WASHINGTON -- Massachusetts Senators Elizabeth Warren and Edward Markey are opposing a bipartisan compromise aimed at preventing interest rates from doubling on subsidized federal student loans, saying it unfairly allows the government to reap profits from students.
“The U.S. loans to big banks at less than 1 percent interest, and here we turn around and demand profits on the back of our kids. That’s wrong. This is not the business the U.S. government should be in,” Warren said in an interview Thursday. “We need to invest in our kids, not make it harder for them to get an education.”
The government would gain about $184 billion over 10 years from the program, according to the Congressional Budget Office.
Interest rates doubled to 6.8 percent after Congress, amid partisan wrangling, missed a July 1 deadline to change it. The compromise would set the interest rate at 3.86 percent for the 9 million undergraduates expected to take out federal student loans this summer, and cap the rate for any future increases at 8.25 percent.
Warren referred to the deal as a “teaser rate student loan system,” and championed her own legislation to lend students money at the same discount rates granted to large banks. Warren’s proposal sought to set the rate at 0.75 percent for one year.
“We need to do more to make college affordable so that every student who dreams of higher education isn’t saddled with higher loan rates,” Markey said in a statement. “I will oppose plans that substantially increase the rates students pay now and in the future.”
The bipartisan group of senators that struck the deal include Joe Manchin, a West Virginia Democrat; Richard Burr, a North Carolina Republican; Angus King, a Maine independent; Tom Coburn, an Oklahoma Republican; Tom Carper, a Delaware Democrat; Tom Harkin, an Iowa Democrat; Lamar Alexander, a Tennessee Republican; and Dick Durbin, an Illinois Democrat. An earlier proposal by several in the group did not include a cap on rates, something many Democrats insisted upon.
Durbin, the majority whip, rose to speak on the Senate floor Thursday evening immediately after Warren railed against the bill and addressed her directly.
“Please, walking away from that just doesn’t make sense,” Durbin said, adding that he accepts Warren’s premise that “we can do better.” But, he said, “we don’t have the votes.”