US Senator Elizabeth Warren said greater awareness of ballooning education debt in the U.S. will provide fresh momentum for legislation she introduced Wednesday afternoon that allows students to refinance loans at lower rates.
“A problem that was bad a year ago has gotten worse,” Warren said in an interview. “The federal loans produce obscene profits for the federal government and the biggest banks on the private side.”
Outstanding student loan debt jumped to $1.3 trillion in 2014 from $1.2 trillion, an increase of $100 billion, according to data from the Federal Reserve System. There were roughly a million additional borrowers in 2014 compared with the previous year, according to figures from the Department of Education.
Warren’s bill would allow most students to refinance debt at current government-subsidized rates, which are currently below 4 percent. The costs would be paid for via higher taxes on top earners.
Warren introduced identical legislation last year, but it didn’t garner the 60 votes needed to overcome a Republican-led filibuster in the Senate. The House never voted on it. Passage this year would be even more difficult, given Republicans have taken control of the chamber after November’s election.
Warren said that broader public awareness of the student debt load will help change the political dynamic in favor of her idea. The Democratic establishment has embraced reducing student debt loads since she first introduced her bill. Earlier this month President Obama made it the centerpiece of his weekly radio address.
“Higher education is, more than ever, the surest ticket to the middle class,” Obama said. “But just when it’s never been more important, it’s also never been more expensive.”