Loans

This is an interesting bit:

Earlier this month, when Congress was consumed by a hearing on the attack against Americans in Benghazi, Warren took to the Senate floor to introduce the bill, a dramatic cut in the federal interest rate for student loans. Under Warren’s bill, the current rate of 3.4 percent, set to double to 6.8 percent on July 1, would drop for a year to 0.75 percent, to match the short-term rate afforded to big banks by the Federal Reserve.

The issue hit Warren’s sweet spots: what she describes as the built-in advantages enjoyed by big banks, the middle class struggle to repay debts, the universities that bolster the Massachusetts economy, and the college students whose passion helped transform Warren’s Senate campaign into a national cause.

“If the Federal Reserve can float trillions of dollars to large financial institutions at low interest rates to grow the economy, surely they can float the Department of Education the money to fund our students, keep us competitive, and help grow our middle class,” she said.

A pair of scholars from Brookings disagreed, labeling Warren’s proposal a “cheap political gimmick” in an online essay, noting that student borrowers have higher rates of default and are offered generous forgiveness policies not granted to big banks.

“This logic just fails,” said Beth Akers, a fellow at the Brown Center for Education Policy at the Brookings Institution, who co-wrote the piece. “Students are fundamentally different as borrowers from these large financial institutions at the discount window.”

And students didn’t crash the world economy. If they had they would have been due an infusion of hundreds of billions of dollars, right Beth?

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