Photo Credit: Mikhail Zinshteyn, National Education Writers Association.

Sen. Elizabeth Warren, D-Mass., spoke concluding month at the Education Writers Association conference in Boston.  Credit: Mikhail Zinshteyn, National Education Writers Clan

The federal authorities should stop making profits from student loans, said Sen. Elizabeth Warren, D-Mass., a leading consumer activist and advocate for student loan reform in Congress.

Warren, citing a Congressional Budget Office study,said the government stands to bring in $51 billion in profits from student loans this year, a disputed figure that has economists taking sides and has left Warren open to criticism.

With student-loan debt nearing $1.2 trillion, "it's a threat to our students' futures" and to the economic system, Warren told higher education journalists Sept. 28 at a conference at Northeastern University, where she outlined her ideas for making both loans and college more affordable.

Over the summer, Warren was a tenacious critic of both Republican and Democratic bills aimed at preventing student loan rates from doubling on July ane from three.iv percent to 6.8 percent. As EdSource Today has reported, the final legislation passed past Congress ties rates on federally subsidized and unsubsidized Stafford loans for undergraduate and graduate students and PLUS loans for graduate and professional person students to the 10-twelvemonth Treasury note. Interest rates are capped at a fixed amount for the life of the loan.

Warren co-sponsored an alternative bill, the Keep Student Loans Affordable Act of 2013, which would have rolled dorsum interest rates and frozen them for a twelvemonth at 3.4 percent. During that year, Warren and her colleagues planned to reform the student loan organization to eliminate profits, provide better consumer protection and address "the college affordability trouble," which, she says, forces families into debt in the starting time place.

"More and more than low-income and middle-income students just can't afford to pay the loftier cost of college. Only if those kids want a shot at a stable future, the kind that comes with a college degree, so they can't afford not to pay, either," Warren said. "Pedagogy is the path. It is the opportunity for kids. It is the chance for the boot-strappers to go ahead. It is the chance to build a better time to come."

The nib failed, but Warren said she is continuing to press for the changes proposed in the nib and other reforms. They include:

  • Eliminating government profits from the pupil loan plan
  • Reducing the burden of student debt on existing borrowers past letting them refinance their loans during this period of historically low interest rates
  • Restoring basic consumer protections, such as bankruptcy relief. Nether current police, pupil loans cannot exist dismissed when someone files for defalcation protection.

When asked what the likelihood is that this Congress, 1 that can't even agree on keeping the government open up, will act on Warren's proposals, she was undeterred and recalled how, equally a Harvard constabulary professor, she persevered in getting Congress to approve creation of the Consumer Financial Protection Bureau to protect homeowners and investigate the function of banks in the mortgage crisis.

"And so my bottom line on this is, you get the things you fight for. Y'all become the things that y'all make a priority. You get the things that you lot get plenty people out there who encounter it, who see the problem, and who see a possible solution, and therefore get behind it," Warren said.

Advocates for higher access agree. "She, more than possibly anyone else, focused attention on the fact that the government is making billions of dollars off pupil loans," said Pauline Abernathy, vice president of the Oakland-based Establish for College Access & Success (TICAS).

Abernathy said that just by speaking out, Warren has impelled alter. In August, during a speech at the Land University of New York, Buffalo, President Obama discussed steps his administration has taken to protect students, such as establishing a consumer watchdog to assist students and families select the best loans for their circumstances and to launch a pay-equally-you-go option that allows students to repay their loans based on their earnings to ensure that payback rates are manageable. And then the president gave his support to Warren's key issue.

"Hither'southward the bottom line – regime shouldn't run across educatee loans as a way to brand money; information technology should be a manner to assist students," Obama said to applause.

Abernathy said those reforms are a sign that Warren has moved the contend in a significant way. "It takes people similar Warren to give it the urgency and help it movement forward," she said.

The urgency for Warren, Abernathy and other advocates is that students and their parents are increasingly turning to loans to pay for college educational activity as college costs become out of achieve for nigh families. Nationally, about 11 1000000 students take out higher loans each year;  608,000 in California. One reason loan numbers are spiking is that college costs accept soared since 1982-83, by 257 percent at four-twelvemonth land colleges and universities and past 166 per centum at four-year private colleges and universities, co-ordinate to the College Board. At the same time, state support of public colleges and universities slipped. State funding for public universities dropped by 23 percent between 2007 and 2012, Warren said. Land support for California State University has dropped by 22 percentage since 2007-08, a decline of about $600 one thousand thousand, and by about $900 million for the University of California.

The Found for College Access reports that ii-thirds of college seniors in the grade of 2022 owed coin when they graduated – an average of $26,600 each. The load is lighter in California. According to the Institute, 51 percent of college students have loans, averaging simply nether $xix,000 per educatee. It'south a footling lower for University of California students, and much less for students at California Country Academy, who average about $12,411 in loans.

"The debt loads that people are taking out to finance their lives are crushing us, and pupil loans are the worst of them," Warren told reporters at the Education Writers Association meeting in Boston. "They're the worst because they start early on, when you're trying to launch a life, when you're almost vulnerable, when you have the fewest resources."

A recent report by the Consumer Financial Protection Bureau warns that heavy debt as well deters higher graduates from giving back to their community through public service careers, considering they need high-wage jobs to pay off their loans.

"In effect, educatee debt may be driving young graduates away from lower-paying public service careers in favor of more lucrative work in the individual sector. Some take raised concerns that pupil debt is exacerbating existing workforce shortages in public schools, hospitals and in rural communities," cautions the bureau.

Warren agrees that the consequences are dire unless the regime takes steps to protect borrowers and make college more than affordable. "The debt will kill us. Information technology really will. It kills hope. Information technology kills opportunity."

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