Elizabeth Warren's New Plan to Lower Student Debt: Will Congress Balk?

by Kristina Bravo, Take Part:

(Photo: Cargo/Getty Images)

http://www.takepart.com/article/2014/05/23/elizabeth-warren-its-your-interest
 

Kristina Bravo is a Los Angeles–based writer. She is a fellow at TakePart. full bio

 

It's the time of year when commencement speeches filled with good cheer and optimism circulate the Internet. 

 

Yet one big issue makes this graduation season kind of a downer: student loan debt.

 

The amount of cash grads owe has tripled in the past eight years, and, having passed the $1 trillion mark in 2012, it only keeps swelling. Even Congress, which isn’t known for speedy action, is paying attention to the skyrocketing number. 

 

Last summer, members passed the Bipartisan Student Loan Certainty Act, which lowered the federal loan interest rate to 3.86 percent for undergraduates.

What about borrowers with outstanding debts who graduated prior to 2013? They still have to pay nearly 7 percent more, and Sen. Elizabeth Warren wants to change that.

The Massachusetts senator introduced the Bank on Students Emergency Loan Refinancing Act this month. If it passes in Congress in June, federal loans taken out before 2013 will be charged the newer (and lower) interest rates.

“Exploding student loan debt is crushing young people and dragging down our economy,” Warren said in a press release. “These students didn’t go to the mall and run up charges on a credit card.”

The bill is in its preliminary phase, but the main goal would be to let all federal borrowers refinance their debts. This would allow them to replace their existing charges with a loan with better terms.

“It’s not just a youth issue,” says Brian Stewart of Generation Progress, a national organization that promotes political and social advancement for young people. Along with Warren and groups such as Student Debt Crisis and Young Invincibles, Generation Progress has been pushing for solutions via the Higher Ed Not Debt campaign.

According to Stewart, more than half of student loan debt is held by people older than 30. “You start to hear parents and grandparents helping pay for college by taking out loans themselves and co-signing.”

When young people delay buying homes and other investments because of excessive debt, the entire economy suffers.

Higher Ed Not Debt’s latest project, #ItsOurInterest, aims to spread awareness about the refinancing movement by asking people to record and submit their personal debt stories.

Voters get to pick winners, who will receive $500 each. The prize may pale in comparison with the average college debt, which stands at $29,400, but telling these stories might be the empowerment borrowers need.

Sure, student loan tales might be harder to hear than anecdotes about fish and advice like “stay foolish.” But it’s a conversation that needs to start before any change can happen.

“You don’t want to sugarcoat things,” Stewart said. But not carrying a massive debt before your career even starts? Now that’ll give graduates a reason to "get excited to go out in the world.”

TakePart’s parent company, Participant Media, is collaborating with Samuel Goldwyn Films on the distribution of the documentary Ivory Tower.