Sen. Elizabeth Warren introduced legislation on Tuesday to tackle the nation's over $1 trillion student loan crisis.
"Exploding student loan debt is crushing young people and dragging down our economy," the Massachusetts Democrat said in a statement.
Warren's proposal, which has the backing of nearly two dozen co-sponsors, including Senators Sheldon Whitehouse (D-R.I.), Barbara Boxer (D-Calif.) and Al Franken (D-Minn.), would allow those with outstanding student loans, some who pay interest rates of over seven percent, to refinance those loans at the current 3.86 percent rate new student loan recipients are charged, as decided by Congress last year.
"Allowing students to refinance their loans would put money back in the pockets of people who invested in their education," Warren's statement continued. "These students didn't go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America."
A projection by the Congressional Budget Office last month revealed that the U.S. Department of Education was set to make $127 billion from loan interest payments over the next ten years. The finding was derided by Chris Hicks, who leads the Debt-Free Future campaign for Jobs With Justice, telling the Huffington Post, "The student loan program isn’t about helping students or borrowers — it’s about making profits for the federal government."
To make up for the loss of revenue from those higher rates, the legislation, the Bank on Students Emergency Loan Refinancing Act, would also enact the so-called Buffett rule, which would require that millionaires not pay less than 30 percent of their income in taxes.
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Students are leaving school with "oppressive debt" that potentially burdens them for decades, a statement from Senator Whitehouse added. A report from public policy organization Demos also estimated that "the $1 trillion in outstanding student loan debt will lead to total lifetime wealth loss of $4 trillion for indebted households, not even accounting for the heavy impact of defaults."
The proposed legislation "would offer students less costly loans and pay for that relief by asking multi-million-dollar earners to pay their fair share of taxes," Whitehouse, the original author of the Buffett Rule, stated.
Speaking to MassLive, Warren pointed out that the rate she chose is the same rate Republicans voted for last summer, so if they reject the Bank on Students Emergency Loan Refinancing Act, it would put on full display the fact that Republicans are saying tax loopholes are more important.
Supporters have been tweeting out messages today using the hashtag #FairShot: