[Congressional Record Volume 159, Number 64 (Wednesday, May 8, 2013)]
[Senate]
[Page S3260]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. WARREN:
  S. 897. A bill to prevent the doubling of the interest rate for 
Federal subsidized student loans for the 2013-2014 academic year by 
providing funds for such loans through the Federal Reserve System, to 
ensure that such loans are available at interest rates that are 
equivalent to the interest rates at which the Federal Government 
provides loans to banks through the discount window operated by the 
Federal Reserve System, and for other purposes; to the Committee on 
Health, Education, Labor, and Pensions.
  Ms. WARREN. Mr. President, on July 1, the interest rate on new 
federally subsidized student loans is set to double from 3.4 to 6.8 
percent. That means unless Congress acts, for millions of young people 
the cost of borrowing money to go to college will double.
  The student debt problem in this country is a quiet but growing 
crisis. Today's graduates collectively carry more than $1 trillion in 
debt--more than all the outstanding credit card debt in the whole 
country. Doubling the interest rate on new student loans will just 
increase the pressure on our young people.
  Keep in mind: these young people didn't go to the mall and run up 
charges on a credit card. They worked hard, they stayed in class, they 
learned new skills, and they borrowed what they needed to pay for their 
education. Their education will improve their opportunities in life, 
but their education will not just help these students. When they 
acquire more skills, these students help us build a strong and 
competitive economy and they strengthen our middle class.
  Student interest rates are set to double in less than 2 months, but 
so far this Congress has done nothing--nothing--to address this 
problem. Some people say that we can't afford to help our kids through 
school by keeping student loan interest rates low. But right now, as I 
speak, the Federal Government offers far lower interest rates on loans, 
every single day--they just don't do it for everyone.
  Right now, a big bank can get a loan through the Federal Reserve 
discount window at a rate of about 0.75 percent. But this summer a 
student who is trying to get a loan to go to college will pay almost 7 
percent. In other words, the Federal Government is going to charge 
interest rates that are nine times higher than the rates for the 
biggest banks--the same banks that destroyed millions of jobs and 
nearly broke the economy. That isn't right. And that is why I am 
introducing legislation today to give students the same deal that we 
give to the big banks.
  The Bank on Students Loan Fairness Act would allow students eligible 
for federally subsidized Stafford loans to borrow at the same rate the 
big banks get through the Federal Reserve discount window. For 1 year 
the Federal Reserve would make funds available to the Department of 
Education to make loans to students at the same low rates offered to 
the big banks. This will give students relief from high interest rates 
while giving Congress a chance to find a long-term solution.
  Some may say we can't afford this proposal. I would remind them the 
Federal Government currently makes 36 cents in profit for every $1 it 
lends to students. Add up those profits and you'll find next year 
student loans will bring in $34 billion. Meanwhile, the banks pay 
interest that is one-ninth of the amount students will be asked to pay. 
That is just wrong. It doesn't reflect our values. We shouldn't be 
profiting from our students who are drowning in debt while we are 
giving a great deal to the big banks. We should be investing in our 
young people so they can get good jobs and grow the economy, so let's 
give them the same great deal the banks get.
  Some explain that we give banks exceptionally low interest rates 
because the economy is still shaky and banks need access to cheap 
credit to continue the recovery. But our students are just as important 
as banks to a strong recovery, and the debt they carry poses a serious 
risk to that recovery. In fact, in March of this year, the Federal 
Reserve said because of the economic impact on family budgets, high 
levels of student debt pose a risk to our shaky economic recovery.
  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 grow our middle class.
  Let's face it, banks get a great deal when they borrow money from the 
Fed. In effect, the American taxpayer is investing in those banks. We 
should make the same kind of investment in our young people who are 
trying to get an education. Lend them the money and make them pay it 
back, but give our kids a break on the interest they pay. Let's bank on 
students.
  The Bank on Students Loan Fairness Act is my first stand-alone bill 
in the Senate. I am introducing this bill because our students are 
facing a crisis. We cannot stand by and simply watch. This is about our 
students, our economy, and our values. The Bank on Students Loan 
Fairness Act is a first step toward helping young people who are 
drowning in debt. Unlike the big banks, students don't have armies of 
lobbyists and lawyers. They have only their voices. And they call on us 
to do what is right.
  I thank the Chair.
                                 ______