Elizabeth Warren on Changing the Student Loan Game

Drawing of graduate with diploma chained to money bag

Elizabeth Warren’s latest speech on student debt could be the turning point in making college more affordable.
Image: Shutterstock

It’s not news that college loans are crippling entire generations, but what is news is that some politicians are actively fighting to change that.

Take Elizabeth Warren, the Massachusetts Senator who has been a vocal—if not always successful—advocate for attacking the student loan problem on both federal and state levels.

Back in 2013, when the Department of Education reported that federal student loan default rates for borrows in their first two years of repayment were as high as 9.1%, Warren brought forward a bill that addressed the issue by taking student loan interest rates out of Congress’s control. She argued this would keep student loan interest more in step with broader financial markets.

The bill didn’t pass, but that didn’t stop Warren. In 2014 she was back with the Bank on Students Emergency Loan Refinancing Act, which would have let people with federal and private loans issued prior to 2010 refinance their loans at 3.86%–the rate Congress set the previous year. This bill was defeated by Senate Republicans.

But maybe the third time’s the charm? Warren’s latest suggestions came as part of a speech given on June 10 for a panel hosted by the Albert Shanker Institute and the American Federation of Teachers called, “The Affordability Crisis: Rescuing the Dream of College Education for the Working-Class and Poor.”

Building on her previous work, Warren described a new framework that takes into account ideas from both sides of the aisle:

“Democrats talk about resources, pointing out that we’re no longer investing in our kids the way we once did. Republicans talk about risk and incentives—arguing that students take on debt without fully understanding the consequences and that colleges get access to federal dollars pretty much no matter what the cost of the education that they provide. Here’s the truth—both sides are right….Our college crisis needs a one-two punch—more resources and better incentives to keep costs low.”

So what might that look like in practical terms? Warren suggests renewing investments in higher education and using incentives to encourage federal, state, and college organizations to work together. If colleges shared some of the financial risk with students, it might inspire them to keep costs manageable. Warren also promoted the idea of further support for public schools, fixing the Pell Grant system, simplifying financial aid, and changing the rules of student federal aid programs to focus more on what’s best for the student and less on profit. She also argued that the Department of Education should strengthen its accountability.

Will any of Warren’s ideas actually be implemented? Only time will tell. But as an influential politician with the determination to make college more affordable, Warren has a serious chance of changing the game when it comes to college finances.

 

 

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