Lifestyle & Belief

Elizabeth Warren: Charge students same loan rate as banks (VIDEO)


Massachusetts Senate candidate Elizabeth Warren speaks during day two of the Democratic National Convention at Time Warner Cable Arena on September 5, 2012 in Charlotte, North Carolina.


Alex Wong

Students taking out government loans for college should pay the same rock-bottom rate as the nation's biggest banks, Sen. Elizabeth Warren proposed today.

Her proposal, titled the Bank on Students Loan Fairness Act, would allow the low-rate loans for one year to give Congress time to figure out a long-term solution to interest rates.

More from GlobalPost: Americans owe more for student loans than cars, credit cards

Federal loan rates for new students are set to double on July 1 to 6.8 percent.

Warren said it's unfair that big banks can borrow money from the Fed and pay just 0.75 percent interest.

"In other words, the federal government’s going to charge interest rates nine times higher than the rates they charge the biggest banks -- the same banks that destroyed millions of jobs and nearly broke the economy," she said in a speech on the Senate floor.

"That isn't right."

More from GlobalPost: Record 1-in-5 US households have student loan debt

Warren's bill would cut student loan rates to that same 0.75 percent for the next year.

The Fed justifies loaning money essentially for free to big banks so they can maintain liquidity during emergencies.

But Warren says student loan debt also affects the economy. 

In a press release, progressive think-tank the Campaign for America's Future endorsed the proposal as a way to end the student loan crisis instead of "kicking students when they are down."