Warren said she supports the Keep Student Loans Affordable Act would extend the 3.4 percent rate for need-based loans for one year and would be paid for by ending a tax break on tax-deferred retirement accounts. That bill, S. 1238, is expected to get a vote in the Senate later this week.
“Congress can ease the burden on our students and we should be committed to doing just that,” Warren said. “This is how we build a better future for our entire country.”
But Republicans and a couple Democrats have argued that a permanent solution would be better than a short-term rate extension.
Sens. Joe Manchin (D-W.Va.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Lamar Alexander (R-Tenn.), Angus King (I-Maine) and Tom Carper (D-Del.) introduced a bipartisan bill similar to something House Republicans passed last month. The Bipartisan Student Loan Certainty Act, S. 1241, requires that, for each academic year, all newly issued student loans be set to the U.S. Treasury 10-year borrowing rate plus 1.85 percent for undergraduate loans. The interest rate is capped at a consolidated rate of 8.25 percent.
Warren said that bill increases federal profits from student loans at the expense of struggling college students and middle class families.
“The government is making obscene profits on these loans,” Warren said. “This is just plain wrong.”
Warren argued that a one-year fix was necessary for lawmakers to have enough time to address the drivers of increased tuition costs and existing student loan debt in the reauthorization of the Higher Education Act.
It’s unclear if Senate Majority Leader Harry Reid (D-Nev.) will allow a vote on the bipartisan bill, but a vote on the motion to proceed to the Democratic bill introduced by Sen. Jack Reed (D-R.I.) could be as soon as Wednesday.
Last month, the Senate attempted to pass similar legislation that would have extended the 3.4 percent rate for two years but there wasn’t enough support to overcome the Republican filibuster requiring 60-votes to advance the bill.