If you haven’t heard of the Bank On Students Loan Fairness Act, here’s a small introduction:
The bill gives students the same deal that we give to the big banks by allowing those who are eligible for federally subsidized Stafford loans to borrow at the same rate offered to banks through the Federal Reserve discount window. For one year, the Federal Reserve would make funds available to the Department of Education to make these loans to our students. This would give students relief from high interest rates while giving Congress time to find a long-term solution.
Fixing the interest rate on new subsidized loans is only a first step in helping students who are drowning in debt. We must ensure that the interest rates on all student loans are as low as possible, and that struggling borrowers have options to help them avoid default. Congress will have the opportunity to address these issues next year when it reauthorizes the Higher Education Act. We will work with our colleagues to make student loans a fair deal for students rather than a profit center for the federal government.
Economists explain that banks need low rates because their stability is essential to our shaky economic recovery. But students are just as important as banks to a strong recovery. High levels of student debt pose a risk to our economy if students cannot pay it back. If the Federal Reserve can lend trillions to financial institutions at low rates to grow the economy, surely it can float the money that will keep student loan payments low, keep us competitive, and grow our middle class.
Unlike big banks, students do not have armies of lobbyists and lawyers. They’re banking on us to do what’s right. Let’s bank on students by investing in their futures and giving them a break on student loan interest.