Senate Blocks Elizabeth Warren's Student Loan Refinancing Proposal
Shahien Nasiripour
shahien@huffingtonpost.com
Posted: 06/11/2014 12:40 pm EDT Updated: 06/11/2014 3:59 pm EDT
The Senate on Wednesday declined to approve a measure that would have enabled millions of Americans with expensive student loans to refinance into cheaper debt.
The 56-38 vote on the refinancing proposal, sponsored by Sen. Elizabeth Warren (D-Mass.), failed to garner the 60 votes needed to overcome a Republican filibuster. Warren’s proposal, which mostly targeted student loans owned or guaranteed by the Department of Education, sought to fund the reduction in borrowers’ student loan payments by increasing taxes on wealthy households.
“With this vote we show the American people who we work for in the United States Senate: Billionaires or students,” Warren said minutes before the vote.
Other than Senate Majority Leader Harry Reid (D-Nev.), who voted against the measure on procedural grounds in order to preserve Democrats’ ability to reconsider it at a later date, only Republicans voted against it. They said the measure wouldn’t help reduce the skyrocketing cost of college and argued that it was not the best way to help former students manage their debt.
The 56-38 vote on the refinancing proposal, sponsored by Sen. Elizabeth Warren (D-Mass.), failed to garner the 60 votes needed to overcome a Republican filibuster. Warren’s proposal, which mostly targeted student loans owned or guaranteed by the Department of Education, sought to fund the reduction in borrowers’ student loan payments by increasing taxes on wealthy households.
“With this vote we show the American people who we work for in the United States Senate: Billionaires or students,” Warren said minutes before the vote.
Other than Senate Majority Leader Harry Reid (D-Nev.), who voted against the measure on procedural grounds in order to preserve Democrats’ ability to reconsider it at a later date, only Republicans voted against it. They said the measure wouldn’t help reduce the skyrocketing cost of college and argued that it was not the best way to help former students manage their debt.
The proposal failed despite nearly widespread agreement among federal policymakers, financial regulators and financiers that Americans’ student debt burdens risk choking U.S. economic growth as student loan payments take ever bigger chunks of workers’ paychecks.
Unpaid student debt has doubled since 2007 to nearly $1.3 trillion, according to the Federal Reserve. Some 40 million Americans have student loan debt, according to the Education Department. The average borrower owes nearly $30,000.
Warren said Wednesday that outstanding student debt presents an “economic emergency that threatens the financial futures of Americans and the stability of our economy.”
Officials at the Federal Reserve, Treasury Department and executives at some of the nation’s biggest banks are among the financial experts who have publicly warned about the growing negative consequences of not taming Americans’ student debt bills, pointing to reduced home and automobile purchases, lower retirement savings, fewer new small businesses, and decreased future revenues for the U.S. banking system as households curtail their borrowing in favor of paying back the Education Department.
Financial firms including BlackRock, the world’s largest money manager, and regulators such as the Consumer Financial Protection Bureau have suggested that the U.S. government needs to strengthen its efforts to help borrowers repay their student debts.
Sen. Lamar Alexander (R-Tenn.), the top Republican on the Senate education committee, said Wednesday it was more important to help current and future students rather than former students struggling with their debt.
Only three Republican senators -- Susan Collins of Maine, Bob Corker of Tennessee and Lisa Murkowski of Alaska -- voted in favor of Warren’s proposal.
Many skeptical lawmakers and analysts derided the vote as a political stunt designed to highlight the chasm between Democrats and Republicans in an election year. Senate Democrats first proposed refinancing measures last year, but those bills never got a vote.
The White House waited until last week to signal its support for Warren’s bill, a sign the Obama administration was not seriously attempting to whip up support for the measure. The bill likely would have been doomed in the Republican-controlled House of Representatives, where the specter of any kind of tax increase is viewed with deep skepticism.
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No one said these people were not going to pay their bill, just that they may be able to get a better interest rate than they have right now. Their money will go somewhere, so if they have a lower interest rate, they may be able to do other things with their money. The economy could use a boost, and if these people could get out from under the debt they have maybe it would help the economy as well. I suppose if you are wealthy, it is hard to relate to some one with debt. Bev.
ReplyDeleteBev - the students who have the highest rate of unpaid debt are students who never graduate. That is partly the result of an emphasis on college as the only option for high school graduates. Many are woefully unprepared for college level work. Even in Mass, a very high number of entering freshman must take remedial coursework, and the percentage of students who ever graduate is lowest among those who need remedial work.
DeleteSenator Warren was a part of a system, as a college professor, where she directly benefitted from skyrocketing costs of a college degree. By flooding the market with students, colleges were able to far outpace the rest of the economy in boosting their fees and tuition. The President of the mount earns $256,838.46 in salary, where's the outrage? It's not greedy banks, as Sen. Warren would have you believe. It costs too much to attend college, and the system allows students who have no hope of completing the work to borrow money in order to fill the ever-expanding seats in American Colleges.
I have a granddaughter who got a loan to go to hairdressing school. She graduated but it takes time to build a client base. The phone rang off the hook, with the loan company looking for payments to start, even before she could get established. She has worked hard and is finally working consistently, so she can pay off her loan. Why on earth would anyone get paid as much as the President of the Mount ?? He has not cured cancer, he is running a small community college. I would bet there are a lot of people who would do as good a job, a lot cheaper. I do think Senator Warren has her heart in the right place. She is grateful for the education she received with out going to the poor house in the process. While it is true that not everyone is college material, it is a saving grace to the people who are, to have the interest lowered if the rate they paid is unreasonable. Whether it is the banks or the schools who push up the cost, the person who has to repay their debt can be crippled by the process. If the payments are manageable, a person will have money to spend on other things, and the economy will be helped. It will also be a relief to the parents who have a adult child living with them, for lack of a cheaper place to reside. Mark, I appreciate your input on the blog. It is good to have other opinions to think about, so feel free to join in anytime. I do hope you guys on the Advisory Board will hang in there, even though our friend the" Moderator" seems to be trying his hardest to muck up your progress. Hang in there. It is a good morning to go to East Templeton to help with transforming the old school into our own Town Hall. Bev.
DeleteBev - Mr. Asquino's salary at the Mount is just one example of the greed in higher education. You are correct, they could find someone to do as good a job, a lot cheaper. Maybe the person could even live in Massachusetts. Asquino commutes, in a taxpayer-funded SUV, from Rhode Island. Is it really necessary that students borrow more money to fund these extravagances? You don't hear Senator Warren speaking up about these salaries and perks that are paid for with borrowed money.
DeleteWhat about Senator Warren herself? She made $340k for teaching one course at Harvard in 2009. She made $429,981 from Harvard in 2010-2011. That was not her full-time job, as she earned $134,000 consulting on legal cases in 2010.
The senator is pointing to the financial system as the culprit for student debt. She wants to ignore the very high salaries of her and her pals. They don't want to "leave any money on the table". They want it all.
Take a look at the chart at the link below.
http://inflationdata.com/inflation/Inflation_Articles/Education_Inflation.asp
It shows the consumer price index increased by 114.85% from 1985 to 2011. Pretty bad, isn't it? Not compared to the college education inflation rate. That has gone up 498.49%.
Senator Warren directly benefited from that price gouging by colleges and universities. For her to be preaching about solutions is laughable. Especially when the solutions do not include any mechanism to prevent the federal student loan program from continuing to fuel the inflation of a college education.
It would appear that Senator Warren's idea is a good one and would save these kids some money. Nobody complained when home owners were allowed to refinance their houses at a lower rate. Pete Farrell
ReplyDeleteThe real issue is lowering the interest on some of the school loans that some people have been saddled with. To do that will give them a few extra bucks to spend on other things. Oil is my pet peeve. When is Wall Street going to let the price come down ? Bart says it should be around $70.00 a barrel, but any excuse will do to keep it high. I do believe our economy will not improve until gas and oil come down. Gas and oil are sucking any extra money out of the little, people have in their pockets. How are the older people in our community going to stretch their Social Security money, when is is stretched thin as it is ??. Bev.
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