Senate Kills Warren Bill To Let Student Loan Borrowers Refinance

[Update, 06/11/14, 11:50 a.m. EDT: The Senate voted down a bill on Wednesday from Senator Elizabeth Warren (D-Mass.) that would have allowed about 25 million borrowers with older student loans to refinance at lower interest rates.]

Sen. Elizabeth Warren (D-Mass.) says she plans to continue her fight for student loan reform, even if she faces stiff opposition in Congress.

“I’m going to keep fighting on this every day,” Warren told Fusion’s Alicia Menendez.

Student debt in the United States has swelled to $1.2 trillion this year, with around 40 million American paying off student loans.

Beyond causing financial struggles for individual borrowers, Warren said, the economy as a whole is suffering as young people devote more of their income to loan payments and less to purchases like house and cars.

“They’re not making the purchases that we would expect them to make as they grow up,” Warren said, “as they move out of their parents’ homes and start their own independent economic lives.”

How did the country reach this point?

“We got here,” the senator said, “by loading up young people with more and more and more and more student loan debt.”

As states have struggled to rebound from the recession and devoted less state funding to public colleges and universities, schools have raised tuition to compensate.

“It’s crushing young people who are just getting started,” Warren said, but said there is a viable solution.

President Obama on Monday signed an executive order to cap student loan repayments at 10 percent of borrowers’ monthly income.

The senator supports the move and has also introduced a bill, expected to be heard on the Senate floor this week, that would help student loan borrowers pay less interest by taxing the wealthiest Americans.

“It’s a question of values,” Warren said. “Are we going to be a country that says this place works only for millionaires and billionaires, and that the Republicans are going to get out and make sure that every single tax loophole is protected for millionaires and billionaires? Or are we going to take that very same money and say, we’re going to use it to help young people who are just getting started?”

Republicans have balked at the idea of more taxes and many strategists see the bill as a political gesture meant to energize a Democratic base ahead of the midterm elections and 2016. But Warren says that’s not true.

“That’s just wrong. We need to bring this to a vote,” she said, going on to acknowledge the power of lobbyists who will try to prevent lawmakers from closing tax loopholes that benefit the wealthy.

Warren would like to see a two-pronged approach to helping students. The nation needs to ease the student debt burden, she said, but it also needs to make college more affordable for future students.

“We need to do both,” she said, adding that she knows what it’s like to pay her own way through school but that during her college years, a semester’s tuition ran just $50.

“Homeowners have refinanced their loans. Small businesses have refinanced their loans,” she said. “Let’s let our kids do the same thing.”