Sen. Elizabeth Warren (D-MA) has introduced a bill to cut college student loan interest rates to just 0.75%, a move that progressive Huffington Post writer Robert Kuttner says could spark a “counter-revolution against austerity politics.”
Kuttner calls on progressives to mount a “mass movement for relief of college debt.”
Warren’s proposal would tie Stafford Loans to the Federal Reserve’s bank lending rate. Lawmakers have warned that interest rate on subsidized Stafford student loans will double July 1st for loans taken out by new student, not those with existing loans.
Critics, however, say the issue is overblown.
Mark Kantrowitz of FinAid.org says over a 10-year repayment period, a student borrower would incur just $761 in added cost. And as CBS News Money Watch points out, “While Americans have roughly $1 trillion in outstanding student debt, only about 3 percent of student debt will be impacted if the Stafford rate doubles.”
What is more, today’s interest rates are already unusually low. In 2007, the subsidized rate was 6.8%, not the 3.4% for the 2011-2012 school year.
Still, Kuttner says progressives should exploit the issue and push for debt-free college degrees.
“No student should have to incur debt in order to attend college,” says Kuttner. ”Instead, students could incur a moderate and progressively levied surcharge on their income tax, which could be phased out for people serving the public interest in one of several professions.”