Sen. Warren Is Furious: Government Makes $51 Billion A Year Off Student Loan Interest (VIDEO)

warren

Earlier today, the Washington Post detailed the newly crunched figures by the nonpartisan Congressional Budget Office (CBO), showing the federal government making $51 billion in 2013 alone from student loan interest. It’s hard to fathom such an astronomical number, but to give it some context: in 2012, ExxonMobil, the most profitable company in the U.S., reported “only” $44.9 billion in net income.

Nationwide, outstanding student loans are at nearly $1.2 trillion, making them the second-largest source of household debt after home mortgages. Furthermore, the New York Fed states that it’s also the only kind of consumer debt that has increased since the onset of the financial crisis.

A huge swath of young America is completely hamstrung by their crippling monthly student loan payments. In May, President Barack Obama stated that the average new college graduate carries more than $26,000 in student debt, which “…doesn’t just hold back our young graduates. It holds back our entire middle class.”

An entire year ago, Congress was considering raising the student loan interest rate, and President Barack Obama went on a college campus tour, calling on Congress to stop the rate hike. He warned that if interest rates doubled, the average student borrower would end up paying an additional $1,000 for each year of college, over the life of their loan. His efforts bought borrowers another year at the 3.4% rate.

However, that year expired on July 1, and due to Congressional partisan bickering, no agreement was reached. The rate doubled, going from 3.4% to 6.8%.

Republican plans have favored tying student lending to market rates, which would result in students seeing their interest rate rise every year, like an adjustable mortgage.

In contrast, Senator Elizabeth Warren (D-Mass.) has been arguing that the federal government should not be using student loan interest as a source of profit. In May, she issued a proposal called the Bank On Student Loan Fairness Act, which would provide a one-year stopgap solution while Congress works on a long-term solution. Her plan cuts interest rates from 6.8 percent to 0.75 percent – the same percentage that Wall Street banks enjoy on their loans.

Even though Republicans blocked her proposal from passing before the July 1 date, the Democratic Senator is still campaigning for these drastically reduced interest rates to be approved, giving a speech to Congress on July 8 and referencing the aforementioned newly established $51 billion that the government now stands to profit at the current rates.

More than 1,000 college professors have signed a petition supporting Senator Warren’s proposal. If you’re a current college student or staff member, please add your name to the other 600,000+ signatures on this letter and show your support for Warren’s godsend of a plan. Also, please share this and other related articles on social media forums. Let’s speak out against the Republican plan to prolong the crippling of America’s young peoples’ financial futures while Wall Street enjoys a miniscule interest rate!

Watch Elizabeth Warren’s speech about this on the floor on congress BELOW: