After a group of senators announced a deal on student loan interest rates last week, Massachusetts Senators Ed Markey and Elizabeth Warren continued to attack the plan on Monday that they say would create ‘outrageous profits’ for the federal government.
It was only his fifth day on the job, so you couldn’t blame Senator Ed Markey for trying to redirect questions about student loans to the senior senator from Massachusetts.
Looking over Marina Bay in Boston, Markey stood with Senator Warren during a press avail, and credited her for asking why the government is raking in billions of dollars on federally subsidized student loans.
"She has absolutely created a national debate now on the issue of whether the federal government should make $184 billion over the next ten years off of loans given to kids from Dorchester and Malden and Revere and Springfield,” he said.
Despite their opposition to the deal, Markey and Warren said there is room for compromise. They’d like to see a long term plan that keeps the rates much lower in the long run.
Senate Majority Whip Dick Durbin urged both Markey and Warren to face the political reality and come around on the plan that would tie student loan interest rates to market-based rates. But, Warren said won’t back down.
“I don’t think it’s a compromise to say we’re going to keep making more and more profits off our students," she said. "We got more than $1 trillion in student loan debt that’s outstanding. We need to bring that cost down for our students.”
For the first time, Warren said, there’s a public discussion about the profits the federal government makes off student loans.
“Last year, when people talked about subsidized loans it sounded like the government was putting money into the program rather than making profits off it," she said. "Senator Durbin and I are on the same side. We both are going to be out there fighting to try to reduce the total student loan debt, we are just having a difference in the short-term about what constitutes a compromise.”
But with their financial futures largely up in the air, many of the students and recent graduates who Warren and Markey met with at an innovation event at MassChallenge in Boston said they’d like to see some kind of compromise – and soon.
Derek Kaknes, the founder and CEO of Prime Student Loan, a company that tries to put a fair price on higher education said he's frustrated with the protracted debate in Congress.
“Regardless of what the interest rate is there’s a trillion dollars in principled outstanding, so when we talk about student loan reform it’s not really student loan interest loan reform it’s student loan principled reform," he said. "If you really want to make a difference, you have to start lowering the lending limits -- stop issuing $400,000 in debt.”
Greg Affsa is a junior at Wentworth Institute of Technology and the co-founder of Gentoo Inc., a company that designs devices to assist patients going through chemotherapy. He said he is paying for school without any outside help, and he’s expecting to average $25,000 in debt when he graduates in 2015. He said he is counting on either Congress striking a deal or his start-up taking off.
“Whether or not I think I can continue with the business and afford a life after school will hang on whether or not this is successful because of how much student loan I have to take on,” he said.
Affsa says he and friends would like to see Congress do something rather than nothing, but given its recent track record he’s not counting on it.