Warren recently proposed her first piece of legislation since she took office earlier this year. Her bill posits that students should be charged the same interest rate that the Federal Reserve banks charges interest rates towards big banks, which compose a large share of our financial system. This would put interest rates down to 0.75%, the current interest rate the Federal Reserve has set. With student loans set to go up to 6.8%, this is a bill that is far more polarizing for the specific intent to bring this issue up to debate and address an impending student debt bubble. Student loans have the second highest debt in the current market, only behind the housing market. This is a political statement, which would then lead to a larger compromise on both sides of the aisle.
So what does this mean? Such an adjustment would clearly affect the markets because this would be a big cut from 3.4 to 6.8 percent to then 0.75%. The Federal Reserve would also not want to take more assets out onto its balance sheet, which has ballooned because of the financial crisis in 2008. Warren incorporates theories of justice, fairness and equity for a generation drowned in student debt. Student debt has doubled over the past ten years from $10,649 in 2003 to $20,326 in 2012. Warren provides a strong voice which has the concern of many college students. And in many ways asks a simple question: If big banks have the support of taxpayers, why don’t our students receive the same sort of backing?
Warren brings about one of the most important issues for millennials and is slowly incorporating millennials into the larger political debate. What on earth do you do with so much student debt? If the American public does not address issue sooner rather than later, American taxpayers might have another mess to deal with. Student debt takes no prisoners. With education only becoming more increasingly important, with bachelor degrees necessary to land even basic administrative positions, this is an issue, which has reshaped and questioned the American model of higher education. Warren’s bold move in bringing up this issue is something which can bring together a strong coalition. Her bill is not a magic bullet. It’s something that is up for debate, a crafty political play in a time when people and pundits alike are noticing something so tangible that is mortgaging future generations chances for success and prosperity.
Like Occupy Wall Street and many other movements in the past two years, issues that have been on the fringe are slowly entering the center. Warren’s bill will now let a chance for the discussion to shift towards a meaningful debate.