Elizabeth Warren Calls For Big Changes To Student Loans

Elizabeth Warren Calls For Big Changes To Student Loans

BOSTON -- College graduates struggling to repay their student loans should have an easier time getting their debt eliminated if they go into bankruptcy, Sen. Elizabeth Warren (D-Mass.) said Saturday.

Warren laid out several reforms to address the rising costs of higher education in a speech at the Education Writers Association's Conference on Higher Education, held at Northeastern University. She spoke of the difficulty a growing number of graduates have repaying their debt and advocated for better financial support for public colleges.

She also called for the reversal of reforms enacted in the past three decades that have made discharging education debt practically impossible, except in extreme circumstances. She declined to offer a specific proposal to address the issue when asked by The Huffington Post, but suggested there were steps Congress could take.

"We stepped a piece at a time into making student loans impossible to deal with when a person hits a financial crisis, there are a lot of steps we could take back out of that," Warren said. "I'd like us to go a long way toward letting people deal with student loans the same way they deal with home mortgages and medical debts."

The Massachusetts Democrat has already signed on as a co-sponsor of legislation Sen. Dick Durbin (D-Ill.) has pursued in the past two sessions of Congress that would roll back a 2005 reform preventing private student loans from being discharged in bankruptcy. Thirty-five consumer and student advocacy organizations have endorsed the legislation, including the Institute for College Access & Success, and the Consumer Financial Protection Bureau issued a report in 2012 suggesting Congress consider rolling back bankruptcy restrictions on private student loans.

"Americans with private education loans who fall on hard times deserve bankruptcy relief and a fresh start just like everyone else," said Pauline Abernathy, vice president of The Institute for College Access and Success, which runs the Project on Student Debt. Many of Warren's proposals mirrored a white paper the group released earlier this year.

In her Saturday speech, Warren called student loans the worst kind of consumer debt families face today because they start early and "they are inexorable -- you can't get rid of them."

"Young people get into trouble on these debts and you know what happens? It just means the amount they owe keeps going up and up and up," Warren said. "It's crushing these kids."

Warren boasted at the conference about increased awareness of the enormous profits the federal government makes from its student loan program. During the debate in Congress this summer over changes to the interest rate on federal student loans, Warren offered legislation that would've drastically lowered interest rates for students. Although her bill went nowhere, it received grassroots support. Warren vowed to return to the issue, and said "the debate will never be the same."

Among Warren's other proposals: providing federal financial assistance to states that fund public colleges, eliminating government profits from student loans, and punishing colleges with graduates who aren't able to manage their debt, suggesting schools that have a high number of graduates defaulting on their loans should pay back money to the federal government. That money could in turn be used to reward the schools that keep costs low, Warren said.

Students should also have their aid packages calculated before they even apply for college, Warren said, and the federal government should proactively guide graduates with debt towards more beneficial repayment plans. The U.S. Department of Education has faced criticism recently for not doing an adequate job informing borrowers about repayment assistance programs.

Warren dismissed the notion that her proposals wouldn't make it through a gridlocked Congress or would be defeated by lobbying from the financial services industry, citing the difficulty she faced in getting the Consumer Financial Protection Bureau established.

"You get the things you fight for, you get the things that you make a priority," Warren said. "You get the things that you get enough people out there who see it, who see the problem and who see the possible solution."

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