Sen. Elizabeth Warren (D-Mass.) is by no means alone in her belief that the U.S. government should give college students the big-bank treatment.
More than 250,000 MoveOn.org members have signed a petition demanding Congress set student loan interest rates at the same level as that offered to big banks by the Federal Reserve, a proposal put forth in Warren's first-ever Senate bill last week.
Warren herself launched the petition on MoveOn.org, a community of more than 8 million Americans focusing on progressive issues. If Congress doesn't act before July 1, some student loan rates will increase to 6.8 percent from their current 3.4 percent rate. Warren’s bill seeks to limit student loan interest rates to just 0.75 percent.
“The biggest banks in the country – the ones that wrecked our economy and cost millions of Americans their jobs – pay next to nothing on their debt, while students pay nine times as much. That isn't right,” Warren’s petition, states.
The Fed has argued that providing banks with near-zero interests rates is essential amid a lackluster recovery, but recent research suggests growing levels of student debt are hindering a broader recovery as well.
In less than a decade, the average amount of American student loan debt for a 25-year-old has doubled to $20,326 in 2012, from $10,649 in 2003, according to the Federal Reserve Bank of New York. In total, U.S. student loan debt now exceeds $1 trillion.
A survey released just after Warren unveiled her bill last week illustrates the pain such debt can inflict. Three-quarters of student borrowers and their parents said they or those around them were forced to make sacrifices because of student loan debt, according to the American Institute for CPAs.