Will Biden Reduce Or Eliminate Student Loan Debt?

The exorbitant rise in the cost of a college education, combined with stagnant wage growth for most Americans, has created a crisis of debt for many students. There is currently about $1.7 trillion of loan debt for students. This is keeping them from buying the things their parents were able to buy at the same point in their lives, and that is a drag on the country's economy.

Many want President Biden to eliminate, or significantly reduce this loan debt. And currently he is considering doing that. Here, from Vox.com, are his three options:

Senator Warren Calls For Forgiving Student Loan Debt

The following is the letter from Senator Elizabeth Warren (D-Massachusetts) to her supporters regarding student loan debt. She favors forgiving up to $50,000 of that debt. Here is what she had to say

There's been a lot of talk about unity recently.

For me, unity is about doing the work that the American people want done.

It's not about ideology. It's not about helping just the richest Americans or some interest group — unity is about doing things that the American people want to see us do.

And you know one thing that unites Americans? Canceling student loan debt.

It's a hugely popular proposal that would immediately put hundreds and thousands of dollars back in the pockets of millions of Americans, start to close the racial wealth gap, and boost our economy.

And the president can get it done without waiting for Congress.

I'm partnering with Senate Majority Leader Chuck Schumer and Congresswoman Ayanna Pressley to set a bold plan for how Joe Biden can use his executive authority to deliver meaningful relief to struggling Americans and broadly cancel up to $50,000 in student loan debt.

We need to take action because families need relief. Over 40 million Americans are being crushed by over $1.5 trillion in federal student loan debt.

In the middle of an economy that's been badly hit by the pandemic, the student debt crisis acts like an anchor, preventing a swift recovery and restricting opportunity and prosperity for millions of American families.

Canceling student loan debt as soon as possible would mean substantial and immediate relief for tens of millions of Americans, many of whom have suddenly been laid off or are worried that their jobs are next.

And communities of color, which have been hit hardest by the health and economic consequences of the coronavirus pandemic, disproportionately bear the burden of student debt.

Black students are on average nearly 20 percentage points more likely to take out federal student loans. Half of Black borrowers and a third of Latino borrowers default on their loans within 20 years. Canceling student loan debt would increase wealth for Black and Latino families, help them avoid default, and start to close the racial wealth gap.

Economists agree that canceling student loan debt would also help boost our struggling economy through a consumer-driven economic stimulus, greater home-buying rates and housing stability, expanded access to more affordable financial products including car loans and mortgages, higher college completion rates, and greater small business formation. This is a no brainer for our economy.

Look: we all saw what happened in 2008. After the financial crisis, young people were shoved into a weak job market and plunged even deeper into student debt. And today, as workers face layoffs and frozen wages in the wake of the coronavirus pandemic, student loan borrowers who were barely staying afloat are now drowning. When Americans can't fully participate in our economy, we see a ripple effect across our entire economy and a slowdown in economic growth. This affects all of us, including those of us who don't have student loans or have already paid off their student debt.

We can do better than this. And Democrats will.

Elizabeth

Voters Don't Think The Paycheck Protection Program Is Fair

The chart above is from the Politico / Morning Consult Poll. It was done on May 2nd and 3rd of a national sample of 1,987 registered voters, with a 2 point margin of error.

The Paycheck Protection Program was part of the massive bill from Congress that created over $2 trillion to help the economy a few weeks ago. It was designed to help small businesses survive the recession. They could apply for loans to pay employees and pay rent and other bills while they were closed. If a business kept most of their employees on the payroll, they would not have to repay the loan.

It was a good idea. Unfortunately, it did not work as intended. It turns out that a lot of publicly-held corporations applied for (and got) the loans. The money was not intended for them. A separate program of $500 billion was created for them. But those companies got over a billion dollars out of the PPP program, and left many small businesses out in the cold.

When exposed, a few of those corporations gave the money back, but most did not. Congress had to go back and put more money in the PPP program for real small businesses.

Was the program administered fairly? A plurality of registered voters say NO. About 44% (including 50% of Democrats, 45% of Independents, and 36% of Republicans) say the program was not fair, while only 20% said it was.

They are right. Congress did not adequately define the small businesses who could get loans from the program, and the Trump administration used that to pass out money to businesses supporting Trump. It was another example of crony capitalism.

Much Of Money For Small Businesses Will Go To Religion

(The image at right was found) at blindgossip.com.)

The $2.2 trillion bill passed to help the economy contained about $350 billion earmarked for small businesses. The money is in the form of loans from banks, and was meant to help these businesses survive while shut down during the current epidemic. If a business kept 75% of their pre-shutdown staff on the payroll, they wouldn't have to pay the loan back.

It was a good idea, but is off to a rocky start. Some, if not most, of the small businesses are finding it difficult to access the money -- our to confusing instructions to banks.

Now those small businesses will run into another problem. In a move to prop up Trump's evangelical base, his administration has changed the rules for small business loans. Normally, religious institutions (churches, synagogues, mosques, etc.) cannot qualify for the loans. But the new loan program has changed the rules, and those religious institutions can apply (and receive) loans meant for small businesses.

The following is from the Small Business Administration website:

We additionally clarify that faith-based organizations are eligible to receive SBA loans regardless of whether they provide secular social services. That is, no otherwise eligible organization will be disqualified from receiving a loan because of the religious nature, religious identity, or religious speech of the organization. The requirements in certain SBA regulations—13 C.F.R. §§ 120.110(k) and 123.301(g)—impermissibly exclude some religious entities. Because those regulations bar the participation of a class of potential recipients based solely on their religious status, SBA will decline to enforce these subsections and will propose amendments to conform those regulations to the Constitution. . . .

In particular, loans under the program can be used to pay the salaries of ministers and other staff engaged in the religious mission of institutions. . . .

Simply put, a faith-based organization that receives a loan will retain its independence, autonomy, right of expression, religious character, and authority over its governance, and no faith-based organization will be excluded from receiving funding because leadership with, membership in, or employment by that organization is limited to persons who share its religious faith and practice. . . .

Receipt of a loan through any SBA program constitutes Federal financial assistance and carries with it the application of certain nondiscrimination obligations. Any legal obligations that you incur through your receipt of this loan are not permanent, and once the loan is paid or forgiven, those nondiscrimination obligations will no longer apply.

Small businesses pay taxes -- lots of taxes. Religious institutions don't. Small businesses hire most of the people in the U.S. civilian workforce. Religious institutions hire very few people. Saving small businesses make sense for our ailing economy, because they will pay back by paying taxes and keeping millions of Americans employed. But allowing religion, with it's many thousands of churches (and others), to soak up billions of the dollars meant to save the economy doesn't.

This giveaway of federal money to religions also poses a constitutional question. While the Constitution guarantees religious freedom, it does not allow any religion to be favored over another, or religion in general to be favored over secular peoples. Every American will be required to pay this money back through taxes -- and non-religious individuals should not have to help pay for religions to receive a government handout.

This is one more really bad idea put forth by the Trump administration!

Warren Has A Real Plan For The Student Loan Debt Crisis

The charts above, from NBC News, illustrate a significant and growing problem in the United States. Colleges and universities are being priced out of reach for working and middle class students. To attend a college, students are forced to borrow large sums of money -- meaning they start their working lives with a large amount of debt.

The Republicans don't care. As long as the rich are doing well, they are happy. Their solution to the growing student debt in the last Congress was to raise the interest rate on those student loans. Trump offers nothing better. He wants to limit the amount of money a student can borrow -- which would affect the students who need help the most.

There is someone who has a plan to address the student loan debt crisis -- Senator Elizabeth Warren (D- Massachusetts). She is running for the Democratic Party's presidential nomination in 2020, and one of her campaign planks is a plan to address this. Here, in her own words, is what she proposes:

It’s time for bold action to actually fix the debt crisis. Here’s what my new plan would do:

• It cancels $50,000 in student loan debt for every person with household income under $100,000.
• It provides substantial debt cancellation for every person with household income between $100,000 and $250,000. The $50,000 cancellation amount phases out by $1 for every $3 in income above $100,000, so, for example, a person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation.
• It offers no debt cancellation to people with household income above $250,000 (the top 5%).
• For most Americans, cancellation will take place automatically using data already available to the federal government about income and outstanding student loan debt.
• Private student loan debt is also eligible for cancellation, and the federal government will work with borrowers and the holders of this debt to provide relief.
• Canceled debt will not be taxed as income.

An economic analysis from leading experts on student loan debt finds that my plan would provide at least some debt cancellation for 95% of people with student loan debt (and complete and total student debt cancellation for more than 75%), provide targeted cancellation for the families that need it most, substantially increase Black and Latinx wealth, and help close the racial wealth gap.

The experts also conclude that my plan will likely provide a boost to the economy through “consumer-driven economic stimulus, improved credit scores, greater home-buying rates and housing stability, higher college completion rates, and greater business formation.”

The time for half-measures is over. My broad cancellation plan is a real solution to our student debt crisis. It helps millions of families and removes a weight that’s holding back our economy.

That’s step one.

Step two is making sure nothing like this ever happens again. We need to fundamentally change the broken system that created the crisis in the first place.

Our public schools for K-12 students are free for everyone. That’s because we understand that a high school-level education is a basic need for our society and our economy — and it should be available to all.

But we expect everyone but the wealthy to take on mountains of debt if they want to get a post-secondary education. This is closing off opportunities for generations of Americans and widening this country’s racial wealth gap. The cost of college deters people from attending college. And it forces people to drop out before completing their degrees. Only about two-thirds of students complete a four-year public college degree in six years and only about a thirdof students complete a two-year public college degree in six years. The financial strain of attending college — the need to work many hours to cover costs — is a top reason so many people drop out.

College shouldn’t just be a privilege for those who can afford to take on the significant expenses associated with higher education. Like K-12 education, college is a basic need that should be available for free to everyone who wants to go. That’s why I’m proposing a historic new federal investment in public higher education that will eliminate the cost of tuition and fees at every public two-year and four-year college in America. The federal government will partner with states to split the costs of tuition and fees and ensure that states maintain their current levels of funding on need-based financial aid and academic instruction.

But we need to go beyond just covering the cost of tuition and fees. Non-tuition costs of college like room and board and books have been going way up too. Between 1975 and 2015, cost-of-living expenses grew by nearly 80% at public colleges even after accounting for inflation. Non-tuition costs now account for 80% of the cost of attendance at community colleges and 61% of the cost of attendance at public four-year colleges.

To allow students to graduate debt-free — especially students from lower-income families — we must expand the funding available to cover non-tuition expenses. In addition to the existing federal higher education funding that can be redirected to cover non-tuition expenses, we should invest an additional $100 billion over the next ten years in Pell Grants — and expand who is eligible for a Grant — to make sure lower-income and middle-class students have a better chance of graduating without debt. Research shows that more funding for non-tuition costs helps improve graduation rates, which must be our goal. . . .

Experts estimate my debt cancellation plan creates a one-time cost to the government of $640 billion. The Universal Free College program brings the total cost of the program to roughly $1.25 trillion over ten years.

The actual costs of these new ideas are likely to be even less than that. Experts find that my debt cancellation plan will create an economic stimulus, and study after study shows that investments in higher education provide huge returns for every dollar. But even setting aside the eventual returns to these investments, we can fully cover the cost of these ideas with revenue from my Ultra-Millionaire Tax on the wealthiest 75,000 families in the country — those with fortunes of $50 million or more.

We can address the student loan crisis and cancel debt for families that are struggling. We can provide truly universal free college. We can fix some of the structural problems that are preventing our higher education system from fairly serving lower-income students and students of color. We can make big structural change and create new opportunities for all Americans.

Most Americans Want College Made Affordable For Students

A college education used to be affordable in this country, especially at public colleges and universities. That's because states kept tuition low by providing a lot of the funding to those institutions -- and the federal government provided grants and low interest loans for students needing it.

That is no longer true. In many states, the Republicans removed the caps on tuition and cut the funding for colleges and universities. This forced colleges to raise tuition to cover those cuts, and that tuition has kept rising. They also freed banks to charge high interest rates for college loans, and made sure the grants (like Pell Grants) did not keep up with the rising costs.

This has had a very negative result on the affordability of a college education. It has gotten so bad that only two groups can easily afford college -- the children of upper middle class parents, and the children of rich parents. All others now have a very difficult (if not impossible) time trying to afford to go to college -- and many students now finish college with a huge amount of debt (that forces them to put off staring a family, buying a home, etc.).

This is not only bad for those students, but it is also bad for our economy -- because they are able to buy things to boost the economy or pay higher taxes thanks to their education, because they must spend a lot of their income trying to pay back the exorbitant loans.

Other countries are smarter than our government when it comes to helping students get a college education. They provide free tuition to students. They know that is cost-effective, because when those students graduate they will make higher wages and pay higher taxes -- and the government will get back more in higher taxes than it spent to help educate those students. The American government is not smart enough to see that. They want to make going to college a business where profits are made -- and that makes college unaffordable to many students (and puts others in deep debt).

Both of the leading Democratic presidential candidates understand this -- and both Hillary Clinton and Bernie Sanders have plans to help reduce the cost of a college education. And it looks like the American people might also be finally understanding that college is costing too much, and that hurts the country. Note the charts above.

Those charts were made from a recent YouGov Poll -- done on August 11th and 12th of a random national sample of 1,000 adults, and has a 4.1 point margin of error. It shows that most people don't think students (or their families) should have to borrow to pay college tuition. They also don't think either the state or the federal government does enough to help make college affordable. And perhaps most important, they think tuition at public colleges and universities should be free.

The Democrats are on the right side of this issue.

Work Compensation Is Not Determined By Societal Worth

The following post was written by Robert Reich for his own blog. I thought it was worth reading, and very thought-provoking.

What someone is paid has little or no relationship to what their work is worth to society. 

Does anyone seriously believe hedge-fund mogul Steven A. Cohen is worth the $2.3 billion he raked in last year, despite being slapped with a $1.8 billion fine after his firm pleaded guilty to insider trading?

On the other hand, what’s the worth to society of social workers who put in long and difficult hours dealing with patients suffering from mental illness or substance abuse? Probably higher than their average pay of $18.14 an hour, which translates into less than $38,000 a year.

How much does society gain from personal-care aides who assist the elderly, convalescents, and persons with disabilities? Likely more than their average pay of $9.67 an hour, or just over $20,000 a year.

What’s the social worth of hospital orderlies who feed, bathe, dress, and move patients, and empty their ben pans? Surely higher than their median wage of $11.63 an hour, or $24,190 a year.

Or of child care workers, who get $10.33 an hour, $21.490 a year? And preschool teachers, who earn $13.26 an hour, $27,570 a year?

Yet what would the rest of us do without these dedicated people?

Or consider kindergarten teachers, who make an average of $53,590 a year.

Before you conclude that’s generous, consider that a good kindergarten teacher is worth his or her weight in gold, almost.

One study found that children with outstanding kindergarten teachers are more likely to go to college and less likely to become single parents than a random set of children similar to them in every way other than being assigned a superb teacher.

And what of writers, actors, painters, and poets? Only a tiny fraction ever become rich and famous. Most barely make enough to live on (many don’t, and are forced to take paying jobs to pursue their art). But society is surely all the richer for their efforts.

At the other extreme are hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants, high-frequency traders, and top Washington lobbyists.

They’re getting paid vast sums for their labors. Yet it seems doubtful that society is really that much better off because of what they do.

I don’t mean to sound unduly harsh, but I’ve never heard of a hedge-fund manager whose jobs entails attending to basic human needs (unless you consider having more money as basic human need) or enriching our culture (except through the myriad novels, exposes, and movies made about greedy hedge-fund managers and investment bankers).

They don’t even build the economy. 

Most financiers, corporate lawyers, lobbyists, and management consultants are competing with other financiers, lawyers, lobbyists, and management consultants in zero-sum games that take money out of one set of pockets and put it into another.

They’re paid gigantic amounts because winning these games can generate far bigger sums, while losing them can be extremely costly.

It’s said that by moving money to where it can make more money, these games make the economy more efficient.

In fact, the games amount to a mammoth waste of societal resources.

They demand ever more cunning innovations but they create no social value. High-frequency traders who win by a thousandth of a second can reap a fortune, but society as a whole is no better off.

Meanwhile, the games consume the energies of loads of talented people who might otherwise be making real contributions to society – if not by tending to human needs or enriching our culture then by curing diseases or devising new technological breakthroughs, or helping solve some of our most intractable social problems.  

Graduates of Ivy League universities are more likely to enter finance and consulting than any other career. 

For example, in 2010 (the most recent date for which we have data) close to 36 percent of Princeton graduates went into finance (down from the pre-financial crisis high of 46 percent in 2006). Add in management consulting, and it was close to 60 percent.

The hefty endowments of such elite institutions are swollen with tax-subsidized donations from wealthy alumni, many of whom are seeking to guarantee their own kids’ admissions so they too can become enormously rich financiers and management consultants.

But I can think of a better way for taxpayers to subsidize occupations with more social merit: Forgive the student debts of graduates who choose social work, child care, elder care, nursing, and teaching.  

NOTE -- This suggestion of excusing college debt for jobs with high societal worth is not as outlandish as some might think. In fact, it is something that has worked well for this country in the past. Back in the 60's, a college student could get a National Defense Loan -- and if they worked a certain number of years in a job considered valuable by the government (military, teacher, police, etc.), that loan would be forgiven.

Growth Of And Need For College Student Loans (20 Years)

The Pew Research Center has compiled information on student borrowing for college over the last twenty year. They got their information from the National Center for Education Statistics. As college has become more expensive, more students are graduating with student loan debt -- and that includes large segments of both genders and all income groups. The charts below show this growth.

It's Time To Offer A Free College Education To Qualified Students In The United States

Regular readers of this blog will know that I am in favor of the government providing free college tuition to students who qualify for college admission. Other countries do it because they know it benefits them -- providing a more educated workforce, giving people a way to better themselves, and providing more revenues for government (through the higher taxes educated people pay on their higher incomes). In other words, it is good for everyone -- students, society, and government.

Germany has just realized this, and recently passed a law providing free tuition for college students. But here in the United States, we do just the opposite. College costs go up every year, making college unaffordable for many poor and working class students (and even some from the lower middle class), and students who try to overcome this by borrowing to pay for their education find themselves deeply in debt upon graduation -- forcing them to spend years paying off that debt, instead of actually bettering themselves (getting married, buying homes, investing, establishing retirement accounts, etc.). Currently, Americans owe more than $1.2 trillion in student loan debt.

It is time the United States realized that providing free tuition for college students would be cost-effective for government (since we would easily recoup the cost their the higher taxes graduates would pay), and would help to reduce the growing economic inequality in this country (by providing an easy way for students to climb the economic ladder).

The Republicans tell us we can't afford to provide free tuition for college students. That is just not true. We would get far more back in increased tax revenues than we would spend providing the free tuition. And if money was needed to start the program, that could be provided by using part of a "Robin Hood" tax (a small tax on Wall Street stock market trades). We can afford it, and it would put this country back on a competitive footing with countries that already do it.

And one of Texas' leading progressives agrees with me. Here's what Jim Hightower has to say about this issue on his excellent blog:

Question: Is making higher education available to every American more important to our national interest than letting Wall Street profiteers make a few more billions-of-dollars each year?

Answer: Of course. Yet, our political leaders – pushed by Wall Street lobbyists – have been making the opposite choice for years. As a result, banksters have loaded students down with a mountain of high-interest loans, rising from just over $2 billion a decade ago to nearly a trillion last year. Worse, the financiers – either banks or government lenders – have become the gatekeepers of advanced education, shutting out thousands of young people wanting to get ahead, but not able to hurdle the formidable financial barrier.

This is enormously costly to America – and completely unnecessary. The smart choice – as we learned from the GI Bill after World War II – would be to make college and professional training free. Universal access to higher education – ie, free access – produces a very high return on the public's investment, while also producing widely-shared prosperity and a broadly educated citizenry.

Of course, an up-front investment in a smarter, more productive, more democratic civilization is pricey. So where do we get the money to do what America needs? Get it from where it went. Wall Street's superrich speculators are now making millions of super-fast, robotic financial transactions per second, generating trillions of dollars a year for them – but producing nothing of real value for us, while distorting and endangering markets.

Put a tiny tax on each of those automated gambles by speculators, and more than enough money will come into the public coffers to free-up higher-ed for all. For information, check out United States Students Association: www.usstudents.org.

Is Race A Factor In GOP Blocking Student Loan Relief ?

I would like to think that race is not a factor in loan debt relief for college students, but the GOP has made it clear that much of their party's policies, especially since the election of President Obama, is decided by the large racist element in their party (commonly called the "tea party"). These teabaggers like the idea that their party is primarily made up of Whites, and they have made sure their elected representatives don't vote for racial or ethnic parity.

It only makes sense then that these same racial views might be affecting the GOP's opposition to letting college students refinance their loans at a lower rate -- especially when you look at the charts above. Those charts show that, while a growing percentage of both Whites and Blacks are finding college unaffordable with loans, both historically and currently Blacks need those loans more than Whites (and usually need bigger loans than Whites).

Traditionally, education has been a great equalizer in the United States. Both poor people and minorities have been able to use education to climb the economic ladder to better themselves and their children. But that only works when those people can afford to get that education -- and get it without incurring an enormous debt. Unfortunately, that is no longer true for too many Americans -- and it affects Blacks more than it does Whites (and the poor and working class more than the rich or upper middle class).

We could partially solve this problem by lowering the interest rates on education loans, and letting those with those loans refinance them at the lower rate. But the Republicans have blocked that. They have done it to protect the exorbitant profits of Wall Street banks -- but after looking at these numbers, I have to wonder if there is not also a racial element to their action. Is this just one more way to preserve power for rich Whites?

The charts above were made from a recent Gallup Poll. That survey was done between February 4th and March 7th of a random sample of 29,560 adults with a Bachelor's degree or more. The survey has a 1 point margin of error because of the large sample.

Warren Blasts GOP For Blocking Student Loan Bill

We have known for a while now that the congressional GOP is in favor of passing only two kinds of bills -- bills that cuts taxes for the rich and corporations, and bills that funnel more money into the corporate pockets of the military-industrial complex. But something the GOP doesn't want to do is pass a bill that helps ordinary Americans, especially if that bill might take a bit of cash out of corporate hands (like the Wall Street banks).

The Republicans showed this once again last week, when they blocked a bill in the Senate that would have allowed college students to refinance their college loans at a smaller interest rate. This would have reduced the amount they had to pay back and reduced the time it would take them to pay off those loans -- allowing them to get on with their lives and begin to build up their own wealth much sooner (which would benefit the nation as a whole).

But it would also have cut some money from the exorbitant interest rates charged by the giant Wall Street banks -- and the Republicans couldn't have that. They have filibustered the bill, and last week upheld that filibuster to keep the bill from getting a vote on the Senate floor. In other words, they chose to protect the abnormally large bank profits over helping millions of students.

That has angered the bill's sponsor, Senator Elizabeth Warren (whose caricature above is by DonkeyHotey) -- and she is blasting the excuses those Republicans are giving the voters on why they blocked that bill. Sen. Warren says:

The excuses have started. Once again, the Republicans blocked a vote on our student loans bill – and now that they are about to head home to face voters, they are pouring out the excuses.

Excuse #1:  Some Republicans say that the benefit of letting people refinance their student loans is too small. Too small? Tell that to young people with 8%, 10%, even 12% interest rates (and higher on some of the private loans). They could save hundreds – or even thousands – of dollars on their excessive student loan payments each year.

But if the Republicans really think the benefit of the bill is too small, I'll call their bluff. I'm all for finding ways to give our students an even bigger break.

Excuse #2:  Some Republicans say that the $1.2 trillion in outstanding student loan debt just isn't a big deal – that we should be focused on the rising costs of college instead. Yes, the rising cost of college is a terrible problem – and we need to stop it – but that doesn't mean we shouldn't do anything for the millions of people who already went to school and are being crushed by debt.

But if the Republicans really want to do more, I'll call their bluff. Let's work together to do even more to help our students. I'm ready.

Excuse #3:  Some Republicans don't like that the bill is paid for by closing the tax loopholes for millionaires and billionaires and making them pay their fair share.

But if the Republicans' only problem with the bill is how it's paid for, I'll call their bluff. If they have ideas on other ways to pay for it, we're eager to listen.

Excuse #4:  Some Republicans – including Mitch McConnell – went so far as to say that Democrats don't really want this bill to pass. Really? That's just plain ridiculous. Only in Washington can you vote against something, and then when it doesn't pass, blame the people who voted for it.

Excuses. Excuses. But they don't fool anyone. They don't fool each of you who signed our petitions, made phone calls, posted on Facebook and tweeted asking for a vote.

This isn't complicated. It's a choice – a choice that raises a fundamental question about who the United States Senate works for. Does it work for those who can hire armies of lawyers and lobbyists to protect tax loopholes for billionaires and profits for the big banks? Or does it work for those who work hard, play by the rules, and are trying to build a future for themselves and their families?

This fight isn't over. Millions of Americans are getting crushed in student loan debt, while the rich and powerful hang on tight to their tax loopholes. When the choice is between billionaires and students, I know which side I'm on, and I'm going to keep hitting back.

Warren Responds To GOP Filibuster Of Student Loan Bill

Last year the Congress passed a law reducing the interest rate for student college loans to about 3.8%. While I think that's still too high, it's a lot better than the old interest rates for those loans (some of which topped 7%). There was a problem with the new law though -- it only applied to new loans. That left millions of students and former students still struggling to pay back loans with much higher rates.

Senator Elizabeth Warren (D-Massachusetts) introduced a bill in the Senate to fix this problem. Here bill would allow those loan recipients to re-finance their loans at the new lower interest rate (making it easier for them to pay back those loans). This is important because the high interest loans are hurting those who have them, and the country (because it is hindering these students from starting families, establishing savings & investment accounts, buying homes, etc.).

But while Warren's bill would be good for the country and the economy, the Republicans are filibustering it (and refusing to allow it to even get to the Senate floor for a vote). Democrats tried to get the bill to the floor for a vote yesterday, but fell short of the 60 votes needed to kill the filibuster. They only got 56 votes (with Sen. McCaskill not present for the vote, and Sen. Reid voting no so he could bring it back up again -- a parliamentary maneuver).

Senator Warren was disappointed with the result of the vote, but is pledging to continue to fight to get the bill passed. Here is what she told her supporters in an e-mail following the vote:

We lost the vote.  

This morning, the Senate held its first vote on the Bank on Students Act to let people refinance their student loans. We got a majority -- 58 senators were ready to go our way -- but the Republicans filibustered the bill and we didn't even get to debate it.

I guess this is when some people would give up. Not us. Not a chance.

Here's how I see it:

When we first started talking about student loans last summer, we stood strong for a better deal on new student loans. Today, we got every Democrat, every Independent, and even three Republicans to support a bill that would permit refinancing for 40 million people who are shouldering $1.2 trillion in student loan debt.  

Considering the speed that the Senate normally works, that's a lot of movement in a short time.

And it's not only what we did, it's how we did it. We put the plan to pay for it right on the table. No gimmicks or smoke-and-mirrors. We said that when the government reduces its profits on student loans, the money should be made up by stitching up tax loopholes so that millionaires and billionaires pay at least as much in taxes as middle class families.  

We made the choice clear: billionaires or students. People who have already made it big or people who are still trying to get a fair shot.

We made the choice clear -- and then we fought for it. We stood up and spoke out -- individually and through our terrific organizations. We gathered more than 750,000 signatures on petitions. We made our voices heard -- and that's how we got well over 50 votes.

At this point, most Republicans want us to quiet down and fade away. They don't want us to point out that this morning, most Republicans said it was more important to protect the tax loopholes for billionaires than to cut the rates on student loans.

I think it is time to come back louder than ever. I think it is time to show up at campaign events and town halls and ask every single Republican who voted against this bill why protecting billionaires is more important than giving our kids a chance to pay off their loans. I think we need to ask, and ask again, and ask again.

So there it is: Show up at an event and ask a question. Encourage your friends to show up and ask questions. Send an email. Make a call. And keep circulating the petitions. This isn't over.

In Washington, I hear people say that "Elections have consequences." I'd like to shift that just a little bit and say "Senate votes have consequences, too."  

When Republicans vote to force students to keep paying high interest rates on students loans in order to plug the budget holes from tax breaks for billionaires, then it's time to hold those Republicans accountable.  

I don't plan to let this issue die. I plan to fight back. And I hope people all across this country will do exactly the same.  

Thank you for being a part of this,

Elizabeth

37% Of Young Households Now Have Student Debt

Young people who get a college education are normally an asset to their families and their country. That education helps to increase the family's income and standard of living -- and it helps the country by providing an educated workforce (and a workforce that pays more in taxes than they would without an education). It benefits a country to help young people get that education for those reasons, but unfortunately we are not doing it right in this country.

Note in the top chart that the percentage of young households (headed by someone under 40 years old) with a debt incurred from going to college has ballooned since 2001. In just the last 13 years, the percentage with student debt has grown from 22% to 37% (from slightly more than 2 out of 10 households to nearly four out of 10 households). And this debt (the amount of which has also grown) is not only holding these families back from accomplishing their financial goals, it is also delaying the increase in taxes they should be paying (because too much of their income must go to pay back the huge loans they had to take out to finish college).

There are two main reasons for this growing percentage of young people with student debt -- rising tuition & other college costs, and a stagnant national median wage. While college costs are rapidly growing (along with other living costs), wages are not growing. That is causing the middle class to shrink, and many parents who could have paid for their kid's college can no longer do so. Those middle class kids now join working class kids in having to borrow money (many times a lot of money) to get their college degree. Then they must spend many years trying to pay back that crushing debt.

Once again making employers share some of the rising productivity with their workers would help this situation for the future, but for now we need to lower (or eliminate) the interest rate of those college loans already burdening young households. That might not sound like good economics, but it actually is -- since the quicker those loans are paid back, the sooner those young people will be able to establish themselves and start earning more (and paying more in taxes). The truth is that helping these young people to reduce their debt (and others to graduate with less debt) would be cost-effective.

Trying to make interest money off of student loans is a silly and short-sighted economic policy. We should be offering free tuition to those who qualify for college -- not discouraging them from going to college because of high college costs and high interest rates on student loans. Education should be treated as a public good -- not a profit-making business (which it will never truly be).

Here are some other interesting charts (all charts are from information provided by the Pew Research Center) showing the problems created by the huge student debt problem.

Student Debt Continues To Grow

Back in 1993, only 47% of college students graduated with a debt incurred from paying for their education, and that average debt was only about $9,400. Since then, both the percentage of students graduating with debt and the amount of that debt have grown substantially -- to about 68% and an average debt of $27,850.

There are two main reasons for this. College costs have gone up astronomically, in both private and state-supported colleges. And worker wages have been stagnant (actually dropping in purchasing power due to inflation). The median income is dropping due to the growing number of low wage jobs be created (to replace the higher wage jobs lost due to the recession and outsourcing to other countries). Because of this, parents are less able to pay for, or help pay for, their children's ever-rising college costs -- forcing students to borrow if they want an education.

This is leaving many graduates with a heavy debt as they start their working lives. In a healthy economy with lots of good-paying jobs this might not be so bad, but we do not have a healthy economy. We have a floundering economy with millions of people out of work. This leaves many of those students with a huge debt and a low-paying job (if they can find a job at all) -- forcing them to delay things like starting a family or buying a house (and that delay hurts the economy in general).

This is an insane policy. In this modern world, a country needs a well-educated workforce to keep pace. Other countries know this, and give students who have earned it a free education (or an education mostly paid for by government). This has a couple of advantages for these countries -- giving them a more educated workforce, and a workforce that makes more money (which means they pay more taxes -- making up for the education help they received). It's a cost-effective arrangement that benefits both the country and the student.

We do things differently in the United States. We give students very little free financial help, forcing them to take out loans from the government -- loans which must be paid back with interest. In fact, the federal government is set to make about $185 billion in interest off those loans in the next 10 years.

This makes no sense at all. The government should be providing free (or nearly free) educations for those who qualify. But if they won't do that, the very least they should do is make those student loans interest-free. We should be helping more students to get a college education -- not putting up barriers to prevent them from doing so (or punish them when they have to borrow).

And like it or not, this is also a class problem. Poor students, if they are to get an education, must borrow much more than the averages shown above -- which puts them in deeper debt upon graduation, which acts as another barrier to their efforts to better themselves and climb the economic ladder.

Our education policy is screwed up in this country. It is time to rethink it.