Elizabeth Warren’s ‘Bank on Students’ Emergency Loan Refinancing Act to Get Obama’s Endorsement

After some initial resistance, President Obama is expected to announce his support Monday for an overhaul of the federal student loan program proposed by Sen. Elizabeth Warren. The Massachusetts Democrat has drafted a bill that would allow students to refinance their loans at interest rates as low as 3.86 percent and save thousands of dollars in the process. Of course, there is resistance from banks that will lose money due to the lower interest rates and Republicans who are also less than thrilled that the bill proposes raising taxes on the wealthy to pay for “the loss of future federal revenue.”

The GOP, however, claims it’s against the plan because it doesn’t make college cheaper for incoming students, but for the plethora of students who have graduated already, and are carrying crushing amounts of debt on their shoulders, Warren’s bill could mean the difference between years of struggle and the opportunity to keep their heads above water.

The Huffington Post:

The Obama administration initially was hesitant to fully embrace the bill because of disagreements over how to pay for it. But with mounting pressure from advocacy groups, and with a renewed political focus on issues confronting working families, the president has softened his opposition. Obama’s endorsement would be the latest recognition to date of the ascendance of Warren-style populism within the Democratic Party.

An administration official told The Huffington Post that Obama is expected to “call for passage of the refinancing bill” when it comes up for a vote, as it is scheduled to do next week.

Student groups and other organizations focusing on younger Americans enthusiastically support Warren’s bill, under which new interest rates would range from 3.86 percent for loans taken out by borrowers when they were undergraduates to 6.41 percent for parents who took out loans for their children’s college tuition, as well as for borrowers who took out loans to pay for graduate school….The lack of Republican support means the proposal would be unlikely to garner the 60 votes needed to prevent a filibuster in the Senate or pass the GOP-controlled House of Representatives. Analysts at Compass Point Research & Trading, a financial firm, put the odds of it becoming law at less than 10 percent.

But Democrats, including the White House, still are likely to hold a vote in hopes of placing Republicans on the wrong side of an issue that is becoming increasingly important to American households. Some 40 million Americans have student loans. They collectively owe $1.3 trillion, making student debt the second-biggest form of consumer debt after home mortgages. Unpaid student debt has doubled since 2007, according to the Federal Reserve.

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—Posted by Natasha Hakimi Zapata