Warren Balks at Student Loan Deal That Would Give ‘Outrageous Profits’ to Government

Sen. Elizabeth Warren, D-Mass., is criticizing a Senate compromise on federal student loans that would temporarily keep interest rates at 3.4 percent before jacking them up to as much as 10.5 percent within a few years. Warren, who has introduced legislation that would give students the same interest rates as the bailed out banks get, argues the deal not only doesn’t do enough to protect students from incurring massive debt, but that the government will reap “outrageous profits” from it.

“I don’t think it’s a compromise to say we’re going to keep making more and more profits off our students,” Warren said Monday. “We got more than $1 trillion in student loan debt that’s outstanding. We need to bring that cost down for our students.”

Warren has emerged as one of the foremost critics of the Senate’s new proposal, calling it a “teaser rate loan program” and comparing it to low interest rates that credit card companies use to entice new customers. By Tuesday morning, the senator had sent an email out to her supporters, urging them to back an amendment put forth by Sen. Jack Reed, D-R.I., that she’s co-sponsoring. The amendment would prevent student loan rates from going above 6.8 percent.

“If Republicans insist that we continue to make the same $184 billion in profit off of the student loan program, that just means that students in future years will have to pay higher rates to make up the difference,” Warren wrote in the email. “I don’t believe in pitting our kids against each other. In fact, I think this whole system stinks.”

She continued: “We should not go along with any plan that demands that our students continue to produce huge profits for our government. Making billions and billions in profits off the backs of students is obscene.”

A vote on the Senate’s plan is expected sometime this week.

— Posted by Tracy Bloom.