Noting that the government stood to bring in nearly $200 billion over the next 10 years because of the higher rates, Ms. Warren denounced the bill.“This is obscene,” she said. “Students should not be used to generate profits for the government.”
Warren’s own preferred plan, we note, was laughed out of the debate by none other than that leading bastion of conservative thought, the Brookings Institute:
Sen. Warren’s proposal should be quickly dismissed as a cheap political gimmick. It proposes only a one-year change to the rate on one kind of federal student loan, confuses market interest rates on long-term loans (such as the 10-year Treasury rate) with the Federal Reserve’s Discount Window (used to make short-term loans to banks), and does not reflect the administrative costs and default risk that increase the costs of the federal student loan program.
None of this is about generating profits for the government. It’s about reining in a huge subsidy that has been inflating a bubble in higher education by profoundly distorting price signals. Of course, this plan still doesn’t come close to even addressing the tuition inflation problem. But it’s at least heartening that the Senate has come together to roundly reject the bizarrely myopic schemes of the bluest of its members.[Ball and chain image courtesy of Shutterstock]