Could SB2292 be Senator Warren's First Sell Out to the Student Loan Lobby or is some Movement Better Than None??
"Senator Elizabeth Warren, along with two dozen other Senators, introduced the Bank on Students Emergency Loan Refinancing
Act. This bill would allow borrowers to refinance their federal and private student loans at a lower interest rate. This
will save borrowers thousands of dollars over the life of their loan. "This is truly an emergency," said Senator Warren. "The idea here is that we are going to lower the interest
rate on outstanding student loans...get people back on their feet, so they can pay their loans off sooner, so they can reduce
their monthly payments and help families move forward, help this economy move forward."There could be a vote as early as next week, so sign and share TODAY and tell the Senate to vote YES on S2292!
"As I predicted the refinancing bill that Senator
Warren introduced recently is taking up all of the media's attention,
much to our detriment.
I posted a synopsis of the bill when it first came out- good and bad, but here is the gist:
The Good. The bill promises to lower borrower's
interest rates to the current rates (about 4.5% undergrad, 6.4%
graduate). This is pretty good. Not great, but significant if you are
carrying a large principal.
For private loan borrowers, this could be a very significant decrease in interest rate.
The Bad: To begin with, defaulted borrowers
(who are typically the most financial distressed borrowers) CANNOT
participate. Also, there is a .5% fee slapped on to the balance of your
existing loan before repayment begins.
For private loans, the loans will lose statutes
of limitations when they become federalized. Also, any negotiation
power borrowers might have had for their private loans (since there is
no government guaranty behind the loans) will be lost. Federal Loans
have (despite popular myths) FEWER consumer protections than private
loans. Federal loans are also more immune to fair debt collection
practices, have weakened truth in lending requirements.
More Bad: The Department of Education, which
hates this plan is to be given the authority to decide who they let in,
and who they don't. If recent history is any guide (with the various
repayment programs), they will only let a tiny trickle of borrowers
STILL MORE BAD:
From a citizen's perspective, the bill does
nothing to lower the price of college, nothing to decrease the amount of
debt having to be borrowed, and does nothing to address the perverted
fiscal incentives that have turned this lending system structurally
For Private loans, the refinancing piece looks
SUSPICIOUSLY like a BAILOUT FOR THE BANKS!!! Sorry to have to say this
about an Elizabeth Warren Bill, but the language speaks for itself: It
calls for paying principal, interest, fees, and leaves open the
possibility for paying even MORE THAN THIS to the lenders...Remember,
the lenders would LOVE to dump their crap loans on the taxpayer for
full-book value...these are loans that they probably wouldn't be able to
get 50 cents on the dollar for otherwise...this really rewards the
predatory behaviors they have been engaging in since bankruptcy was
removed from the debt in 2005, and as a taxpayer this is very
aggravating. As someone who has seen the bad faithed, cruel,
dishonest, and unAmerican behavior this industry has engaged in to this
point, I would say it's an absolute outrage.
THE WORST THING:
The worst thing about this bill is that it is a
major distraction from the urgent need to return bankruptcy protections
to ALL student loans. We have seen this happen year after year, and
this looks exactly like just one more distracting, time-wasting exercise
I cannot in good faith spend more time than what
I have already spent contributing to this debate, and so I urge all of
you to not be distracted or caught up in the hype. Keep your focus on
what is most important... returning bankruptcy protections and other
standard consumer protections to the debt!
The question, is why aren't we doing more for the students we motivate to go to college and then crush the economy and their ability to start new careers and families with TPP treaties and other questionable trade, labor & economic policies. Is S2292 smoke and mirrors if all it does is help the people NOT in a financial crises (e.g. the ones making enough to pay their student loans?)