Sen­ator Eliz­a­beth Warren, a Mass­a­chu­setts Demo­crat who also cam­paigned on low­ering stu­dent loan debt, had pushed for tying the stu­dent interest rate to what big banks pay to the Fed­eral Reserve and low­ering loan rates to 0.75 for one year. But Warren’s bill, her first piece of stand­alone leg­is­la­tion, never made it to the Senate floor.

We should not be making money off the backs of our stu­dents,” said Warren, refer­ring to the $51 bil­lion in rev­enue the fed­eral gov­ern­ment receives from the stu­dent loan pro­gram by charging more in interest than it costs to borrow the money. Warren and Tierney recently dis­cussed the issue with stu­dents at North­eastern Uni­ver­sity and encour­aged them to express their con­cerns to public offi­cials in Washington.

It’s per­plexing that we’re in this posi­tion,” said Jane Brown, Northeastern’s vice pres­i­dent for enroll­ment man­age­ment. “Here we are asking stu­dents to pay interest rates that are higher than they’re charging banks.”

Interest rates on fed­er­ally sub­si­dized Stafford loans used to vary from year to year, depending on how much it cost the fed­eral gov­ern­ment to borrow the money. But in 2006, in an effort to win the House majority, Democ­rats cam­paigned on promising to cut the interest rate from 6.8 per­cent to 3.4 per­cent. Upon win­ning con­trol of the House, Democ­rats, with Repub­lican sup­port, grad­u­ally low­ered the rate until it reached 3.4 per­cent in 2011.

Read the article at The Boston Globe →