At a campus event on Monday morning, U.S. Sen. Elizabeth Warren said that a looming hike to federal student loan rates would squeeze borrowers nationwide, and she urged college students to press Congress into action to avoid the rate increase.
On July 1, the interest rate on federally subsidized Stafford student loans is set to double from 3.4 percent to 6.8 percent, and Democrats and Republicans are still at odds over the right course of action. Among the pieces of legislation being discussed is Warren and U.S. Rep. John Tierney’s Bank on Student Loan Fairness Act, a bill that would allow students to take out Stafford loans for one year at an interest rate of less than 1 percent—the same rate at which they say financial institutions can borrow from the Federal Reserve.
Warren underscored the need for legislation by pointing out that there is approximately $1 trillion in outstanding student loan debt in the United States today. What’s more, she said the government hauls in $51 billion in profits off student debt.
“We need to get our student-loan problem under control,” Warren told students at the event, held in West Village F. “It’s weighing down our students, it’s weighing down their families, and it’s weighing down the economy.”
President Joseph E. Aoun introduced Warren and Tierney at Monday’s event. In his opening remarks, Aoun said Northeastern will provide $204 million in institutional grant aid for 2013-2014, the largest financial-aid investment in the university’s history. The increase represents a 9 percent rise from the previous academic year and aligns with Northeastern’s strategy to increase financial aid at double the rate of tuition and fees—a goal the university has met each of the last six years.
Aoun has long taken a leadership role in tackling critical issues in higher education on a national stage, ranging from financial aid to national security to regulation of unpaid internships at the federal level. On Monday, he said the U.S. has the best higher education system in the world, in part because of the partnership between government and the public and private sectors.
“We want to keep college affordable and accessible,” he said. “Higher education has a role to play to provide access and outcomes. We have to prepare students for the job market. This is a priority, and providing students with financial aid is the first step.”
Warren also hailed Northeastern’s experiential-learning model, including the university’s signature co-op program. More than 7,000 students participate in co-op each year at more than 2,900 employers worldwide. Students do co-op, study abroad, faculty-led study abroad, and research in 92 countries and on all continents. In addition, more than 90 percent of graduates from 2006 to 2011 were employed or enrolled in graduate school nine months after graduation.
“I love to come here because Northeastern has a vision for how to educate people, and it’s not the same vision as every other university,” Warren said. “To see it in place, to see it happening, is what excites me every time I come here.”
Warren urged students to join their peers nationwide in pressing Congress into action to avoid the looming rate increase. She said avoiding this rate hike would serve as “a foot in the door” to later address two larger higher-education issues: the rising costs of college and refinancing the nation’s collective outstanding student loan debt.
“We cannot as a country say it’s critical to get a post-high school education…and then say you’re on your own to get it,” Warren said.
For his part, Tierney, who is a member of the House Committee on Education and the Workforce, decried the notion that student loans should be a “profit-making enterprise.”
“Student loans are meant to give people access to higher education in an affordable way so they can have great opportunity and contribute to society,” Tierney said.