Higher Ed Seminar: Sen. Elizabeth Warren’s Plan to Make College More Affordable
EWA held its annual Higher Education Seminar recently at Boston’s Northeastern University. We invited some of the education journalists in attendance to contribute posts from the sessions. Today’s guest blogger is Libby Nelson of Politico Pro. For more content from the seminar, including stories, podcasts, video, check out EdMedia Commons.
Sen. Elizabeth Warren spoke passionately to an audience of higher education writers about student debt, saying that American colleges are in “crisis” and that the government should take more aggressive steps to help existing borrowers and drive down costs for future college students.
“The debt will kill us. It really will,” Warren said. “It kills hope. It kills opportunity.”
In a keynote speech for the Education Writers Association conference, the Massachusetts Democrat laid out a plan for an ambitious overhaul of higher education, focusing both on students who have already taken out loans and prospective students who haven’t yet enrolled.
Congress should allow borrowers to refinance their debt at new, lower rates, Warren said. Rates on student loans used to be fixed by Congress, but are now tied to the 10-year Treasury note – meaning that those borrowers who took out unsubsidized undergraduate loans or PLUS loans for graduate school years ago are paying much higher rates than they would if they took out the same loans today. And she called for student loans to be dischargeable in bankruptcy, which an increasing number of think tanks and progressive activists are recommending as student loan debt increases.
“This is something we could do right now,” Warren said.
Her other proposals would require more work for Congress. One would provide matching federal grants to states as an incentive not to cut higher education funding. An earlier program, the Leveraging Educational Assistance Partnership Grants, tried to accomplish similar goals by creating matching programs through states that colleges could use for additional need-based aid, but it ended in the 2011-12 academic year.
And, using a phrase that’s quickly becoming a cliché in discussions of the upcoming reauthorization of the Higher Education Act, she called for colleges to have “skin in the game” when their students take out federal loans. Colleges with high default rates should have to pay money back to the federal government, Warren said.
Warren, who gained prominence as a consumer advocate and Harvard Law School faculty member before winning election to the Senate in 2012, signaled that she wasn’t going to let the issue of student debt go. While she applauded President Barack Obama for trying to tackle college costs with his proposal to rate colleges and allocate financial aid based on performance, she indicated that she thought the effort was somewhat beside the point and didn’t focus enough on borrowers who are struggling now.
“If you asked me, ‘Do I care a lot about students knowing what a college really will cost?’ That’s what I will really care about,” Warren said during a question-and-answer session after her remarks. Beyond that, she said, colleges should be free to try out different approaches to affordability as they see fit.
But it was another proposal that waded into one of the most contentious — if wonky — debates about higher education. The federal government’s current accounting system shows student loans as profitable. But some argue that’s the wrong way to count because it doesn’t properly account for taxpayer risk. And because programs to forgive a growing number of student loans are relatively new, it’s hard to say whether the program will still count as “profitable” in a few years. Sen. Tom Harkin has requested a report on the issue sometime this year
During the student loan debate earlier this year, Warren proposed charging student borrowers the same rates as big banks to borrow from the federal government. The proposal didn’t become law. But Warren was one of a contingent of liberal Senate Democrats who warned that the Obama administration’s proposal for market-based interest rates wasn’t generous enough to students. She voted against the final measure, which tied interest rates to student loans on the 10-year Treasury note.
But she chose to look on the bright side of her legislative defeat and said those who doubted her ability to effect change in higher education should remember that the same critiques were made of the Consumer Financial Protection Bureau, now a 2-year-old agency, when it was first proposed: Great idea; won’t happen.
“The debate will never be the same again,” Warren said. “We talked about the federal government making a profit off the backs of our students. That is fundamentally wrong, and that was not in any of the discussions before any of the proposals.”
Besides, added Warren, a member of the Senate Committee on Health, Education, Labor and Pensions: “I’m not going away.”