May 08, 2014 12:07 PM EDT
Education Department Attempting to Slow Progress of Democratic Senators' Student Loan Refinancing Bill
The group of democratic senators trying to pass a bill protecting student loan borrowers form higher interest rates are seeing opposition from members of their own party.
According to the Huffington Post, the U.S. Education Department is not in favor of the Elizabeth Warren-led bill that would allow borrowers to refinance their student loans at drastically lower interest rates. Sen. Warren (D-Mass.) and about a dozen other dems, including majority leader Harry Reid (D-Nev.) hope to pass the bill by Memorial Day.
Warren has been an outspoken critic of Education Secretary Arne Duncan and his department's opposition to her bill only adds tension to the Obama Administration's relationship to the democrats in the Senate. Warren's group wanted to pass the bill because of allegations that Sallie Mae, the ED's preferred student loan servicer, intentionally wronged borrowers.
A bi-partisan bill passed months ago has also tied federal student loan interest rates to the market value. Student loan rates are expected to rise as the economy recovers, but the bill has kept rates low in the time being.
Members of Congress have accused Duncan's department of refusing to share data that could implicate a number of borrowers who would benefit from refinancing their loans.
Warren is just the loudest voice of critics who say the ED is wrong for renewing its lucrative contract with Sallie Mae despite what the company is accused of. Sallie Mae is currently under investigation from several state attorneys general and government agencies for intentionally incurring late payment fees and making it difficult for borrowers to get into favorable repayment plans.
40 million Americans have $1.3 trillion in student loan debt and that figure will not be whittled down as long as college remains unaffordable yet necessary for a decent job. The Obama administration responded to this problem by announcing the development of a college ranking system.
Naturally, several colleges and universities across the nation opposed it, but the ED is pushing ahead. The ranking system would award better schools with better federal funding, meaning more student aid and grants that would not have to be paid back.
"What really gets me throughout this whole system is how little accountability there is, and Sallie Mae is a great example," Warren told the HP Monday. "We already have these documented examples of Sallie Mae not following the rules... and yet what happens? Sallie Mae gets very profitable contracts renewed? That just seems fundamentally wrong to me."
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