For Insider Louisville
Published: JULY 1, 2014
By RAE HODGE
More than 500 people turned out at the University of Louisville’s Red Barn on Sunday morning to hear Senate candidate Alison Lundergan Grimes and U.S. Sen. Elizabeth Warren, D-Mass., advocate for reforms on student loan interest rates, which have risen again this month.
Before a boisterous crowd ranging in age from Baby Boomer to Millennial, both Warren and Grimes lambasted U.S. Sen. Mitch McConnell for his role in blocking legislation aimed at lowering interest rates on federal Stafford loans.
“Mitch McConnell said if you’ve got a choice between billionaires and students, Mitch McConnell says it’s more important to protect the billionaires. And that’s what this race is all about,” Warren said. “It’s about billionaires or students. And I stand here with a woman today, who said, ‘In that choice, I’m going with the students.’”
In support of Grimes’ run against the 30-year Republican incumbent, Warren not only targeted McConnell for his votes against student-centered bills, but also took him to task on his reputation for leading filibusters in the Senate.
Warren also noted that national student loan debt totals have broken $1.1 trillion, surpassing overall U.S. credit card debt.
The student loan bubble, which has been compared to the sub-prime mortgage bubble, has had economists and financial reporters predicting a bust as Standard & Poor’s continues to issue warnings and banks like JP Morgan withdraw from the market.
Rates on federally subsidized Stafford loans for undergraduate degrees saw an 0.8 percent bump this month, bringing them up from the 3.86 percent fixed rate to 4.66 percent. Unsubsidized Stafford loan rates rose from 5.41 percent to 6.21 percent (most students opt for a combination of both to pay their tuition). Students seeking a master’s degree saw rates jump from a 6.21 percent fixed interest rate to 7.21 percent.
Meanwhile, student loans are currently netting the government about $51 billion in profit, according to a 2013 report from the Congressional Budget Office.
Warren’s plan, known as the Bank on Students Act, would have temporarily reduced interest rates on subsidized Stafford loans to 0.75 percent from the then-3.86 percent rate. People still carrying older student loan debt would have also been allowed to refinance their loans at the new, lower rate.
In Kentucky, the pressure is building: The White House has issued a report saying 588,000 Kentuckians have student loans worth more than $13.4 billion, while the Project on Student Debt says 62 percent of Kentucky graduates carry debt out of college, to the tune of about $22,000 each.
Grimes has endorsed the Warren plan, which would be paid for by the “Buffet Rule,” a tax affecting those who make more than $1 million yearly. Grimes said she would carry similar legislation to the Senate if elected.
“Instead of having a senator that turns his back on 360,000 Kentucky students and graduates–that are trying to reach out from beyond the debt they’ve incurred in getting that degree–we will instead fight for a United States Senator that supports the backs of our students,” said Grimes.”Education should be a passport out of poverty, not into poverty.”
After the event, Grimes and Warren both ducked questions from reporters. Meanwhile, McConnell’s campaign only offered six words about student loans. In a June 28 release, the campaign called the Warren legislation a “tax hike plan on student loans” but gave no further detail. The same release included a paragraph written by campaign spokeswoman Allison Moore which avoided the topic altogether, instead calling Grimes a liberal.
“If you look at the policies Alison Lundergan Grimes is promoting and the national liberals she’s associating with, she’s not even hiding her allegiances anymore,” Moore wrote. “Alison Lundergan Grimes is outright telling Kentuckians that if she’s elected her only problem with Barack Obama would be that occasionally he’s not liberal enough for her taste.”
The McConnell campaign has not acknowledged the record-breaking totals for national student loan debt or the inaccessibility of college for a growing number of Kentuckians. There have been no statements released from McConnell regarding a plan to address these issues, and he has not responded to questions from reporters.