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Anchored by Jake Tapper, The Lead airs at 4 p.m. ET on CNN.

Anchored by Jake Tapper, The Lead airs at 4 p.m. ET on CNN.

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May 9th, 2013
07:08 PM ET

Sen. Warren proposes deep discounts for federal student loans

On average, student loan borrowers end up carrying debt loads of $27,000. The interest rate on federal student loans is set to double this summer if Congress does not do anything about it. Sen. Elizabeth Warren, D-Massachusetts, has introduced her first piece of legislation - a bill that would give a steep, temporary discount, taking the interest rate from 3.4% to less than 1%.

The U.S. government has been lending money at a rate of about 0.75% to financial institutions for years, said Warren.

"We have students out there borrowing money to get an education, working hard. My view is if the American taxpayer is going to invest in those big, financial institutions by giving them a great deal on their interest rate, let's invest in those students by giving them the same deal," said Warren.

But critics say comparing the student loan rate to the federal reserve discount rate is not quite apples and apples. The federal rate involves virtually no risk because it is short-term.

"There is no risk in lending to the big financial institutions because they've got too-big-to-fail backing them up," said Warren. "That doesn't seem like the right approach to me."

Student loans produce plenty of revenue, said Warren. For every dollar that the government is putting into a federally guaranteed student loan, it gets $0.36 back over the life of that loan from the students, said Warren.

For the senator, this legislation is about making things fair.

"Let's make at least a level playing field on those investments, same deal that we give the big banks, available to our students who are trying to get an education," said Warren.

The Massachusetts Democrat also weighed in on the first Congressional hearing on the Boston Marathon terror attack; the hearing took place Thursday.

"This is what we have to do whenever there is a tragedy. We have to go back and look and see if there was something we could have done better in this particular case to share information better," said Warren.

"I'm just sorry that we didn't figure this one out earlier," said Warren. "There is going to be an investigation, and we'll see what can be changed to try to get the information into the hands of local authorities."

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