Sen. Elizabeth Warren wants student loans to get Fed discount rate

[Douglas Carpenter]

WASHINGTON -- Students taking out government loans to help pay for college should pay the same rock-bottom interest rate that the Federal Reserve charges big banks, Sen. Elizabeth Warren (D-Mass.) proposed Wednesday.

With the interest rate on federal student loans set to double to 6.8% this summer, Warren said it's unfair that big banks can borrow money at 0.75% from the central bank's discount window.

Warren acknowledged that the Fed's policy, which also includes a near-0% federal funds rate, is designed to help boost the economy by providing cheap credit.

But, she said, "our students are just as important to the economic recovery as our banks."

"Let's face it: Banks get a great deal when they borrow money from the Fed," she said. "In effect, the American taxpayer is investing in those banks. "

"We should make the same kind of investment in our young people who are trying to get an education," Warren said.

[mythology]

1. I'm so glad that she's one of my senators

But she's wrong about one tiny thing in this. Students are more important than the banks in the recovery. Having a college degree makes one far more likely to be employed, earn a higher wage, and a whole host of other things that are positive indicators of improved socioeconomic status.

Banks on the other hand, decided that screwing everybody else over was fine as long as they weren't left holding the bag.