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WASHINGTON -- Sen. Elizabeth Warren (D-Mass.) unveiled her first bill Wednesday, designed to set student loan interest rates at the same level the Federal Reserve offers to big banks.
With some student loan rates set to double on July 1 -- from 3.4 percent to 6.8 percent -- Warren's bill would reduce student loan interest rates to 0.75 percent, opening the Fed's discount window to students.
"Every single day, this country invests in big banks by lending them money at near-zero rates," Warren told The Huffington Post. "We should make the same kind of investment lending money to students, who are trying to get an education."
The freshman senator said she plans to mobilize students -- those most affected by student loans -- to help get the bill through the Senate. "This is about their lives and if they are active in this fight, we can make this change," Warren said.
The Fed justifies loaning money essentially for free to major banks so they can maintain liquidity during emergencies. But Warren noted that student loan debt also affects the economy. Research by the Federal Reserve Bank of New York, reported by Washington Post's Wonkblog, found that the amount of student loan debt of Americans under the age of 25 has doubled in less than a decade, from $10,649 in 2003 to $20,326 in 2012. Along with this increase in student debt comes a decrease in the likelihood someone will take out an auto loan or a home mortgage. That burden is a drag on the economy.