Warren wants feds to help on student loans

Mother Jones - Since her election to the Senate in 2012, [Eliabeth] Warren has devoted a lot of energy to tackling Americans' $1.2 trillion in student loan debt. The first bill she introduced upon her arrival in the Senate in 2013 proposed allowing students to obtain loans at the same low rate the Federal Reserve gives to banks. That bill went nowhere, so the following year Warren returned with a second proposal to allow Americans to refinance their student debt at current interest rate levels. Senate Republicans blocked it.

Now Warren is turning to the Department of Education, which, she argues, already has the power to address the problem. The department, which Congress has empowered to administer student loan programs, has broad authority to collect unpaid loans. But in many cases, it also have the authority to reduce or wipe away debts.

In her letter to Duncan, Warren charges that the federal government is projected to earn $110 billion in profits from student loans over the next decade due in part to the department's "failure to implement congressional directives or utilize its discretionary authority to protect our most vulnerable borrowers." Warren's letter was signed by other progressive Democratic senators, including Richard Blumenthal of Connecticut, Tammy Baldwin of Wisconsin, Sherrod Brown of Ohio, Jeff Merkley of Oregon, and Ed Markey, also of Massachusetts.

"It is striking that the Department still intends to generate such significant revenue from federal loan programs designed to help young people get an affordable education," the lawmakers wrote.

In their letter, the senators explain that under the Higher Education Act, the Department of Education has the authority to cancel federal student loan debts if colleges lied to the borrower or undermined the quality of students' educations or finances. Many borrowers who attended a for-profit colleges, lured in by misleading job-placement rates, for example, could qualify for loan cancellations under this authority.

The department also has the power to cancel debt for students whose college shuts its doors, Warren and her colleagues note. Warren's letter highlights the case of Corinthian Colleges Inc, a for-profit college chain that was poised to go belly up last year after evidence it doctored its job placement data resulted in the Department of Education cutting off its access to federal student loan funding. The Consumer Financial Protection Bureau was also suing Corinthian over what it called the company's "illegal predatory lending scheme." The lawsuit against Corinthian is still ongoing.