Some student loan rates are set to double on July 1, from 3.4 percent to 6.8 percent, and new legislation introduced by Democratic Senator Elizabeth Warren would lower rates to 0.75 percent.
"Every single day, this country invests in big banks by lending them money at near-zero rates," Warren said. "We should make the same kind of investment lending money to students, who are trying to get an education."
Warren ran for Senate in Massachusetts as a consumer protection advocate promising to fight against an economic system she described as "rigged" in favor of big business. The Fed justifies loaning money to major banks nearly for free so they can maintain liquidity during emergencies.
Research by the Federal Reserve Bank of New York found that the student loan balance of Americans under age 30 has nearly doubled in less than a decade, from $13,340 in 2005 to $21,402 in 2012. As students' debt increases, the likelihood that they will take out car loans or house mortgages decreases, slowing the economy further.
Warren noted the GI Bill and National Defense Education Act loans, which funded her education. "It wasn't just soldiers that got the education, it was the whole economy that benefitted from that investment," Warren said. "Why not give students a break?"