Students got some relief on interest rates for their college loans as the Senate passed a bill that would cap rates down the road at 8.25% and immediately lower the rate to 3.8%
President Obama's administration "strongly supports" the deal, and he is expected to sign the bill if it reaches his desk.
On July 1, need-based student loan rates doubled from 3.4 percent to 6.8 percent.
"The interest rate for undergraduate students goes down almost 3 percent from 6.8 percent for 3.8 percent," Sen. Dick Durbin (D-Ill.) said ahead of the vote. "As interest rates go up, so will student loan rates, but we put a cap on it. ... This is a better outcome."
Several Democratic senators opposed the Senate bill, despite the fact that Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-Iowa) supported it.
"Not only does this legislation raise long-term loan rates for students, it fails to close tax loopholes, and does not ask the wealthy to pay their fair share," Sen. Tammy Baldwin (D-Wis.) said. "It does not ask our country to invest in the future, nor does it offer a comprehensive solution to college affordability. Rather, it offers a shabby permanent fix and slaps students and their families with the bill."
Warren, along with Sens. Jack Reed (D-R.I.) and Bernie Sanders (I-Vt.) argued that they could not support the bill because it "profits off the backs of students."
According to the Congressional Budget Office, the Senate bill generates $184 billion in profit over 10 years for the government -- roughly the same amount as if the 6.8 percent rate remained in place.
Supporters of the bipartisan deal argue that rates will remain below the current 6.8 percent rate for at least the first three years of implementation, while opponents argued rates for future students would be much higher.
"Interest rates are going to go up and in fact it will be harder for families to send their kids to college," Sanders said ahead of the vote. "It is a dumb idea. We've got to get out of the business of making profits off struggling families."
Actually, Senator Baldwin is right. This solution simply kicks the can down the road a bit. There is over a trillion dollars in delinquent student loans - a problem that is only going to get worse. As far as college affordability, it's hard to see how the government can affect tuition costs except at the margins. And eligibility for the loans has to be tightened, while terms should be more generous.
Students are saddling themselves with hundreds of thousands of dollars of debt while they are still in their 20's, and far from their peak earning years. Do they really have to? Nobody wants to answer that question.