Sen. Elizabeth Warren has a funny idea about what constitutes a nonpartisan bill.
The bill would allow borrowers to refinance outstanding student loans at rates currently available to new borrowers (3.86 percent for undergraduates, 5.46 percent for graduate students and 6.41 percent for others).
Warren framed the issue as a no-brainer for members of both major parties.
"This is a step Republicans and Democrats can easily support right now," Warren said. Later, she said the bill should "not be a partisan issue."
Democrats and Republicans worked together in 2013 to lower the rates on Stafford and other federal student loans for new borrowers, but the Bank on Students Act is far from a win-win proposal.
While Warren touted a Congressional Budget Office report finding that her bill would "pay for itself," it does this by imposing a "Fair Share Tax" on upper-income earners -- a deficit-neutral option, just not one Republicans will tolerate. The CBO found that the bill would increase direct spending by about $51 billion from 2015-2024, and the tax would bring in $72 billion over the same period.
Besides 23 senators, all Democrats, who co-sponsor the bill, it has been endorsed by "think tanks like Demos and The Center for American Progress, student groups like Generation Progress and the Young Invincibles and teachers groups like the [American Federation of Teachers] and [National Education Association]" -- progressive organizations all.
The bill also does not address critics' concerns about the true cost of refinancing the estimated $1 trillion in outstanding federal student loans and loan guarantees and more than $100 billion in outstanding private student loans not guaranteed by the federal government.
It would allow borrowers with private loans to refinance with the federal government at attractive (read, taxpayer-subsidized) rates; the borrower is bailed out of the deal they freely made while lenders are denied the deal they expected. Borrowers with federal student loans would be able to refinance so their debt is further subsidized by the taxpayer.
The bill, then, is a transfer to a group that Warren likes, to be paid for by a group that she dislikes.
Such a proposal may be well-received on the speaking circuit with Thomas Piketty. However, if Warren wants her bill to clear the Senate she will have to offer a genuine olive branch to Republicans rather than a fig leaf.