The College Fix

Never one to miss an opportunity to position herself as the compassionate messiah, millionaire advocate for the nation’s poor and pretend Native American Senator Elizabeth Warren D-MA, has now taken up the cause of student loan reform. She wants to force banks to lower interest rates. Only problem is, she’s got the facts wrong, and, oh yeah, she’s lying. College Fix contributor Ian Tuttle, of St. John’s College, writes for National Review:

Warren, for her political convenience, has studiously misrepresented the interest rates extended to banks. “The banks pay interest that is one-ninth of the amount that students will be asked to pay,” she complained. “That’s just wrong. It doesn’t reflect our values.” Warren derided the notion that “the banks get exceptionally low interest rates because the economy is still shaky and banks need access to cheap credit to continue the recovery,” adding, “our students are just as important to our recovery as our banks.”

What Warren is alluding to is the Federal Reserve Discount Window, which the Fed defines as “an instrument of monetary policy that allows eligible institutions to borrow money, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.” Warren may have been a professor in a past life, but even the most rabid deconstructionist is unlikely to associate an “institution” that has “temporary shortages of liquidity” with a typical college student.

But it is not confusion; it is misrepresentation. The Discount Window is an emergency measure used to prevent runs on banks; it is offered “short-term.” And these measures are typically very short-term: frequently, overnight.

As the Daily Beast’s Megan McArdle observes, “No one except possibly a lunatic has told Elizabeth Warren that banks are getting 0.75 percent at the discount window as a thank-you for all the hard work they’re doing helping the economy.” Banks get those low rates for three sound reasons: “The borrowers have assets and income that are easy to seize, the loans are quite short term, and the banks are required to put up collateral. . . . Students, on the other hand, are borrowing for a decade, and the only thing they’re putting up as a guarantee is their character.”

Read Ian Tuttle’s full story on Warren’s student loan lie at National Review Online.

Click here to Like The College Fix on Facebook.  /  Twitter: @CollegeFix

(Image by David Shankbone / Wikimedia Commons)