April 30, 2012

At a Loss on Loans

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Congress is in the midst of a debate over extending a subsidy for federally subsidized Stafford student loans. Currently, students pay a 3.4 percent interest rate on their Stafford loans. Unless Congress passes a bill by July 1, the interest rate on those loans will double to 6.8 percent.

We condemn the ineptitude and pettiness exhibited by both political parties on this issue, and urge both to find an amiable solution.

Senate Democrats have proposed collecting more payroll taxes on high earners to pay for the $6 billion that maintaining the current interest rates would cost. House Democrats proposed reducing tax breaks for oil and gas drilling to cover this cost.

Republicans countered by proposing that the costs of this policy be offset by doing away with a preventative care fund created by President Barack Obama’s health care reform act.

President Obama has threatened to veto the Republican version of the bill, as signing it would mean damaging his signature domestic legislative accomplishment. The majority Republican House will not pass the Democratic version of the bill, and the filibuster-happy Republican Senate will see to it that the Democrat’s bill goes nowhere in the upper chamber.

All the while, many college-bound students anxiously wait to se­­­e if they will be levied with an interest rate double what they expected.

It is baffling that both sides of the aisle agree that the interest rate should be kept at 3.4 percent, and still nothing can get done. Instead of coming together to find a mutually agreeable means of funding the bill, both sides appear to be making every effort to make the other side look bad.

While we feel that sacrificing tax breaks for extremely profitable oil companies is a better solution than cutting from the preventative care fund, the fact remains that President Obama himself proposed a budget that included $4 billion in cuts from the same fund. While the Democrats appear to be digging in their heels against the Republican version of the bill, only a short time ago they were more than willing to sacrifice their sacred cow.

If this is how our elected politicians deal with one of the rare examples of a mutually desired public policy, we have grave concerns about Congress’ ability to address issues of even more substance.

Keeping the Stafford loan rate at 3.4 percent will certainly help keep costs low for college students. However, Congress needs to figure out a way to reduce costs for higher education. As long as tuition costs keep rising at a rate far exceeding that of inflation, low interest loans are not enough to ensure that all Americans have the chance to attend the college of their choice. Witnessing the political showmanship currently going on in our nation’s capital, we have little faith that Congress will be able to address the long term problems in higher education.

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