Student Loans

May 7, 2012 the Chicago Tribune said - One way or another Congress seems certain to prevent a low interest rate for federal student loans from doubling (to 6.8%) on July 1, aides and analysts say, largely because lawmakers do not want to rile young voters before the November 6 elections. Yet it remains unclear how - or even if - Congress will pay for a one-year-renewal of the 3.4 percent rate for about 7.4 million students which would cost about $6 billion. A senior Democratic aide predicted that bipartisan talks would begin on May 8. A top Republican aide agreed, adding, "We have time. I fully expect us to reach a deal." US Education Secretary Arne Duncan on MSNBC's "Morning Joe Show," said on May 7, "We have to make sure that the chance to go to college remains a critical American dream. What we need to do is work in a bipartisan way, the general public is tired of the disfunctionality of Congress. If there's anything that Congress can unite and do in a bipartisan way it has to be around education." Greg Valliere of the Potomac Research Group, a private firm that tracks Congress for investors, said, "Congress will get a deal because the political consequences of not getting a deal would be huge with younger voters." Strong support from young voters helped propel Obama to victory when he ran for president in 2008. He is hoping to mobilize that block of voters again this year. Valliere said Congress may decide to renew the rate without paying for it, noting many in Washington have become weary of government spending cuts. "The anti-austerity mood is growing in Washington-not just in Europe. The path of least resistance is to extend the student loan program without offsets." A senior aide said any possibility of a refusal by Republicans to go along with renewing the low-rate ended two weeks ago when Obama's presumptive Republican presidential challenger, Mitt Romney, came out in favor of renewal.

Despite claims to the contrary by Republicans, Democrats argue that Republicans had little, if any interest, in extending the 3.4 percent rate until Obama hammered them on it with campaign-style speeches on college campuses in recent weeks. Obama took his effort to Twitter on Monday with a tweet saying "The Senate votes tomorrow on student loan rates-tell them to help keep college affordable" with the hash tag #DontDoubleMyRate. House Speaker John Boehner accused Obama of political grandstanding but has also said that a way must be found to renew the low-rate, given that half of all recent college graduates are unemployed or underemployed because of Obama's economic policies. Not all members of Boehner's party agree that the rate should be renewed; 30 Republicans broke ranks and voted against the House bill last month after the Club for Growth, an influential conservative advocacy group, came out against it. "The government should not be in the business of subsidizing student loans," the organization said.

The interest rate on student loans is not the only issue here. On January 31, 2012 I heard that the tuition at California’s (CA) Claremont-McKenna college was $55,000+ per year so I just checked the internet to find out what’s going on. On October 26, 2011 the LA Times reported that funding cuts to higher education in CA and elsewhere were factors in pushing average tuition and fees up 8.3% at four-year public colleges and universities nationwide per a report by the nonprofit College Board. An annual study found CA's public universities enacted the highest average tuition increase (21%) of any state and CA enrolls a tenth of the nation's public four-year college students. On March 12 the LA Times reported that Berkeley ($12,835) may be more expensive than the University of Texas at Austin ($9,794) but costs less than the University of Michigan ($13,961). They also reported the tuitions for the University of Colorado, Boulder ($10,098), University of Connecticut ($10,670), University of Oregon ($8,789) and University of North Carolina, Chapel Hill ($7,008). I also found that students all over the world are protesting tuition hikes but the only one to hit our news was the April 4 Santa Monica, CA incident where students protested a quadruple tuition hike on some classes and were pepper sprayed by police and at least 25 were injured.  

Senate Democrats are expected to reject a bill passed two weeks ago by the Republican led House of Representatives to fund it by taking money away from Obama's healthcare overhaul and per the New York Times "Senate Republicans on May 8 did block the Democratic bill...Republicans say they want to extend the legislation passed in 2007 that temporarily reduced interest rates for low and middle income undergraduates who receive subsidized Stafford loans but the Republicans would not accept the Senate Democrats’ proposal to pay for a one-year extension by changing a law that allows some wealthy taxpayers to avoid paying Social Security (SS) and Medicare taxes by classifying their pay as dividends, not cash income."

I can’t believe ordinary Americans pay SS and Medicare taxes that some of the rich do not. The brunt of the student interest rate argument is that Republicans want to take health care from those that need it so that the rich can continue not to pay their fair share into programs that the rest of us do pay in to. We need to show our anger at this reverse Robin Hood action and replace Republican members of Congress with Democrats.