Dear Commons Community,
The New York Times editorial today is right in criticizing Congress for dealing with student financial aid on a piece-meal basis. Congress provided only enough money for five years of low-interest rates in 2007. Now that the rates are about to double, both Democrats and Republicans are failing to do the right thing again. The editorial (full text below) comments:
“Members of Congress from both parties say they want to prevent interest rates on subsidized Stafford student loans from going up in July, but they are fighting over how to pay for a solution. And by proposing quick-fix methods to pay for only a year’s worth of loan subsidies, both parties suggest they are not really serious about helping students afford college.
The Republican proposal, passed by the House last week, is unquestionably worse than the Democrats’ plan. To cover the $6 billion cost of keeping interest rates at 3.4 percent for a year, it would eliminate a farsighted fund established by the health care reform law to help states and communities prevent obesity, heart disease, diabetes, cancer and infectious diseases, among other ailments.
The Democratic bill, now before the Senate, would pay for the cost by eliminating a loophole that allows owners of some small S-corporations to avoid paying their payroll taxes. The loophole has long been an unfair use of the tax code, and the bill would apply only to those who make more than $250,000 a year.
But the money the bill would raise in a decade would pay for only one year’s subsidy of student loans, keeping rates from rising to 6.8 percent in July. In a Congress that routinely passes 30-day extensions of funding for transportation and other necessities, a year is apparently considered a long-term solution.”
I agree fully with the editorial’s conclusion: “There is no better long-term solution to the nation’s economic troubles than increased access to higher education. It cannot be achieved with short-term extensions.”
Tony
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New York Times Editorial – May 3, 2012
Short-Term Fixes
Federally subsidized student loan rates were bound to become an election-year fight, since Congress provided only enough money for five years of low-interest rates in 2007. Now that the rates are about to double, both Democrats and Republicans are failing to do the right thing again.
Members of Congress from both parties say they want to prevent interest rates on subsidized Stafford student loans from going up in July, but they are fighting over how to pay for a solution. And by proposing quick-fix methods to pay for only a year’s worth of loan subsidies, both parties suggest they are not really serious about helping students afford college.
The Republican proposal, passed by the House last week, is unquestionably worse than the Democrats’ plan. To cover the $6 billion cost of keeping interest rates at 3.4 percent for a year, it would eliminate a farsighted fund established by the health care reform law to help states and communities prevent obesity, heart disease, diabetes, cancer and infectious diseases, among other ailments.
The Republicans never see any reason to offset the cost of tax cuts for the rich, but are always happy to raid “Obamacare” to pay for something that helps needy people, correctly guessing that the president would threaten to veto a bill because he wants to avoid paying their ransom price.
The Democratic bill, now before the Senate, would pay for the cost by eliminating a loophole that allows owners of some small S-corporations to avoid paying their payroll taxes. The loophole has long been an unfair use of the tax code, and the bill would apply only to those who make more than $250,000 a year.
But the money the bill would raise in a decade would pay for only one year’s subsidy of student loans, keeping rates from rising to 6.8 percent in July. In a Congress that routinely passes 30-day extensions of funding for transportation and other necessities, a year is apparently considered a long-term solution.
Democrats should have made the subsidy permanent when they passed it in 2007, but the cost was considered too high, even as Congress was writing blank checks for two overseas wars and had earlier approved the Bush tax cuts, which cost more than $2 trillion over a decade. Instead, they let the low rates expire five years later. Now that it is an election year, the issue has become a convenient cudgel against the misplaced priorities of Republicans, but the issue is too important for that.
More than 7.4 million low- and middle-income students rely on these loans to get a higher education, and the need will only grow as college costs spiral higher. States have forced tuition up by cutting their support for public colleges, and while some may have done so because student loans are cheaper, the more pressing reason is that they, too, are losing tax revenue and federal aid.
But Washington only wants to deal with these matters on a piecemeal basis, or when it is to one side’s political advantage. Pell grants for low-income students, for example, face an $8 billion annual shortfall beginning in 2014, when their mandatory funding runs out.
Republicans continue to resist any attempt to make these programs permanent. Senator Jack Reed of Rhode Island proposed making Stafford loan subsidies permanent, but Democrats now say they will be lucky to get the one-year extension.
There is no better long-term solution to the nation’s economic troubles than increased access to higher education. It cannot be achieved with short-term extensions.
