Stafford loan interest rates generate debate among politicians
EDITORIAL | Students fall victim to more gridlock within Congress
Published: Saturday, May 5, 2012
Updated: Saturday, May 5, 2012 03:05
Interest rates for student loans are set to double by July 1 of this year unless Congress acts quickly to offset the cost of the lower rates. Currently, one-third of all undergraduate college students in the United States have unsubsidized Stafford loans with interest rates of 3.4 percent. Stafford loans are federal student loans for both undergraduate and graduate students attending college at least half time, although the proposed rate increase would only apply to unsubsidized loans, which are available only to undergraduates. If the interest rates on these loans increases, as planned, to 6.8 percent, more than 7 million students across the country will face higher costs for college. Over the lifetime of the loan, the estimated average increase in cost per student if the interest rate increases is $5,000. Democrats and Republicans alike have announced their commitment to keeping interest rates low for students. However, Congressional members of the two parties are, once again, trapped in a state of political gridlock, while each side attempts to make the other look like a villain in the fight for college students’ votes.
Within the saga that is the U.S. student loan crisis, Democrats and Republicans have proposed two separate plans to offset the cost of keeping the interest rates low. Democrats state that they would fund keeping the interest rate low by using the funds generated from requiring wealthy Americans to pay Social Security and Medicare payroll taxes. However, Congressional Republicans have met this proposal with vehement criticism, arguing that Democratic politicians’ desire for popular support supersedes their concern for the financial security of students. “The only reason Democrats have proposed this particular solution to the problem is to get Republicans to oppose it, to make us cast a vote they think will make us look bad to the voters they need to win the next election,” said Senate Republican leader Mitch McConnell, Indiana.
Democrats were equally willing to villainize their counterparts’ proposal for funding student loans. The Republican bill, which passed the House on Friday, April 27 with a 215-195 narrow majority, proposes to obtain the funding for lower student loan rates by slashing funds from the Affordable Care Act’s Prevention and Public Health fund. This funding cut is sure to doom the Republicans’ proposed bill. The Democratically-controlled Senate has voiced concerns about the negative effects slashing this funding could have on women, and has accused Republicans of being more concerned with killing the Affordable Care Act than it is with aiding students.
With politicians in a state of gridlock, students are being held hostage by members of Congress. According to the Head of the Rhode Island Student Loan Authority, Charles Kelley, an increase in interest rates on student loans this large could be the straw that breaks the camel’s back for some students, who may not be able to afford to pursue higher education with such large increases in cost. Instead of pursuing their own self-interests in an issue that can easily be resolved, Congressional Democrats and Republicans must think about the wellbeing of students. A population of young people that already faces daunting postgraduate prospects does not need to add doubled student loan interest rates to its list of woes. As President Obama pointed out in his appearance in the “Slow Jam the News Segment” on Late Night with Jimmy Fallon, “Now is not the time to make school more expensive for young people.” Indeed, the average member of the college graduating class of 2010 owed an average of $25,250 and faced a startling 9.1 percent unemployment rate for recent graduates upon leaving school. The last thing students facing such a frightening economic reality need is to be caught in the middle of an election-driven stand-off between political parties.