Republicans used to fear monger about the deficit saying they didn’t want to stick their grandchildren with debt, but that’s exactly what they are trying to do with their student loan proposal — force students to pay down the deficit. President Obama isn’t having any of it, and threatened to veto their proposal. Now the President is taking his campaign to the people, trying to force Congress to enact reasonable legislation.
Speaking in the Rose Garden to a group of college students Friday morning, President Obama launched his public campaign to extend the current college loan rates, which are set to double on July 1. Republicans have called Obama’s request to extend the current rates “needlessly partisan”, which is an admission that they stand against affordable rates for students.
Watch a few clips here:
Obama let students know that the clock is ticking, “If Congress doesn’t act by July 1, federal student loan rates are set to double. It’s like a $1,000 tax hike.”
He explained that while he’s glad House Republicans did something, their plan is not smart or fair, “I’m glad that they took action, but their bill does not meet that test. It fails to lock in low rates for students next year. The House bill isn’t smart, and it’s not fair. I’m glad that the House is paying attention to it, but they didn’t do it in the right way.” The President is saying that it’s not fair to force students to pay down the deficit, especially when Republicans won’t even close tax loopholes for the wealthy.
President Obama was resolute that higher education should be available to everyone, saying “Higher education can’t be a luxury for a privileged few. It’s an economic necessity that every family should be able to afford, every young person with dreams and ambitions should be able to access and now is not the time for us to turn back on young people. Now is not the time to slash the investments that help us grow. Now is the time to reaffirm our commitment to you, the generation that’s coming behind… I’m putting my faith in you, let’s work together, let’s get this done by July 1.”
Obama wants the rate to be locked in for students, while Republicans want to raise the interest rates in order to pay down the deficit, which is already lowering at a high rate under Obama. Republicans claim they are saving the student loan program by making it part of the “free market”, but what they really did was pass a variable rate scheme where the loan rate would be reset each year. Naturally, the President threatened to veto the Republicans’ plan.
House Republicans have proposed a plan to charge students a higher interest rate to pay for deficit reduction instead of closing wasteful tax loopholes. Obama doesn’t agree with the Republican plan because he thinks students should have safeguards in place to keep college affordable for middle class families. Both plans are ostensibly tied to Treasury notes, but only the President’s plan has safeguards so that the loan doesn’t go up in years to come. The Republican plan is akin to what we just saw destroy the housing market — it’s low right now, but is a variable interest plan that will come back to bite students in years to come.
The Washington Post reported that the bill would cause the interest rate on a Stafford Loan to double, “Students who max out their subsidized Stafford loans over four years would pay $8,331 in interest payments under the Republican bill, and $3,450 if rates were kept at 3.4 percent. If rates were allowed to double in July, that amount would be $7,284 over the typical 10-year window to repay the maximum $19,000.”
Republicans claim that the government can’t afford to subsidize student loans, and that’s why the loan rate should be tied to the market. However, they refuse to close tax loopholes, effectively subsidizing the rich, so this argument fails the ideological consistency test.
What is consistent, however, is that Republicans love to stick it to the middle class in order to protect the rich. When it comes to student loans, it’s a twofer. Their plan sticks it to the middle class while paying for college and effectively shuts the poor and struggling out of the college game all together, thereby minimizing competition for the wealthy who can afford college tuition. This keeps the rich at the top and hardens the class lines, which is anti-American.
In 2007, Congress passed a law to keep the interest rate for Federal Direct Stafford Loans at 3.4%, which was extended last year when it was set to expire. That law is now set to expire on July 1, 2013, which is why President Obama thinks action must be taken. The hashtag #dontdoublemyrate is one way of making your voice heard, though this Congress seems impervious to the will of the people.