Did you know that the Boehner plan to raise the debt ceiling will result in … hold on to your hats …. a decrease of $22 Billion in the FY 2012 budget ?
That’s right … all this protesting by the Republican-controlled House will result in a scant $22 Billion reduction next year. The legislation passed by the House Republicans is virtually void of details except one area of spending.
Interestingly, read the GOP analysis of the legislation and pay particular attention to TITLE V—PELL GRANT AND STUDENT LOAN PROGRAM CHANGES … According to CBO analysis, the impact is $22 billion related to eliminating the ability of graduate and professional students to take out subsidized Stafford loans and by eliminating the authority to provide incentives for on-time repayment of student loans.
For those not familiar with Stafford loans, Stafford student loans are designed for graduate and professional students. Currently, graduate and professional students can take out up to $20,500 a year in federal loans, and up to $8,500 of this amount can be in subsidized loans if they’re found to have financial need. With the subsidized variety of loans, Uncle Sam pays the interest due while students are in school and during a six month “grace period” after they’ve left school and before repayment begins. With the unsubsidized variety, interest accrues while students study and during the grace period, adding to the amount they must pay back when they graduate. Under the Boehner plan, no new subsidized loans would be issued to graduate students after July 1, 2012.
Speaker Boehner has been on record wanting to “reform” the Student Loan program ever since it was reformed in 2010 … after all, Speaker Boehner has long been involved in writing legislation that effects students (albeit at the benefit of the for-profit educational industry) and as Chairman of the House Committee on Education and the Workforce, Representative John Boehner (R-OH-08) once told a roomfull of loan industry officials to “know that I have all of you in my two trusted hands.”
As the cost of tuition and student debt continues to rise, so do the contributions of the student-loan industry to members of Congress … for example, current Chairman of the Education and Workforce Committee, John Kline (R-MN-02) has received donations to his Freedom and Security PAC while enjoying being feted at banquets sponsored by lobbyists.
The irony in this effort by House Republicans to delay the raising of the debt ceiling is that the credit rating agencies (Moody’s, Standard and Poors, etc.) are now focusing on America’s National Debt … and interest rates may go up regardless of how the debt ceiling is raised.
The obvious impact is that the interest rates on Student Loan will rise … at a time when students and parents can least afford it.
Worse yet, according to a study by Minnesota’s Department of Employment and Economic Development “the state is continuing to shift towards a skill-based economy. National projections indicate that 70 percent of jobs in Minnesota will require a post-secondary degree by 2018, from the current 40 percent.”
Of course, those that want to pursue post-graduate work … may … at a higher cost … and use student loans from organizations focused on making a profit.
Boehner’s plan makes no sense … America’s future is based on a well-educated workforce … where entrepreneurs develop their ideas to the true engine of job creation that have a lasting economic impact.
Targeting Stafford and other student loans is short-sighted.