At an October 25, 2011 hearing of the Higher Education and Lifelong Learning Subcommittee, Chairman John Kline (R-MN-02) and other members agreed that a 6.8% interest rate is too high for student loans.
Consider that Treasury bonds are being sold at a 2 percent yield and a 30-year fixed home mortgage is under 4 percent right now, variabilities at much lower.
Thus, it is not a surprise that Republicans would agree that doubling the current 3.4% rate to 6.8 percent for this one segment of the population would be a bad policy position. Anyone who has dealt with the private student loan market knows that the rates today are roughly about 9 to 10 percent.
Last week, Chairman Kline said “We must now choose between allowing interest rates to rise or piling billions of dollars on the back of taxpayers.”
See, that’s the problem … Chairman Kline and ALL Republicans in the House approved the Ryan Budget which locks in the 6.8 percent interest rate.
The Republicans counted on increasing revenues by increasing the interest rate on Stafford student loans.
Speaker Boehner has now proposed to offset the lost revenues from another source … according to George Miller (D-CA) who is the ranking minority member of Chairman Kline’s Education and Workforce Committee :
“I commend House Republicans for reversing themselves on the pending student loan interest rate hike. But I am deeply disappointed that Republicans propose extracting the price from women and children. To take health care away from middle class and low-income families in order to keep interest rates from rising for middle class and low-income college students is simply wrong. It’s robbing Peter to pay Peter. The Republican bill strips away vital funding for breast and cervical cancer screenings for women. It strips funding for increasing child immunization and for screening newborns for things like hearing loss. In other words, the Republican bill will directly hurt women and children.”
Not only does the Ryan Budget lock in the higher cost of the Stafford student loan program, it cuts the Pell Grant program.
Stafford loans are for low income students … the people who need it. Today’s Stafford student loan program has affordable rates–3.4 percent. There is a forbearance period, after a student graduates, of 6 months before payments commence, and no interest accumulates during the time that the student is actually in college. In fact, there is an income-based repayment formula so that no more than 10 percent of your income can be devoted to the repayment of Stafford student loans.
At one time, Education was a bipartisan issue … heck, Abraham Lincoln had the vision to create a national commitment to higher education. As such, the concept that every State should have a land grant college — The Morrill Act, was actually passed in 1862 in the middle of the Civil War.
Today, there seems to be a new Civil War between Republicans who believe that the Education does not have a role at the Federal level Republicans Sandy Adams (R-FL-24), Todd Akin (R-MO-02), Steve Austria (R-OH-07), Roscoe Bartlett (R-MD-06), John Duncan (R-TN-02), Bob Gibbs (R-OH-18), Don Manzullo (R-IL-16), Mike Pompeo (R-KS-04), Bill Posey (R-FL-15), Reid Ribble (R-WI-08), Martha Roby (R-AL-02), David Schweikert (R-AZ-05) Steve Southerland (R-FL-02), Scott Tipton (R-CO-03), Steve Womack (R-AR-3), etc. – all indicated that they wanted to reduce the role of the Federal Government in Education … Mitt Romney told a group of supporters earlier this month that he plans for changing government … singling out the Department of Education and HUD : “I’m going to take a lot of departments in Washington, and agencies, and combine them.”
The reason that Education would stay at the Federal level … to keep an eye on teachers unions … no recognition that one of the most effective ways to stimulate our economy to create jobs is by investing in our people by ensuring that all students get an equal opportunity for a quality education.
That’s the future we face … Romney, Boehner, Kline, et al … cuts to healthcare and education … and tax cuts for the well-off.
This November, people will make a choice for President, yet if Chairman Kline is still in power, we can expect more inaction … October 25,2011 he acknowledges the problem … April 25, 2012 the solution is offered that is based on “robbing Peter to pay Peter.”