It’s high school graduation season and a lot of parents will be talking about Chairman John Kline (R-MN-02) this weekend … families will gather and encourage the graduate to pursue higher education … yet there will be costs … for tuition, fees, books, room and board, and other school charges … and for many parents that want to help out there is the PLUS Loans program.
PLUS loans are federal loans that graduate or professional degree students and parents of dependent undergraduate students can use to help pay education expenses. The parent is responsible for repaying the loan.
Yesterday, parents knew that the interest rate was fixed … but now, Chairman Kline (and all but 8 Republicans) approved his Smarter Solutions for Students Act (H.R. 1911) and the system will change. As the Washington Post reported Chairman Kline’s advice for parents and students :
“We don’t know what these interest rates are going to be. No one actually knows what they will be,” Kline said. “Pick your score and make your best guess.”
Guess ??? Yeah, the interest rate will now be tied to the US Treasury Rate. Under H.R. 1911, the interest rate would adjust annually based on the last auction of Treasury rates in May of each year for the upcoming academic year (July 1 through June 30).
But then there is the Kline-Kicker … a 4.5% fee.
Gosh, considering that Chairman Kline is a strong advocate for what is called an “onerous” 2.3% “job-killing” medical device tax, why does he legislate a 4.5% fee (remember that in Minnesotans learned during the Pawlenty years that there is nothing is called a “tax” when it can be labeled a “fee”.)
Is this “job-killing” … you betcha, because when businesses are clamoring about the shortage of “trained workers” and as reported in The Georgetown University Center on Education and the Workforce analysis :
By 2018, we will need 22 million new college degrees—but will fall short of that number by at least 3 million postsecondary degrees, Associate’s or better. In addition, we will need at least 4.7 million new workers with postsecondary certificates. At a time when every job is precious, this shortfall will mean lost economic opportunity for millions of American workers.
And how will parents react to the Kline-Kicker :
CBO also projects that as interest rates rise above the level in current law, some borrowers, particularly those in the GradPLUS and parent loan programs, would reduce the amount of their federal borrowing. By 2023, CBO estimates that the volume in GradPLUS and parent loan programs would decline by about 15 percent under H.R. 1911.
Great … greater demand and parents participation declining … the result, more opportunities for jobs overseas.
For some in the Second District that because of redistricting are “represented” by Chairman Kline, would appreciate the words from their former Representative, Betty McCollum :
Chairman Kline and House Republicans are bringing a bill to the House floor that creates greater uncertainty for students and their parents by instituting a variable interest rate over the lifetime of loans. Under this legislation, a college freshman starting school this fall who takes out a subsidized Stafford loan this fall would have no guarantee of what their interest rate would be at graduation! Tying Stafford and Parent PLUS loans to a market-based rate might sound good now, when market rates are low, but that could quickly change. In fact, according to projections from the Congressional Budget Office (CBO), in four short years the Republican plan would have students paying an interest rate of 7.4% on the Stafford loans they take out this fall. Students graduating from college in 2017 would be worse off under this bill than if we did nothing at all!
Too many students and college graduates across this nation are already struggling with a crushing amount of student loan debt. Congress should not pass a bill that would burden them with $3.7 billion of additional debt, as this Republican bill will do. What college students and their families really need is a comprehensive approach that makes college more affordable. The Democratic proposal freezes rates in the short term so that Congress can incorporate a long-term solution to student loan rates into the upcoming Higher Education Act’s reauthorization. Democrats are asking Republicans to work with us to reduce the cost of higher education instead of shutting my colleagues on the Education and Workforce Committee out of policy discussions and bringing partisan proposals like this one to the floor.
The 2012 election should be a wake-up call for the Second District … the Kline Agenda as has become the Voice Of Washington.