Continuing the trend of putting politics before the needs of students and their families, two bills were defeated in the Senate and the possibility that loan rates could double as of July 1st, remains very possible.
The Democratically-sponsored The Student Loan Affordability Act, introduced by Senators Jack Reed (D-RI) and Tom Harken (D-IA)-would have locked in the current rates for the next two years. Republicans introduced a similar bill The Comprehensive Student Loan Protection Act introduced by Senators Tom Coburn (R-OK) and Richard Burr (R-NC), would have linked rate rises at 2% above the 10-year Treasury bill.
The crux of the argument is whether it makes sense to come in with a temporary solution such as offered by the Democrat’s bill or to create a permanent solution like the GOP idea. Many people involved in the debate want loan rates tied to the market in some manner, but the problem is that market fluctuates and those shifts are getting more unpredictable as time passes. Certainly caps can be placed to keep the increases manageable, but letting the market be a guide has some risk.
By connecting the loan rate to the market, you could have a student enter college and take out a loan freshman year at a reasonable 2 or 3% rate. By senior year, with the help of a few market swings, the rates could have risen to 5 or 8% and suddenly, college is no longer affordable. The current student loan debt in the U.S. stands at $1 trillion, an almost unimaginable burden that will slow the economy and burden those lucky enough to graduate for decades to come.
Imagine coming out of college into a tough job market with the equivalent of a good sized mortgage to pay before you even get started. It would appear that GOP lawmakers are interested in making sure that college is kept strictly available for only those rich enough to pay out of pocket. And colleges seem perfectly OK raising tuition and fees year after year despite many institutions having large endowments.
But, getting back to the current situation, if our elected imbeciles fail to act and rates to go from the current 3.4% to 6.8% as of July first, who will it affect and what will it cost them? It will affect about 7 million students to the tune of maybe an extra $39 per month, but that will vary depending on the amount borrowed and not all loans will be affected as older ones are locked in for the life of the loan. It WILL hurt many people, but what it will really do, in the long run, is simply make college unaffordable for more people at a time when the need for a degree is getting more critical by the day.
Can we do something? Certainly. You can, and should call, write, e-mail, text, Tweet and pretty much yell at your elected officials from the President on down. You can get their contact information here. And what should you tell them? Simple. You inform them that a good education is a right that every American should have access too, not just the rich. That unless they come up with a sound solution to the problem, they’ll be the next ones out looking for a job. Hit them where they live. House members serve only two years terms and Senators, six year terms. If they don’t do what we want, let’s make sure this is their last term.
And here’s a novel idea to pitch to them. Divert 10 percent of the Pentagon’s trillion dollar budget directly to subsidizing college education as many other nations do. Instead of flushing billions of dollars away every year for bombs, guns and planes we don’t need, we can use that money to invest in the future of our nation. The payoff will be amazing.
Image courtesy of www.salon.com.