Editorial: Students need politicians' help
Clarise McCants of Philadelphia speaks against higher interest rates for student loans at the U.S. Capitol. With her are Sen. Sherrod Brown (D-Ohio), second left; Sen. Jack Reed (D-R.I.), center; and Sen. Tom Harkin (D-Iowa), right (May 8, 2012). Credit: Getty Images
Both Republicans and Democrats in Congress insist they want to keep interest rates low on college student loans. But don't applaud just yet. Legislation to actually do it died Tuesday in the U.S. Senate.
Low- and middle-income students taking new loans in this uncertain economy shouldn't be forced to pay doubly high interest starting in July. Congress can stop it, but in Washington, even bipartisan agreement on a worthy goal doesn't ensure anything will get done.
Democrats and Republicans are locked in battle over how to offset the $6-billion cost if the interest on new subsidized, undergraduate Stafford Loans is held at 3.4 percent rather than reverting to 6.8 percent.
The House, on a mostly party-line vote, has approved a bill to keep the rates low for another year. But it would pay by wiping out the Patient Protection and Affordable Care Act's fund for preventive care and public health that was established to pay for such things as anti-obesity initiatives, expanded immunizations and responses to disease outbreaks. That's a bad idea, and President Barack Obama has promised a veto.
The Senate bill that Republicans filibustered Tuesday would have closed a loophole that allows select small-business owners, such as lobbyists and financial advisers, to avoid certain taxes by declaring some of their income profit rather than wages.
So to pay for lower-interest rates for students, each party has offered up the other's sacred cow -- Republicans targeted health care reform, Democrats went after tax breaks. Election year positioning aside, Congress has to find a way to get his done.
The $6 billion is real money. But Washington showers $4 billion a year in tax subsidies on big oil companies. For big agribusiness it's about $20 billion a year. The outrageous carried-interest loophole that allows private equity and hedge fund millionaires to pay income taxes at the 15 percent capital gains rate, rather than the higher rate on ordinary income, is worth $14.8 billion over 10 years. The point is there are enough wasteful giveaways to offset the $6-billion break on student loans.
As this battle rages, both parties should keep their eyes on the prize: making college affordable.
