Obama, Romney Support Extending Student Loan Interest Rate Cut
If Congress does not act quickly, interest rates for federal student loans will increase, double in fact, from 3.4 percent to 6.8 percent in July 2012. At a time when current borrowers are already struggling with tuition hikes and therefore will be saddled with higher levels of student loan debt, it does not appear sensible to let these cuts expire.
If the rates do double, federal Direct Stafford loans will be affected.
President Obama will be visiting the University of North Carolina at Chapel Hill and also the University of Colorado in Boulder to discuss the issue this week. Republican presidential candidate Mitt Romney announced today that he supports Obama’s call to maintain the low interest rate on these subsidized federal loans. Moreover, Republican Scott Brown of Massachusetts also supports the freeze.
Student loan advocates have commended Romney’s public support of the President. Rich Williams, higher education advocate for the U.S. Public Interest Research Group (PIRG) said, “We applaud Governor Romney’s support.
“His endorsement should signal to Congress that this is a common sense, non-partisan proposal,” he added.
Some critics have suggested that Romney’s call to freeze the interest rate is politically motivated, and it is likely that he will be accused of being a flip-flopper on yet another issue. After all, Romney has supported the budget plan of Congressman and House Budget Committee Chairman Paul Ryan (R-WI), which proposes deep cuts to funds for higher education. When Ryan unveiled his FY2013 budget plan, the proposal called for Stafford loans to double to 6.8%. Interestingly, funds for higher education are miniscule, as Loop 21 has noted a few months ago. Even more disturbing, outstanding student loan debt has surpassed credit card debt, having exceeded $1,000,000,000 in recent months.
The burden of that debt is on the backs of borrowers and their families. Many young people are finding it difficult if not impossible to keep up with their repayments. In an economic downturn as severe as the Great Depression, young grads are facing high levels of unemployment. A large majority of them are moving back home, putting off having families, and not buying homes. To make matters worse, student loan debt is essentially inescapable. It is virtually impossible to discharge student loans – federal or private – in bankruptcy. Currently, 36 million Americans have student loans.
When it comes to public perception and lack of sympathy for student debtors, Republican Virginia Foxx (R-NC) has outraged a number of Americans with recent statements she made about individuals who have student loan debt. Representative Foxx said on a radio interview that she has “little tolerance” for student loan debtors. She also made a point to say that she was able to pay her way through college by working. Foxx holds a chair on the House subcommittee on higher education, so her unsympathetic attitude matters. Shortly after she made these statements, OpenSecrets.org revealed that Foxx is financially backed by the for-profit industry.
With outstanding student loan debt at $1 trillion, freezing interest rates for current students does not even begin to address the student lending crisis. It is obvious – the rates should not be doubled, but there is far more work to be done in D.C. to bring relief to millions of Americans who are struggling or unable to pay back their loans.
Chair of the California Women’s Democratic Party Caucus Christine Pelosi offered some interesting facts via email about Foxx’s remarks. Pelosi explained, “‘Republicans’ attitudes on the burden of student loan debt on students and families appear to be reflected in recent comments by Rep. Virginia Foxx: ‘I went through school, I worked my way through . . . I never borrowed a dime of money . . . I have very little tolerance for people who tell me that they graduate with . . . $80,000 of debt because there’s no reason for that.’ It turns out that Foxx’s tuition at the University of North Carolina for a semester in 1961 was $87.50.”
When adjusted for inflation that is roughly $660. Today, in-state tuition at the University of North Carolina is $7,000 in tuition in fees for the year, but the total estimated cost is $20,000 a year.
Apples and oranges, Virginee. Apples and oranges.
This article was originally posted by The Loop 21. It is reprinted here with permission.
Cryn Johannsen is a political activist and the founder and executive director of All Education Matters. Her work has appeared in numerous publications, including USA Today, The Huffington Post, Truthout.org, and The New England Journal of Higher Education.