Republicans And Their Bankster Buddies Have A Plan To Squeeze Needy College Students

John Kline (R-MN) wants much higher loan rates for students

Just a few days shy of a year ago, there was a great deal of tumult about conservative Austerity hawks trying to double to interest rate on student loans.

President Obama begins an all-out push on Friday to get Congress to extend the low interest rate on federal student loans, White House officials said, an effort that is likely to become a heated battle along party lines. If Congress fails to act, the interest rate on the loans, which are taken out by nearly eight million students each year, will double on July 1, to 6.8 percent.

...At a time when Americans owe more on student loans than on credit cards-- student debt is topping $1 trillion for the first time-- and the Occupy movement has highlighted the rising furor over spiraling student debt, the issue has moved higher on the political agenda. But the question of what to do about the looming interest rate increase has landed deep in the chasm separating Democrats from Republicans, who accuse the president of using the issue in a fiscally irresponsible way, in an attempt to buy the youth vote.

The Congressional Budget Office has estimated that a one-year freeze on the interest rate for subsidized Stafford loans would cost $6 billion.

“Bad policy based on lofty campaign promises has put us in an untenable situation,” said John P. Kline Jr., the Minnesota Republican who is chairman of the House Committee on Education and the Workforce.

The low interest rate stemmed from the 2007 College Cost Reduction and Access Act, which reduced interest rates on subsidized Stafford loans over the following four academic years-- from 6.8 percent to the current 3.4 percent-- with the proviso that the rates would revert to 6.8 percent this July. Extending the low rate would be too costly, Mr. Kline said. “We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers,” he said. “I have serious concerns about any proposal that simply kicks the can down the road and creates more uncertainty in the long run-- which is what put us in this situation in the first place.”

Mr. Kline, who earlier this year called the interest-rate hike a “ticking time bomb set by Democrats,” said he was exploring other options in hopes of finding a solution that served borrowers and taxpayers equally well.

When the 2007 law was passed, 77 Republicans-- most of whom are still in Congress-- voted for it. But in the current climate of fractious partisanship, new legislation introduced by Representative Joe Courtney to extend the lower rate has 127 co-sponsors, all of them Democrats.

Mr. Courtney said he was hopeful that some Republican support would be forthcoming as the political stakes became more apparent.

It never got that far. Boehner and Cantor instructed Kline to kill Courtney's bill in the House Education and Workforce Committee, which he chairs. And the bill was killed, although the old rate was extended for one year-- enough time to get the Republicans through the 2012 elections. Last week Courtney reintroduced it as H.R. 1433 and it is given little chance of getting a vote on the House floor. All 87 co-sponsors are Democrats. If Congress doesn't act, rates will go from 3.4% to 6.8%. Over 7 million undergraduate students will be impacted, mostly from working class families.

I'm going to guess that contacting your congressmembers and senators and telling them that you favor keeping the rate affordable for students isn't going to do much good if your congressmember and senators are Republicans. Perhaps a more effective way of dealing with this-- if the issue seems important to you-- is to help elect progressives who believe in the policy. This morning we talked with Pennsylvania state Senator Daylin Leach who does back the policy, is running for an open congressional seat in northeast Philadelphia and has been endorsed by Blue America. And the strength of his convictions comes from a place that isn't going to be swayed by some greasy K Street lobbyists. "My single mother had very few financial resources. The only possible path for me to go to college was through student loans. The availability of these loans at reasonable rates literally changed my life. That's why I get so angry when I hear about crushing debt. If we need revenue, how about slashing corporate tax breaks rather than creating an unsustainable burden on middle class students just starting out in life?"