Obama Administration, House Dems Push To Prevent Student Loan Rate Hike

[OhioChick]

Source: Huffington Post

Posted: 04/20/2012 1:54 pm

A Congressman who successfully rallied Democrats in a government shutdown fight last summer hopes he can drum up support once more as he attempts to stop federal student loan interest rates from doubling in July.

Rep. Gary Peters (D-Mich.) is working with Rep. Joe Courtney (D-Conn.) on bill H.R. 3826 to keep the interest rate for federal Direct Stafford Loans at 3.4 percent. If the bill fails to pass, student loan interest rates will jump to 6.8 percent on July 1, when the 2007 law that caps interest at its current rate expires.

In a letter circulated around Capital Hill this week and obtained by The Huffington Post, Peters and Courtney make their case for H.R. 3826. They write:

"When Treasury bonds are being sold at 2 percent and mortgage rates can be had for less than 4 percent, it is outrageous to make college students pay two to three times the going interest rate. As parents and grandparents, it is unconscionable that we would even consider putting this burden on our children. As America faces an incredibly competitive global economy, it makes no sense for Congress to shortchange investing in the college education necessary to ensure that the United States will continue to have the most highly educated workforce in the world."

Read more: http://www.huffingtonpost.com/2012/04/20/obama-gary-peters-house-democrats-student-loan-rates_n_1440249.html

[Scurrilous]

1. K & R

[aquart]

2. Banks are working hard to make this the most uneducated nation on earth.

[SlipperySlope]

3. The burden? Someone needs to get their priorities straight

"When Treasury bonds are being sold at 2 percent and mortgage rates can be had for less than 4 percent, it is outrageous to make college students pay two to three times the going interest rate. As parents and grandparents, it is unconscionable that we would even consider putting this burden on our children. As America faces an incredibly competitive global economy, it makes no sense for Congress to shortchange investing in the college education necessary to ensure that the United States will continue to have the most highly educated workforce in the world.

I don't want to see these interest rates raised, but the above quote just fills me with rage. Someone wants to talk about the "burden" of student loans paying 6.8% interest, while in the same breath mentioning (but not objecting to) the incredible burden of treasury debt and what that means to our competitiveness as a nation. Our national debt works out to nearly $200,000 per family; that is a burden that doesn't seem to be going away. Even if you are one of those who believes that the national debt never needs to be truly paid down, we still are spending around $200 billion per year just to pay the interest on the debt.

If you truly want to reduce the burden on our children and grandchildren, then why not look to reduce the mountain of debt we have piled up for them.

[jeff47]

5. Because 2% < 6.8%.

And it's fine to be concerned about the debt. It's dumb to do something about it right now.

You pay down national debt when the economy is doing well, not when it's in the toilet. When the economy's in the toilet, you run up debt to improve the economy. That not only reduces suffering, but it increases tax receipts thus making it much easier to pay the debt.

Unfortunately, we've had morons for Republicans for the last 40 years, who want permanent and large national debt.

[SlipperySlope]

12. Running up debt isn't working anymore

Classically what you are describing would work. The government could borrow money and spend it, and the M1 money multiplier meant that every dollar borrowed would improve the economy by more than a dollar. In the 1980s for example, every dollar borrowed increased the size of the economy by close to three dollars.



As total debt increases, however, the M1 multiplier diminishes. We have reached the point where every dollar of government borrowing increases the economy by less than one dollar.

In other words, it appears our economy has entered a state where borrowing no longer provides the stimulus it used to.

[gratuitous]

4. This should be interesting

If Congress does nothing, student loan rates go up because the legislation lowering those rates expires automatically. The Bush tax cuts were due to expire at the end of 2010 for the same reason, tax rates to revert to 2001 pre-legislation levels. The original tax cut bill had to be written that way, because it was a budget-buster and Congress has hog-tied itself from passing laws that do that.

Well, we all know what happened in 2010. The Republican minorities in both chambers of Congress whined and pissed and moaned about how the Democrats' tax hike (which was, in reality, no such thing) was going to bankrupty the country and just be all evil and icky. Elected Democrats, from the very top, reacted in such a panic that they boxed themselves in about nine ways from Sunday, so much so that I suspected at the time that it was a deliberate maneuver to avoid taking any responsibility (or credit) for doing the right thing. Polls showed that while the public wasn't rabidly enthusiastic about letting the tax cuts expire, at least a plurality and in many cases a majority, were in favor of doing that, since it meant that the wealthy would shoulder a little fairer share of the burden of financing the country.

Instead of just sitting back and doing nothing, which would have been the path of least resistance leading to the correct policy change, Democrats tied themselves in knots, convinced they were going to get hammered in the mid-terms if they "raised" taxes. So they stalled. And they dithered. And they hesitated. And they got hammered in the mid-terms. Then, in the lame duck session, they worked with all their might and main to continue the ruinous Republican economic policies for another . . . two years, so the Republicans could try this same tactic all over again in 2012.

So, here we are in 2012, talking about not only the expiration of the stupid extension of the Bush tax cuts, but also the expiration of the bill to lower student loan interest rates. And the Democrats are hoping that Congress will act to keep those rates low, when by doing nothing, the Republicans can fuck over their perceived adversaries and get all kinds of strokes from their pals at Fox News.

Anyone wanna bet on what happens? I say the Bush tax cuts get extended another two years, and student loan rates double, returning to their previous 2007 level.

[mbperrin]

6. CitiBank pays my neighbor .2% (yes, 2/10 of 1 per cent) on a $100,000 CD.

I see no reason why student loans should be more than that "market" rate.

In reality, we should have a K-16 school system for all of us. Publicly funded.

[abelenkpe]

8. +1000 nt

[DJ13]

7. "When Treasury bonds are being sold at 2 percent and mortgage rates can be had for less than 4%.."

What about credit cards?

[abelenkpe]

9. Yeeeeeaaaaahhhhh

Personally think it would be more beneficial to provide affordable education rather than cheap loans. Loans are still debts and student loans are the most burdensome loans of all. Why not increase scholarships and grants? Do something to lower the cost of higher education? OR better yet make it free. Why is the reward for busting ones ass in school getting great grades, getting accepted to college and qualifying for financial aide ten to twenty years of indentured servitude repaying a loan that banks profit from? and how much sense is it to continue burdening kids with this kind of debt when we have yet to do anything about outsourcing and offshoring?
it's a nice setiment, but not really the needed cure. Cheap affordable loans are what led to the housing bubble when what was needed was affordable housing. At least ho,downers can walk away from their mortgages....students never. Think twice before letting a loved one take out a student loan. Seriously.

[Proud Public Servant]

10. Here's my cynical, depressing prediction

When student loan rates were cut a few years ago, it was understood -- nay, legislated -- that the cuts would be temporary, would sunset, and that rates would then return to normal.

Does that sound like another piece of legislation you can name? I'll give you a hint: it rhymes with Push Flax Nuts.

What do you want to bet that the GOP price for coming on board with a student loan rate-cut extension is a similar income tax rate-cut extension? Just a guess, but I think it's a pretty good one.

[sarcasmo]

11. Am I the only one who thinks this will be a party line vote?

With the Democrats voting for the students and the Republicans voting for the higher interests rates.

[LongTomH]

13. And people keep saying: "There's no difference between the parties!"

No difference, my ass!