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DISCUSSION: Politicians Hold Student Loan Intrest Rates Hostage

What do student loan interest rates have to do with wellness programs, social security and medicare taxes, and corporations? A lot apparently...and the politics over this one comes with a cost.

While the Republicans and the Democrats scrap over student loan interest rates, the real problem is ignored.

Who should pay?

But full disclosure here: I’m paying on a student loan from grad school, my stepdaughter is in college and paying on a student loan, and my daughter will likely be taking on debt to pay for her education.

So these student loan discussions hit home for us.

Currently Stafford Loan students pay 3.4 percent, but the interest rate is set to increase to 6.8 percent in July. If the loan rate doubles this summer, it would cost 7.4 million Stafford loan recipients an average $1,000, according to the administration, according to a story in the Journal Sentinel today.

But the solutions Democrats and Republicans have come up with some pretty big political punches. The House GOP bill cuts $17 billion from President Barack Obama’s prevention and public health fund. The money pays for “immunization campaigns, research, screenings and wellness education.” And the Democratically controlled Senate’s version of the bill asks “high-earning owners of some privately owned corporations to pay more Social Security and Medicare payroll taxes, violating Republicans' anti-tax doctrine.”

So in the House GOP version we’re pitting lower student loan interest rates against “Obamacare” and in the Senate version we’re pitting student loan interest rates against corporations, all under of the guise of wanting to help students not feel the burden of increased interest rates.

I find both of these bills unacceptable because they are disingenuous in their attempt to actually fix the problem and root their solutions in harming the very group of people they are trying to help. The authors of these bills act as if the people who are in school don’t need to be healthy or to have access to health care, and they act as if the people who are in school aren’t trying to get jobs.

But the question remains… who should pay and how can we have better conversations about it?

Heather Asiyanbi April 26, 2012 at 04:35 PM
Raising the interest rates only makes it harder for recent grads to pay the loans back. There are already too many loans in default, costing US taxpayers millions. And when we're still in a sluggish economy and recent grads are living at home and underemployed because they can't afford to live on their own with a job in their degree field, do we really want another obstacle to paying back the loans that got them the education they aren't using? That's bad math all the way around. I do agree, that if you take out a student loan for school, it is absolutely your responsibility to pay it back. Period.
GearHead April 26, 2012 at 06:34 PM
Notice how quickly screwed up this has gotten since the federal government dealt itself into the game, subsequently elbowing out all of the private market lenders? Any crisis we have tends to have government at its root. So a private market solution to correct this mess isn't in the cards. So the solution then becomes political, which has no basis in reality. That's just the way it is. Excuse me while I roll my eyes. Sigh. Nowhere has the issue of tuition increases ever been addressed. Why doesn't the president rail on greedy professors and colleges? Shouldn't "big education" be vilified? Notice tuition has gone up exponentially with the ready availability of student loans. Simple supply and demand. Flood the educational market with student loans to increase demand, and tuition goes up. Problem is, much of that money is wasted on profs that don't teach, and kids that have no business being there. But what the heck, its just another heaping helping of the taxpayer served up buffett.
Heather Asiyanbi April 26, 2012 at 08:23 PM
@Gearhead - you raise an excellent point. Why the heck does college tuition rise so quickly, sometimes 10% or more from year to year?! Ridiculous. I read information from a study that said only 55% of college freshman will graduate from college and even then, it will take 5-6 years. Unbelievable. We do need to reign in college tuition costs at the same time we don't raise interest rates.
GearHead April 26, 2012 at 10:33 PM
Pretty much the same problem we have with primary school districts, except maybe even more egregious and wasteful. Want to lower tuition? Start with getting rid of tenure, sabbaticals and all of the other clever ways professors have insulated themselves from actually having to be productive. We pay double and triple the personel costs to get the equivelent of one teaching position. Ridiculous! Of course all these gravy train postions are represented by people who used to collectively bargain for such excesses. This is why salaries and financial aid account for 80% of the college budget. Do these numbers sound familier? The link is for Iowa universities, but probably pretty close to WI. http://www.iowahouserepublicans.com/where-does-a-dollar-of-tuition-go
Chris April 27, 2012 at 12:28 AM
Too many people going to college thinking it is job training, when in reality it is EDUCATION. Too many jobs listing a bachelors degree as a pre-requisite when a degree has no actual benefit to the said job. Throw in a loose money supply so "everyone can go to college" spells a recipe for disaster.

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