Senators met with President Obama and Vice President Joe Biden Tuesday night to hash out a student loan deal – and came up with another bad solution for students.
Have they really not received the message yet?
The types of deals they continue to push, which will increase borrowing costs for students when they should at least be held stable if not lowered, have been opposed by many student groups, including the United States Student Association, and are proven to raise rates in just a few years. Apparently Sens. Lamar Alexander (R-Tenn.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Tom Harkin (D-Iowa), Joe Manchin (D-W.Va.), Angus King (I-Maine), Dick Durbin (D-Ill.), and even the White House aren’t listening.
The newest proposal doesn’t look too different from the older ones. It would peg the student loan interest rates to the 10-year Treasury note plus 2.08 percentage points for undergraduate loans and 3.6 points for graduate loans. Undergraduate loans would have a cap of 8.25 percent, and graduate loans would have one of 9.5 percent.
But as we continue to stress (and Congress continues to ignore) loan rates are not going to stay low for long, even if they will be low for the first few years. The Congressional Budget Office projects that rates will reach the cap by 2016. Although this hike in rates seemed to bother Sens. Harkin and Reid before, apparently they are perfectly fine with giving up and giving in to Republican demands.
We can’t let them do this to our students. This proposed deal is seen as a long-term solution, so once it’s passed little can be done to prevent the harm it will do to future generations.
We must act now before it’s too late. Tell your senator to keep loan rates at 3.4 percent until Congress is prepared to support a good long-term deal for students.