Not Far Enough On Student Loans
A rule change was announced today by the White House which will make it somewhat easier for some students to repay their student loans. While any such change should be applauded as a step in the right direction, the wonky nature of the changes aren't exactly a restructuring of how the student loan program works. It's a few baby steps in the right direction, but these changes do not go far enough by a long shot.
A proposal from Senator Elizabeth Warren would drastically change the program, but so far it hasn't gotten President Obama's full-throated support. While I understand that Obama can rightly say that he's doing what he can on student loans outside of Congress, if he truly wanted to reform the program he would get solidly behind Warren's proposal and push it as hard as possible, in an effort to shame at least the Senate into acting upon it.
Warren's proposal -- the very first bill she introduced as a senator, in fact -- is simplicity itself: charge students the same interest rate that banks get from the federal government. This rate is currently below one percent, I should mention, although in better economic times it would be slightly higher. But it is always the cheapest interest rate in America, because banks lend the money they get from this borrowing to others at higher interest (so they can make a profit off of it). Investing in the future could mean (if Warren's proposal were passed into law) that not only banks would get this rock-bottom rate, but also students.
It's easy enough to make the political case for doing so. "America's children are our future" is a good place to start. We would be investing in that future, and making it a lot more attainable for students to achieve. The rationale for lending federal money out at low interest to banks is that it provides a lot of capital to the banking system, meaning there is more money out there to boost the economy. If the rate were higher, banks wouldn't be borrowing as much, to put it another way. Hiking this interest rate means slowing the economy down -- something the government does only to cure ills such as runaway inflation. But there really is no good reason not to make the same investment in students.
Student loans used to have a middle man. The government guaranteed the loans to the banks offering them, which meant the banks raked in a healthy risk-free profit for nothing more than doing a little paperwork. This was changed a few years ago, when the government essentially cut out the middle man and began loaning the money to the students directly. But what this also meant was that all the interest on the loans went straight into the federal coffers. Rather than being a pure investment in tomorrow's workforce, it also became a profit-making venture for the government. This means that adopting Warren's plan would impact the budget and the deficit. Billions of dollars would disappear from the government's income if students were offered rock-bottom loan rates.
This makes it a dicier political issue, to be sure. But it also opens up an argument Democrats might use to convince Republicans to get on board with the idea: "This is a hidden 'tax' on students that we want to cut!" Couch it in tax-cutting language, and Republicans might not be so insistent on making budget cuts to offset the lost revenue. After all, House Republicans just passed billions in tax loopholes without even attempting to offset them in any way. So why not do the same thing for cutting the "taxes" of high student loan rates?
This could provide an economic boost to the whole country, especially if students with outstanding loans were allowed to refinance them at the new low interest rate. It's already been documented that people in their 20s have been putting off big purchases (things like new cars, for instance) because they are struggling with monstrous student debt. Slashing the interest rate to the bone would mean they could pay off these loans years earlier, because more of their payments would be going to the principal rather than the interest. Paying off student loans faster means young adults will have more disposable income faster. Putting more money into the economy from young graduates can have an overall beneficial effect on the economy as a whole.
Of course, this wouldn't solve all the problems with student debt. It wouldn't solve the problem of the high cost of college, for instance, and it wouldn't lessen the amount students have to borrow to attain a degree. But it would lessen the repayment burden considerably. So while it is nice to see President Obama doing what he can, on his own, to tweak a few rules on student loans, it really doesn't go far enough. Wholeheartedly getting behind Senator Warren's idea to charge students the same rate as we charge banks would signal a much more fundamental reform of the entire student loan system. It would make it easier for students to repay their loans, and by doing so it would allow them to spend more of their earnings on goods and services, which would help boost the economy. These students are the brightest America has to offer, and making it easier for them to gain a higher education will help guarantee a well-educated workforce for the future. Making student loans more affordable means making college more affordable for all but the wealthiest families. President Obama should champion Warren's plan to make a much more significant reform to the way America's students pay for their education. After all, if America can afford to loan banks money at such a low interest rate, then we should also be able to afford to offer the same rate to students.
-- Chris Weigant
Cross-posted at The Huffington Post
Follow Chris on Twitter: @ChrisWeigant
CW,
My one criticism is with your continued pretense of political naivety. Obama full getting behind ANY proposal will doom it to failure. You know that. Getting something through the Senate that's DOA in the House is pointless. And the House has only ONE goal to block ANYTHING Obama might claim as a success.
If Obama actually backs a proposal the BEST thing he can do is maintain a low profile and AVOID becoming publicly associated with it.
Why do you insist on pretending Obama can have a business as usual relationship with this Congress? Obama has no influence with them. Obama's interest can only prejudice them against it, as if more of THAT is needed!
If all we're going to do is stage political theatre, on BOTH sides of the isle no one need bother to do anything. I applaud Warren for actually trying to get some things done for the American people. Something few others seem much interested in, including you.
Are you interested in accomplishing the peoples business or posturing for voters? Because claiming Obama could really help an effort by getting solidly behind and pushing sounds like you've been in a coma for the last six years!
And, like heath costs, you can't solve the student debt problem just by addressing the interest. The principle alone is enough to ensure penury for most.
The cost of education is simply to high. One way business has been fattening profits for decades is by transferring the expense of training employees onto the employees themselves. Employees having to continue their education on their own time, at their own expense, saves employers a bundle. Profits THEY pocket. At employees expense. Yet ANOTHER reason for the widening wealth disparity.
And simply attending a trade school isn't an option.
Employers consider a college degree to be the minimum required just to insure literacy! We need to stop outsourcing everything as if there's no price penalty involved. If college degrees are now required just for general education then publicly financed education needs to extend through college.
This idea that business is entitled to things without having to pay for them is the problem. And its a direct result of workers having no power in negotiations. Of business being able to play people off against each other because they aren't allowed to effectively organize the way business does.
Higher education is something almost NO student can afford. Accepting the idea that kids are SUPPOSED to begin their adult lives by taking on massive debt so business can hire skilled workers instead of having to pay to train people is the problem.
Kids shouldn't have to mortgage their future to pay for a decent education because the one we supply them with is useless. No matter WHAT the interest rate is. And business should pay their own training costs. They sure as hell aren't compensating employees for it! That's WHY students are massively in debt for decades! Required to take on more debt for more education before they can even pay for their first "investment."
My one criticism is with your continued pretense of political naivety. Obama full getting behind ANY proposal will doom it to failure. You know that. Getting something through the Senate that's DOA in the House is pointless. And the House has only ONE goal to block ANYTHING Obama might claim as a success.
If Obama actually backs a proposal the BEST thing he can do is maintain a low profile and AVOID becoming publicly associated with it.
Obamacare...
'nuff said.... :D
Michale
Michale,
Exactly, Obamacare. When Obama threw his support behind it Republicans universally and rabidly turned against it, even though it was their own plan! For NO other reason than to spite Obama and spike his presidency.
Exactly, Obamacare. When Obama threw his support behind it Republicans universally and rabidly turned against it, even though it was their own plan! For NO other reason than to spite Obama and spike his presidency.
And yet, it passed and it's the law of the land..
Hardly "doomed to failure" as you stated...
Yea, I know.. It's a nitpick.. But I am in kind of a NitPik LD mood..
Dunno why.... :D
Michale
Michale [5],
Not a problem. When Dems win back the House again, legislation that actually helps Americans can pass again!
Not a problem. When Dems win back the House again, legislation that actually helps Americans can pass again!
Dems HAD the House.. AND the Senate. AND the White House...
Guess what??
NOTHING got done.. It was a disaster of epic proportions..
Michale
I am constrained to point out that Democrats had a SUPER MAJORITY..
What got done??
NOTHING.. ZERO... ZILCH... NADA.....
So take your If-Only-Democrats-Were-In-Total-Control-Then-Things-Would-Be-Perfect mantra and stuff it..
We SEE what happens when Democrats govern..
US Prestige and Credibility hits the skids and American quality of life hits the gutter...
Since Obama and the Democrats have been in charge, not ONE SINGLE RELATIONSHIP with our allies has gotten better.
NOT ONE SINGLE ONE...
What does THAT tell you??
Michale
So take your If-Only-Democrats-Were-In-Total-Control-Then-Things-Would-Be-Perfect mantra and stuff it..
Sorry.. That should have had a :D after it... :D
Michale
Michael,
Dems had a supermajority for just TWO MONTHS! Republican challenges prevented Al Frankin from being seated for A YEAR! And Sen. Kennedy died in office.
As always, your talking points can't bear close examination because THEY ARE LIES! THAT'S why you've no proof of the millions of Obamacare policy cancellations you're POSITIVE that EVERYBODY KNOWS! about!--You wingers are "all hat and no cattle!"
Dems had a supermajority for just TWO MONTHS!
And what did they accomplish??
NOTHING...
Not ONE DAMN THING...
ZILCH... ZERO... NADA.....
So, why should the American people put Dems in charge when they can't DO SHIT even if they have a LOCK on everything??
Answer: They shouldn't..
Democrats are not fit to govern...
Waiting for the "yea, but Republicans blaa blaa blaa blaaa" and "IT'S ALL BUSH's FAULT!!!" Hysteria....
Michale
Michale [11],
Obamacare...
'nuff said.... :D
And you're providing enough hysteria for all of us!
By the way Michale, just have to say how I admire the way you ask "why Americans should put Dems in charge" and then attempt to discourage the obvious answers, "Dems don't start wars on two fronts and put them on our credit card, Dems don't lose skyscrapers OR cities in Louisiana, Dems don't tank the economy..." because talking FACTUALLY about what REPUBLICANS do when THEY'RE in charge compared to Republicans is "blaming Bush...blah...blah...blah...hysteria." RIGHT?
Sort of a preemptive strike to try to keep me from trashing YET ANOTHER patently absurd rightwing lie?--Nice try.
LewDan -
Fair enough. But you'll notice I did propose how to sell it to Republicans. If Republicans are fearful enough, they can be persuaded to still vote for things.
Sure, it may just be something to put into the "Obama tried to make this part of his legacy" box, but advising him to just shut up about everything would mean an awfully restrained next 2.5 years. I mean, what, he's not even supposed to TRY anymore? Again, you can call me naive, but to me, that seems awfully cynical and defeatest.
Here's another way of putting it: if Obama got behind Warren and they actually got a vote in the Senate (but then lost it), do you think that would help motivate younger voters this November? And could that change the demographic of enough states to hold the Senate? I mean, even when swinging for the fences, you can accept a bloop single as a good result, right?
[2] -
Yeah, I know. The article admits this, saying it wouldn't solve the whole problem. But it would certainly be a step in the right direction. As for radical changes, I have indeed come out for the Oregon experiment (or maybe Washington, I'd have to look it up in the FTP archives), of providing "pay it forward" college. THAT is the best idea I've heard ever, personally. Only applies to state schools and state residents, but still...
Michale [7] -
OK, I have to call a foul, here. You say that "nothing got done" like 2 comments after you noted that Obamacare got passed. It can't be both, sorry...
:-)
As for their supermajority, Dems only had it for two months, one of which Congress spent on vacation. Look up the dates of Al Franken being sworn in, and Teddy Kennedy's death to see the exact time period Dems held 60 seats.
LewDan [10] -
Aha! Something we can agree on (see prev. paragraph).
-CW
LewDan -
OK, looked up that link for you. Scroll down to the MIDOTW section...
http://www.chrisweigant.com/2013/07/12/ftp264/
-CW
OK, I have to call a foul, here. You say that "nothing got done" like 2 comments after you noted that Obamacare got passed. It can't be both, sorry...
Nothing got done when Democrats had the Super Majority...
Dems had a LITERAL lock on everything in the government..
And they couldn't do ANYTHING with it...
Not one damn thing...
Michale
Put it this way..
Do you HONESTLY believe that, if Republicans had the House, the White House AND A SuperMajority in the Senate for two months they would not do a damn thing with it?
:D
Michale
Michale,
It is so TYPICAL of you to claim Democrats had control and didn't do anything when Republicans did everything they could to PREVENT Democrats from having control OR doing anything. And ALSO ignoring the minor fact that in the brief time Democrats really DID have control they managed healthcare reform. Something that's been in the to do list for two decades.
You simply lie. Shamelessly. Unrepentantly. And then lie about lying!
It is so TYPICAL of you to claim Democrats had control and didn't do anything when Republicans did everything they could to PREVENT Democrats from having control OR doing anything.
Duuuhhhh It's what the minority Party does...
Just like Democrats tried to prevent Republicans from doing anything when Republicans had control..
The fact that Republicans succeeded more often then not proves the incompetence of the Democrats...
Michale
Michale,
Constantly trying to game the system by lying is NOT "what the minority does." Candidates do NOT file frivolous lawsuits for no other reason than to deny the winner of an election his rightful seat. Committing perjury simply to cause unlawful delay.
Abusing the filibuster to block ANY appointments is NOT "what the minority does." Refusing to allow votes on ANYTHING that THEIR party doesn't support is not "what the minority does."
The Republicans have become the antidemocratic party. Trying to enforce minority rule and PREVENT majority rule is NOT "what the minority does." Its what a corrupt dishonest unethical minority does. In spite of your constant lies to the contrary it IS NOT business as usual. The Republicans' success is due to their lack of ethics. They abuse the trust they've been granted and the power that they hold. They simply do NOT act in good faith and that is NOT "what the minority does."
They succeed because our system is based on voluntary cooperation and requires everyone acting in good faith. That's what everyone promised to do. Its why everyone must take oath TO promise to do.
But Republicans are liars. Their word, their oaths, mean NOTHING. That is NOT "what the minority does." That's just what corrupt modern REPUBLICANS do.
But Republicans are liars. Their word, their oaths, mean NOTHING. That is NOT "what the minority does." That's just what corrupt modern REPUBLICANS do.
Pure unadulterated bigotry..
Replace "Republicans" with "Mexicans" or "Hispanics" or any other nationality/race and you'll see what I mean..
But look at the bright side..
After these elections, Democrats WILL be the minority Party..
THEN we can see if the Democrat Party puts your "Minority Party's don't game the system" into practice... :D
Wanna lay any bets?? :D
Michale
The problem here is you don't like when Republicans use the rules to further their own agenda.
But you have absolutely NO PROBLEM when Democrats do the same thing for the same reason...
Why is that??
Michale
Michale,
I've no problem with anyone using the rules, its abusing the rules I've problems with. Such ad refusing to vote on confirmations because you don't want an agency to be able to enforce the law. THAT'S abusing the rules. If you don't have the votes to repeal a law you do nit have s tight to sabotage the executive branch exercising their duty to enforce the law by refusing to do your duty to consent.
Holding the debt ceiling hostage is ABUSING the rules.
Refusing to allow votes on any judges for the DC circuit to prevent a majority of Democratic appointees is abusing the rules.
Routinely passing legislation you know is unconstitutional in hopes that SCOTUS will illegally rewrite the constitution for you is abusing the rules.
And those frivolous lawsuits to delay Franken being seated required perjury, petitioning the court over claims that you know are invalid
That most definitely is lying, and its illegal. But its impossible to prove.
Bending theme rules may well be necessary on occasion. But the routine day in and day out, year in and year out, abuse of the rules is not a right, is not just "what the minority does." We don't routinely have the minority preventing government from functioning. Its never happened before.
You're the one that's always partisan. Always the Republican apologist. Always trying to defend Republican misconduct with specious claims that Democrats are the same--only worse!
Republicans simply have no ethics. And no one without ethics has any business in government.
I now await your inevitable unsubstantiated false equivalency that's somehow supposed to excuse Republican misbehavior.--Or at the very least change the subject.
Michale,
Can you make ANY argument without lying? Democrats ARE the minority in the House. Republicans are the MAJORITY. Republican misconduct certainly hasn't been confined to the Senate, or to their time as the minority party.
Funny that it's only "abusing" the rules when Republicans do it..
But, Democrats can toss nukes around and you are perfectly OK with that..
Funny, iddn't it?? :D
Michale