Snap Fact #173

In 2007, under George Bush, Student Loan Interest Rates were cut in half. This was done for a five year duration. The five year window is now about to close on July 1, 2012. The lines have been clearly drawn. The Democrats, vigorously led by President Obama want the lower rates to continue. The Republicans want to return the rates to the higher levels which would add about $1,000 to the students obligations. Many clear pronouncements by both sides leave no doubt about where each side stands. The battle lines have been drawn.

Today, President Obama continues his ongoing mission to help students in need of aid. According to CNN Money, Obama will push Congress, “to extend current cheap rates on subsidized loans for more than 7 million undergraduates.” If Congress does not back Obama’s plan, rates will jump from 3.4% to 6.8%. This would make it more difficult for college students who are already drowning in debt to pay their loans. Many will have to drop out depriving themselves of

their future potential and depriving the country of having a well prepared next generation.. 

Barack Obama has supported students throughout his presidency. His track record is commendable. He increased Pell Grants in 2009 to $5500, and then signed the Student Aid and Fiscal Responsibility Act, in March of 2010 as a rider that was attached to The Health Care and Education Reconciliation Act. Both Acts were passed by the 111 Congress.

The Student Aid and Fiscal Responsibility Act addressed student loan reform. It was similar in nature to an act of the same name that was passed the year before, but slightly different in that it ended the process whereby the federal government would give subsidies to private banks that would in turn give out federally insured loans. This change would generate a great deal of income over time. According to U.S. News, “By eliminating taxpayer subsidies to corporate middlemen who marketed and originated federal student loans, the Obama administration says it will raise more than $60 billion over the next 10 years.”

Support of students was shown early on in Obama’s presidency with the establishment of the Loan Forgiveness Program. In a speech on higher education in April of 2009, Obama voiced his opinion, "It's about whether we want to give tens of billions of tax dollars to special interests or whether we want to make college more affordable for 8.5 million more students. I think most of us would agree on what the right answer is. . . " 

President Obama has gone directly to the students themselves about the issue of extending the subsidized loan rates recently. He is cross-crossing the country speaking to overflow auditoriums packed with enthusiastic students. During these powerful speeches he mentions that he personally can relate to the issue because he and his wife only recently paid off their own student debts, merely four years before becoming president of the United States. (6th Reference) This genuine, experiential oration has paled the rote theoretical remarks of his presidential competitor. 

Ethical, financial, and common sense considerations aside, the Republicans have painted themselves into another political corner. It seems that the Chess Master is at it again. The President has once more played the game brilliantly. The Republicans have again exposed their king to check mate by taking the wrong side of the issue. As you read this several key Republican leaders are throwing in the towel and agreeing with the President that Student Loan Rate should be extended. First, Mitt Romney announced that he agrees with the President. It should come as no surprise that this is a 180 from his self-proclaimed position announced only a few months ago. He was quickly followed by Speaker Boehner, Scott Brown, and others who have already conceded their politically untenable position on this issue. Their task now will be to try to take the credit and separate the President from his rightful role in saving the rates for the students. As President Lincoln said, "You can fool some of the people......

Here is one more chance for open minded doubters to look at the competing ideas of how the next presidency and the next congress will take the country. Do you want a 113th Congress like the 112th or the 111th?