Both political parties want to extend indefinitely the “temporary” lower interest rate of federally subsidized Stafford loans, a move estimated to cost taxpayers $30 billion over five years.
The same President Obama who once pledged we were done “kicking the can” on tough decisions is pandering for the youth vote (on Jimmy Fallon, no less) by insisting we extend the largesse. Meanwhile, in a discouraging development, the same Mitt Romney who insists we have to slash spending and reverse course on Obama’s “government-centered society” quickly caved and joined Obama’s call to extend the break.
Politics is ugly to watch sometimes.
Frederick Hess makes some good points that bolster my view the government should let the extra subsidy expire.
The Stafford is a middle class entitlement. We’re not talking about Pell grants for poor students. We’re talking about whether students can get an even bigger subsidy on already-subsidized loans.
Everyone has an offset to “pay” for the extension. Newsflash: we’re borrowing a trillion bucks this year. None of this is paid for. Any cuts we find could trim that debt. We need all those cuts and to let the 3.4% rate expire.
We really need to stop suggesting that it’s okay renege on obligations when we decide we no longer like the terms of contracts we voluntarily signed. It’s been a meme the last few years, especially with Occupy Wall Street, and it makes it really hard to teach students to honor their obligations.
- Should the Lower Interest Rate on Stafford Loans Be Extended? (usnews.com)
- Political battle looms over doubling of student loan interest rate to 6.8%