Washington Post Editorial Board hits Senate for playing politics with student loans

July 10, 2013

Yesterday afternoon, Senate Majority Leader Harry Reid stated:  If we do nothing, student loan rates go to 6.8 percent, as reported by Politico. In case the leader forgot, interest rates doubled to 6.8 percent last week. The House acted to prevent it.  The Senate did not.

Today the Washington Post Editorial Board writes about how the Senate is set to consider the Keep Student Loans Affordable Act, referring to the bill as "the chamber’s only reaction to the recent doubling of a low student-loan interest rate. The Post calls for lawmakers in the Senate to "reject this pathetic non-solution,” calling the bill a "dead-end policy" and another "campaign gimmick."

“The Senate vote is on whether to extend once again the 3.4 percent interest rate that Congress set on a certain class of student loans. That temporary rate, which lapsed last week, has been a potent political tool for years. It started as a Democratic 2006 midterm campaign gimmick. In the past couple of years, politicians from both parties have cited their passionate objection to its expiration as proof that they care more about students than do their opponents.

“But the 3.4 percent rate is expensive policy based on Congress’s whim, and it’s not the best way to promote college affordability. Pell Grants go to the neediest of students. A strong income-based repayment system, meanwhile, is a more efficient safety net than is offering a low, fixed rate even to students who go on to make gobs of money after graduation.

“Instead of continuing to fix rates based on politics and guaranteeing more distraction in a year’s time, lawmakers should finally end the mindless, recurring skirmishes over this issue. Luckily, there are serious plans on the table to do that, and politicians willing to act on them. The president has proposed pegging rates on student loans to that at which the government borrows money, plus a modest markup. The GOP-led House has proposed roughly the same thing, though with some substantive differences. Now the action is in the Senate, where those differences can and should be ironed out.

“At first such a system would result in rates lower than where they are now — 6.8 percent, following their reset upward. That’s better for soon-to-be debtors, but it also means reform would cost the government more relative to current law, at least for a time. Yet the system would also be more flexible and much more sustainable in the long term, guaranteeing that rates reflect the government’s cost of borrowing and the real economy, not simply the politics of the moment. And though student interest rates might fluctuate like everyone else’s, the amount the government helps students would not change. As long as lawmakers fill in some of the details reasonably, the policy is worth the price.” (Washington Post Editorial Board, July 10, 2013)

The editorial continues, “With the president and the House in near-alignment on the student loan issue, the Senate has no excuse to fail. Mr. Obama should press Democrats hard and work with Republicans to strike a deal, not to vote for dead-end policy.”

Unfortunately, rather than solve problems, the Senate is moving forward with another dead-end policy.The American people deserve better, Mr. Speaker. Our students deserve better. The Senate has no excuse.