Sunday, April 28, 2013
The President's Bully Pulpit and Student Loans: One Year Later
The President’s Bully Pulpit and Student Loans: A Redux One year ago on Saturday, April 28, 2012 I posted “The President’s Bully Pulpit and Student Loans.” It has become, for reasons inexplicable to me, by far my most popular posting with 24,583 page views as of a few minutes ago. The thesis was that the President was using student loan interest rates as a wedge issue to win the student vote by showing he was fighting for them by stabilizing their interest rate on the Stafford loans at the existing 3.4% from the scheduled 6.8%. The blog pointed out that the biggest problem for last year’s grads was not the interest rate, but the facts that half of them couldn’t get a job. The interest rate is irrelevant if you have no income. In addition, the sharply rising tuition costs were a great concern to the students. It costs the students more each year than the interest costs. The third major cost issue for students is the high inflation in college texts. Yet the President’s use of the bully pulpit allowed the President to control the debate. The Republicans caved on the student loans rather than point out the economic realities to the students. Here we are a year later and the interest rates are once again scheduled to double on July 1, 2013, two months from now. The rate on federally subsidized Stafford Loans for undergrads will jump up to 6.8%, up from the current 3.4%. As Yogi Berra said "It's deja vu all over again." How can that be? Didn’t the President fix the problem last year? His cynical reelection stratagem succeeded. No one told the students that the fix was only temporary, for one year – well past Election Day. They were told that President Obama saved them thousands of dollars in interest costs over the life of the loans – not that the fix only lasted one year. Where is the President’s Bully Pulpit this year on the costly increase in student loan interest rates? AWOL IN DEFAULT His agenda consists of gun control, immigration reform, and tax increases. The students served their purpose. They voted for him last year. He was reelected President. He does not need them anymore. The only action he had taken is to bury within his proposed budget bill for next year a proposal to index the interest rate annually to .93% above the interest rate on 10 year Treasury Notes. That would cut the rates now, but prove costly to students when interest rates sharply rise, as they must with the nation’s public debt. Don’t forget that even the Democratic Senate consistently rejected on a bipartisan basis his proposed budgets in recent years. The current situation for today’s students is high interest rates on student loans, no jobs, rising tuition, rising textbook costs, and an indifferent President. Maybe they will learn a lesson from this. It is a teachable moment.