As I mentioned he would be earlier this week, President Obama dedicated his Friday morning to educating the youths he used as backdrops at the White House about why it is that the GOP’s idea to fix this cyclical federal student-loan battle by tying interest rates to the market, instead of the president’s own plan allowing politicians to continue to arbitrarily determine the interest rates that they deem appropriate, is such a very terrible take on the problem. It went pretty much exactly as you’d expect.
Key words: “Fair.” “Investments.” “Not the time for us to turn our back on young people.” Ugh.
Let us overlook for a moment the fact that the president is perpetuating a student-loan bubble via a broken system that floods that market with too much demand that in turn causes college prices to just keep right on rising, and focus instead on the fact that the differences between the president’s and the GOP’s plans will have a negligible impact on actual student-loan payments. This is just politics as usual, via the WSJ:
House Education Chairman John Kline’s bill sets floating rates on new Stafford loans at the 10-year Treasury rate plus 2.5%, while also protecting borrowers by capping the rates at 8.5%. Under this plan, a borrower can consolidate his loans after graduation to achieve a fixed rate.
Mr. Obama’s plan is purely for fixed, not floating, rates at the 10-year Treasury rate plus 0.93% or 2.93% depending on the type of Stafford loan, and it has no rate cap. We wish both the House and Mr. Obama would drive a harder bargain on behalf of the taxpayer, but they aren’t separated by a difference of philosophy. A spread of 93 or 293 basis points means the President cares about young people, but 250 basis points signifies unspeakable cruelty? …
Under either plan, rates for new Stafford loans for undergraduates will not nearly rise all the way to 6.8% from 3.4%, as they are scheduled to do on July 1. But the White House likes to run against a doubling of rates even when, as in this case, they are running unopposed. It has been a good political issue for Team Obama in the past, and there’s another reason they may regard it as favorable ground to attack imaginary adversaries.
Hey, if President Obama really wants to focus in on helping young people with life after college, maybe we could worry a little less about piddling, stimulus-esque, big-government market interferences and a little more on our sluggish economy and 16 percent youth unemployment rate? Anyone?
Join the conversation as a VIP Member