In the News: Don’t let GOP block college loan help
Don’t let GOP block college loan help
Published 04/23/2012It is good to see President Obama getting behind the effort launched by Second District Rep. Joe Courtney to prevent the interest rates on federal student loans from doubling on July 1 to 6.8 percent.
The Connecticut Democrat introduced a bill that will keep interest rates at 3.4 percent. On Friday the White House announced that the president will travel this week to the universities of North Carolina at Chapel Hill, Colorado, and Iowa to push for approval of the legislation introduced by Rep. Courtney. The bill now has 127 co-sponsors.
The New York Times reports that the White House plans a sustained campaign to fight for the measure, with President Obama referencing it in his radio address Saturday after Education Secretary Arne Duncan discussed the proposal with the Washington press corps Friday.
The average student using federal loans will rack up an additional $1,000 in debt annually after graduation if Congress allows the doubling of the interest rates, the administration contends.
Rep. Courtney has been out in front on this critical issue and it’s about time the Obama administration began roasting Republicans in Congress for their recalcitrance about helping out struggling students and their families.
In 2007 Congress approved the College Cost Reduction and Access Act of 2007, which cut the then-rate of 6.8 percent to the current 3.4 percent, but with an expiration date of July 1, 2012. Back then the proposal received significant bipartisan support, with 77 Republicans voting in favor, many of them still in the House. This time around, showing how intransigent Republicans in Congress have become in supporting any legislation that is remotely progressive, not one member of the GOP has come forward in support.
Rep. John P. Kline Jr., the Minnesota Republican who chairs the House Committee on Education and the Workforce, said he cannot support “piling billions of dollars on the backs of taxpayers.”
What a profoundly hypocritical argument.
Rep. Kline had no problem voting in favor of a big tax cut for business owners. Under that bill, small business owners (500 employees or less) would be allowed to deduct 20 percent of their income taxes up to 50 percent of their W-2 wages. It’s the scheme of House Majority Leader Eric Cantor in his never-ending quest to make the well off better off.
The ostensible motivation for the tax break is to create jobs, but there is no provision for those receiving the tax breaks to do anything other than stick the money in their pockets. And it’s a one-time deal, so what is the motivation to hire new workers? The Joint Tax Committee, the objective scorekeeper on such matters, concluded the job-creation value would be “so small as to be incalculable.”
Even the business-friendly Tax Foundation criticized the Cantor bill, concluding it could be “easily gamed” while doing little if anything to create jobs. The giveaway would blow another $46 billion hole in the budget, and Republicans offer no offset to make it up.
But Rep. Kline contends the nation cannot afford to help college students obtain federal loans with reasonable rates at a time of record low interest rates? Estimates of the cost of maintaining the current interest rate on the subsidized Stafford loans range from $4 billion to $6 billion a year.
Credit Rep. Courtney with not forgetting his campaign promises. Campaigning at the University of Connecticut in 2006, Mr. Courtney vowed to help students afford the means to pay for college. The election thrust him into Congress with a razor-thin 83-vote victory. Rep. Courtney took Mansfield, home to UConn, by a 4,397 to 1,753 margin. In one his first acts in Congress he backed the interest-rate cut that he now seeks to defend.
College-aged voters can play an important role in elections, a fact Rep. Courtney recognized back in 2006 and which the White House appears to be paying attention to now.
In The News: Student Loan Interest Rates Loom as Political Battle
Student Loan Interest Rates Loom as Political Battle
By TAMAR LEWIN
Published: April 20, 2012President Obama begins an all-out push on Friday to get Congress to extend the low interest rate on federal student loans, White House officials said, an effort that is likely to become a heated battle along party lines. If Congress fails to act, the interest rate on the loans, which are taken out by nearly eight million students each year, will double on July 1, to 6.8 percent.
White House officials said the president was planning a sustained effort through the spring: On Friday, Education Secretary Arne Duncan will discuss the issue at a White House briefing, and on Saturday in his weekly address, the president will call on Congress to pass legislation preventing the rate hike.
Next week, Mr. Obama will again hammer the issue — during visits on Tuesday to the University of North Carolina at Chapel Hill and the University of Colorado at Boulder, and on Wednesday at the University of Iowa. The White House also plans a social media campaign through Facebook, Google+ and Twitter, using the hashtag #DontDoubleMyRate.
At a time when Americans owe more on student loans than on credit cards — student debt is topping $1 trillion for the first time — and the Occupy movement has highlighted the rising furor over spiraling student debt, the issue has moved higher on the political agenda. But the question of what to do about the looming interest rate increase has landed deep in the chasm separating Democrats from Republicans, who accuse the president of using the issue in a fiscally irresponsible way, in an attempt to buy the youth vote.
The Congressional Budget Office has estimated that a one-year freeze on the interest rate for subsidized Stafford loans would cost $6 billion.
“Bad policy based on lofty campaign promises has put us in an untenable situation,” said John P. Kline Jr., the Minnesota Republican who is chairman of the House Committee on Education and the Workforce.
The low interest rate stemmed from the 2007 College Cost Reduction and Access Act, which reduced interest rates on subsidized Stafford loans over the following four academic years — from 6.8 percent to the current 3.4 percent — with the proviso that the rates would revert to 6.8 percent this July. Extending the low rate would be too costly, Mr. Kline said. “We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers,” he said. “I have serious concerns about any proposal that simply kicks the can down the road and creates more uncertainty in the long run — which is what put us in this situation in the first place.”
Mr. Kline, who earlier this year called the interest-rate hike a “ticking time bomb set by Democrats,” said he was exploring other options in hopes of finding a solution that served borrowers and taxpayers equally well.
When the 2007 law was passed, 77 Republicans — most of whom are still in Congress — voted for it. But in the current climate of fractious partisanship, new legislation introduced by Representative Joe Courtney to extend the lower rate has 127 co-sponsors, all of them Democrats.
Mr. Courtney said he was hopeful that some Republican support would be forthcoming as the political stakes became more apparent.
“The visibility of this issue is going to continue to grow as we get closer to the deadline,” he said. “The response of students and parents is one of disbelief that interest is going to double at a time when interest rates are so low, and I think it’s very politically dangerous for Republicans to stonewall this.”
Rich Williams, the higher education advocate for U.S. Public Interest Research Group, said he thought about 14 moderate Republican senators might support the effort to keep the interest rates down.
“This should be a bipartisan issue,” he said. “It’s something everyone gets.”
Outside Congress, even some of the strongest student-aid advocates debate the question. While nearly everyone is in favor of the broad goal of college affordability, some experts wonder whether it is worth risking cutbacks in the Pell program for low-income students, a possible result of using more federal money to keep interest rates low on the Stafford loans, which are in wide use by middle-income students.
But student advocacy groups say it is wrong to view financing for Pells and Staffords as a zero-sum competition.
Campaign News: Convention 2012 RSVP
In the News: Two years after passage, Courtney still selling health reform
Enfield — Joe Courtney held up the poster-sized chart and pointed to the numbers printed in purple: 7,700 seniors in his Eastern Connecticut district got a discount on their prescription drug payments last year, thanks to federal health reform. That included 530 seniors from Enfield, where he had come to chat at the senior center, 143 in neighboring Suffield and hundreds more in several other towns listed on the chart.
“This chart shows that there is improvement that’s happening to the system,” the congressman told the audience of 50 or so seniors. He noted that the health reform law is phasing out the Medicare “doughnut hole” that requires seniors to pay for drugs out-of-pocket once their plan has covered a certain amount, but he added that it will take time before all their costs are gone.
Courtney and his chart showing how many seniors in his district got drug discounts from the health reform law
“I’m not going to sit here and do a victory dance in the end zone like a football player spiking the football saying the problems are all gone for everybody,” Courtney said. “We’re not at that point.”
If this were a re-election speech, it wasn’t much of a rousing argument. But Courtney has been on a different sort of campaign: pointing out the benefits of the controversial Patient Protection and Affordable Care Act.
The third-term congressman from Vernon hasn’t missed many chances to tout the upsides of a law that many of his fellow Democrats have not gone out of their way to promote. Courtney brought a primary care doctor to town hall meetings last year to talk about patients whose cancers were discovered because of free wellness visits that Medicare now covers because of health reform. He’s delivered floor speeches to point out what he considers positive developments from the law, about which Americans remain divided, according to national surveys.
After the law passed, Courtney remained a vocal supporter of health reform “at a time when a lot of other people were kind of running away from it,” said Dr. Robert McLean, a New Haven internist and rheumatologist who serves as governor of the American College of Physicians’ Connecticut chapter.
The group, which represents internists, named Courtney legislator of the year last fall “to recognize his willingness to be such a vocal supporter of health reform efforts,” McLean said.
Courtney said his continued talk about health reform is a way to analyze what was and wasn’t true in the contentious debates that took place at town hall meetings across the country when Congress debated the issue in 2009, when he said seniors were subjected to “some of the most scurrilous, misleading claims.” He likes to point to what he calls “real data,” like the numbers on his chart showing how many seniors in various towns got discounts on prescription drugs, or the story of a community health center in Windham that benefited from funds in the health reform law.
“To me, those town-by-town numbers are exactly what Tip O’Neill would tell any member of Congress to go out and talk about,” Courtney said, referring to the former Speaker of the House known for declaring that all politics is local. “Because I truly believe that when you localize information such as the prescription drug benefits, the health center in Windham, which just cut a ribbon the other day, and tie it to the health care reform law, that’s just smart representation.”
Not everyone agrees with Courtney’s assessment of the law, or his reasons for touting it. Daria Novak, a Madison Republican running for the 2nd District Congressional seat, said she hears from people in the district with concerns about health reform, particularly business owners who are unsure about its impact and wary about hiring while they’re uncertain.
“My guess is the reason that Congressman Courtney is talking about this issue so much is that the people in the 2nd District are very upset about Obamacare,” she said. “I believe that Congressman Courtney is trying to defend himself and justify why he voted for this bill.”
Like Novak, Republican candidate Christopher Coutu, a state representative from Norwich, favors repealing health reform. His campaign manager, Chris Covucci, said the law will lead to cuts in Medicare spending and the Department of Defense, which could hurt the region’s defense industry and lead to military base closings, taking away jobs.
“Joe Courtney has lost sight of how to grow jobs in Connecticut,” Covucci said. ”And ultimately, it will be jobs, not the government, that provide health care and stability for working families.”
And Novak said that Courtney will have little choice but to talk about health reform if she wins the Republican nomination.
“[Courtney] will be talking about this because we are going to bring the issue up,” she said.
A campaign issue?
In an election year expected to focus largely on the economy, will other candidates follow Courtney’s lead as the elections approach, or keep quiet about health reform?
Norman J. Ornstein, a resident scholar at the conservative American Enterprise Institute, said certain elected officials will be happy to talk about health reform: Republicans in safe districts, where the law is a rallying cry and politicians can pledge to repeal and replace it, and some Democrats in districts where it will generate positive feedback.
But Ornstein predicted that Republicans in contested districts will likely avoid talking about the law because they don’t want people to ask what they’d replace it with. And some Democrats will likely be reluctant to address it for other reasons.
“One, because we know it’s met with at best lukewarm approval,” he said. “Two, because I think where Democrats talk about health, they’d much rather talk about Paul Ryan’s Medicare plan.”
Congress’ approval rating hovers around 10 percent, making it less potent for incumbents to tout their accomplishments than to accuse the other side of threatening to destroy something popular, Ornstein said — in this case, Republican Rep. Paul Ryan’s plan to shift Medicare from an entitlement in which the government pays the medical bills to one in which the government gives seniors money to buy insurance.
For Democrats that do campaign on health reform, Ornstein said they’ll likely focus on the elements of the law that have proven popular and what Republicans would do if they repealed the measure. Those include a provision allowing young people to remain on their parents’ health insurance until turning 26 and requirements that insurers offer coverage to people with pre-existing conditions.
Courtney noted that the law does not seem to carry the same emotional resonance as it did in 2009, when Congress was debating proposals and town hall meetings drew protests and people scared that it would hurt Medicare.
The tone at Courtney’s appearance last week in Enfield, the site of a contentious 2009 meeting, was decidedly calmer. People in the audience listened as Courtney and Christie Hager, regional director for the U.S. Department of Health and Human Services, spoke about health reform and Medicare. Some audience members asked about Medicare coverage and how the U.S. Supreme Court or a new presidential administration could affect health reform. The most impassioned exchanges involved why Medicare doesn’t cover dental care, or disparities between Medicare Advantage plans and traditional Medicare.
The difference in tone doesn’t mean everyone is sold on the law, Courtney said. “There’s still, I think, a lot of concern people have,” he said. “The jury’s still out for a lot of people, but it does not have the same emotional response that it did in 2009.”
That could change this summer, he added, when the U.S. Supreme Court is expected to rule on a challenge to the law’s mandate that most Americans have health insurance.
The root of his interest
Asked about the root of his interest in health care, Courtney, a lawyer, noted that he had to purchase insurance when he was a small employer. He had a brother who died of cancer at 26. Although his brother had health insurance, Courtney said the experience taught him that “we all have clay feet and that not having a system that provides that basic level of security is just really unacceptable for a country.”
His wife, Audrey, is a nurse practitioner who gives him exposure to a more expert viewpoint. And he says the year he spent in England during college gave him a chance to see how another system worked.
“But to me, at the end of the day, this is really an issue about justice,” he said. “It really is about whether or not a society or a country like ours can have some basic level of provision for something that we all need as humans.”
Stopping a Higher Education Catastrophe
Read Congressman Courtney’s Op Ed in the Huffington Post.
Don’t Let Student Loan Rates Double
By Congressman Joe Courtney and Senator Jack Reed
Education should not be the province of the lucky few, but the right of every American with skill and determination. Given the opportunity to better themselves through higher education, individuals can provide for their families and strengthen our nation.
A college degree is becoming more essential than ever. In 1980, the gap between the lifetime earnings of a college graduate and a high school graduate was 40 percent. In 2010, it was 74 percent. By 2025, it is projected to be 96 percent.
But with college tuition skyrocketing and the purchasing power of federal financial aid receding, the doors of opportunity are closing on more of today’s students. This is driving young Americans to assume historically high levels of student debt and impeding their climb up the income ladder.
To put this in perspective, tuition rates at four-year colleges and universities have risen over 32 percent in the last decade, and last year Americans took out more than $100 billion in student loans for the first time in our history. Student loan debt now exceeds credit card debt in the United States, creating an immense burden that will last years after graduation.
The problem will only get worse if Congress does not act soon. On July 1, 2012, interest rates on subsidized Stafford student loans — one of the few programs that is affordable for students and families — will double, from 3.4 to 6.8 percent. In no uncertain terms, this would be another hit to middle-class and working-families, and a de facto tax increase on as many as 10 million people.
According to the non-partisan U.S. Public Interest Research Groups (PIRG), if Congress does nothing, borrowers taking out the maximum $23,000 in subsidized student loans will see their interest balloon by an estimated $5,000 over a 10-year repayment period and $11,000 over a 20-year repayment period.
Now, students who took out loans have a responsibility to pay them back. But the government shouldn’t balloon payments at a time when our economy is still struggling to climb back from the worst recession in generations.
To ease the financial challenge of paying for college, we have introduced legislation in the House and the Senate to prevent interest rates on these student loans from doubling this year. Our bill would permanently cap Stafford student loan interest rates at a reasonable and consistent 3.4 percent for low-and moderate-income students.
Student loans should be an investment that pays off, and can be reasonably paid off. Failing to pass this legislation will make it harder for smart, hard-working Americans to join and stay in the middle-class.
Making college more affordable is key to unlocking America’s economic competitiveness. Business leaders know it is vital for young Americans to get an education beyond high school. If today’s students cannot afford college, businesses will not have the workers with the education and training they need to keep our economy competitive and dynamic far into the future.
Under President Obama’s leadership, Congress overhauled the college student loan program — ending a flawed system that gave away billions in federal subsidies to private banks that simply acted as middle-men and putting those taxpayer dollars directly in the hands of students to pay for their education.
Now we need to take the next step and prevent this looming rate hike.
Nothing contributes to America’s economy or helps people overcome economic hardship and fulfill their promise more than a good education.
Making college more affordable is one of the best investments our nation can make in America’s economic future.
Lets stop this rate hike and ensure financial aid opportunities afforded today will also be available to future students. Please join us in this effort by contacting your Congressman or Senator and asking them to stop the student loan rate hike.
