If you don’t think you have a stake in this debt ceiling debate, then you had better start paying attention.
At a recent White House meeting during the deficit reduction talks, Rep. Eric Cantor (R-Va.) proposed eliminating the in-school subsidy on student loans as one step toward cutting the federal deficit, according to the Chronicle of Higher Education. The Chronicle reported that President Obama reacted strongly to that proposal and pushed back hard against Cantor.
“I’m not going to do that. I’m not going to take money from old people and screw students,” Obama said.
Having the government pay the subsidy on certain student loans provides a sense of stability and calm to students. It allows students to pursue their educational goals, knowing that they will only be responsible for the principal amount of their loan, rather than the interest. This also provides a suitable alternative to the unsubsidized version of these loans, which provides students with more cash but keeps the tab running on the interest while the student is in school. The interest subsidy provides students with the alternative of coming out of their educational experience owing less money than they would otherwise.
This is not the first time that Republicans have tried this sort of thing. According to the Chronicle, Republicans have been proposing making students pay the interest on their loans as far back as 1994, as part of their “Contract with America.” They brought the idea back to life in their blueprint for the 2012 fiscal year, arguing that there is “no evidence” that the subsidy increases college attendance, according to the Chronicle.
Students who aspire to achieve a college education are not motivated to do so because of an interest subsidy. Students pursue a college education for a wide variety of reasons. In some cases, they may want a better career. In others, they may simply be after personal enrichment through the knowledge that they obtain while attending a university.
Paying for this subsidy, however, provides those students that rely on loans to educate themselves a certain level of stability while they are in college. The peace of mind that this subsidy provides allows students to focus on their educational goals while not having to wonder how much they will owe when accounting for interest owed.
According to the Chronicle, eliminating this subsidy will save the federal government $43 billion over 10 years. This is not likely to be enough to put a dent into the current federal deficit, which stands at nearly $1.5 trillion, according to the Congressional Budget Office.
Most experts agree that the long-term drivers of deficit and debt are entitlement programs such as Medicare and Medicaid. Our leaders should be focusing on the solvency of those programs first, before electing to come after students. Obama has acted judiciously in standing firm and not giving in to Cantor’s proposal in order to secure a deal on the debt ceiling. It should be noted, however, that Obama has supported eliminating the subsidy for graduate students as a way to cover a shortfall in the Pell Grant program, according to the Chronicle.
Many Republicans have consistently talked about not raising taxes on anyone in a bad economy.
If Cantor’s proposal is any indication, however, Republicans are perfectly happy to increase expenses upon students in a bad economy. The proposal to eliminate the in-school subsidy is a bad one, and Obama rightly rejected the proposal and stood up for the students of this country. Student loans are an important tool that give all of us an opportunity to achieve the American Dream.
Protecting the subsidy provided by our federal government is critically important.Let us hope that cooler heads can prevail and that we can find sensible approaches to bringing our federal budget into balance and reducing our deficit and debt.