Who knew student loan interest rates could be so provocative? Until last week, only a few members of Congress seemed aware that the current 3.4 percent interest rate for government-subsidized student loans will double by June 30 without congressional action. Now everyone knows, thanks largely to the presumptive Republican presidential nominee Mitt Romney, who said last Monday that the lower interest rate should remain in place. President Obama deserves credit, too, for launching the White House college tour to highlight the student loan interest rates. Obama's push no doubt prompted Romney to step up to the plate.
By Friday, the previously sleepy issue had escalated into a literal shouting match, with House Speaker John Boehner bellowing on the House floor that the flame-throwing debate was beneath the dignity of the institution. Rep. Joe Courtney, D-Conn., was almost apoplectic at the Johnny-come-lately intensity from Republicans. Courtney has been coming to the House floor regularly for months to urge members to stop the interest rate hike from going into effect, ticking down the days until June 30. "This was an issue which I have followed like a box score," he told me. He got nothing but shrugs from Republicans. (And to be fair, not many Democrats were in a huff like he was.)
Now Republicans and Democrats are headed for a showdown over how to pay for a $6 billion, one-year freeze of the 3.4 percent interest rates for subsidized student loans. The battle breaks down on disturbingly predictable lines: Republicans want to raid a Health and Human Services Department fund that facilitates health screenings for families. Democrats want to raise taxes on small businesses. It's students versus family health versus small businesses--fine election fodder.
House Education and the Workforce Committee Chairman John Kline, R-Minn., sees the attention as a boon to an otherwise lackluster issue that might languish for years. He wants to spend the year negotiating a variable interest rate for low-income student loans. At first blush, Democrats seem OK with at least talking about the idea, although they say there needs to be protections for students.
Is Kline right that the bluster is worthwhile? Are student loans a political issue? Is it appropriate to discuss variable interest rates for low-income student loans? If so, what protections would be needed? How can policymakers deal with the student loan interest rates in the long term?