Education
9:27 am
Wed May 9, 2012

Students To Congress: Don't Let Interest Rate Double

Originally published on Wed May 9, 2012 7:07 pm

Clarise McCants and Patrick Johnson, both undergraduates at Howard University, are running late — they're on their way to join students from California and Ohio who've come to Capitol Hill to deliver a message to Congress: Don't let the interest rate on federal Stafford loans double in July.

The U.S. Senate took up the issue with competing proposals Tuesday. The Democratic proposal, which would have frozen interest rates at 3.4 percent, was blocked by a 52-45 vote.

Neither Democrats nor Republicans want to be blamed for a higher rate, but lawmakers can't agree on how to pay for keeping the rate from rising for future borrowers. Now, the political stalemate has mobilized students like Johnson, who says the rate hike would be devastating.

"There's a chance that after leaving college, I may not have a job immediately," he says, "and I'm still going to have to pay back these loans eventually. It would really set me back in debt even further."

McCants agrees: "$1,000 means a lot to me."

If the interest rate jumps from 3.4 percent to 6.8 percent on July 1, that's how much more would be added on average to every new Stafford loan for every year a student is in college.

"The student loan rate increase would effectively make college even less affordable for me next year," McCants says. "These additional costs may seem minimal compared to the fiscal budget or, frankly, the salary of a congressman, but they're a big burden to people like me who are economically disadvantaged."

McCants, Johnson and other students have organized with the help of the liberal think tank Center for American Progress. Their first Capitol Hill visit is with Sen. Rob Portman, a Republican from Ohio. Portman is all for the idea of keeping rates down, but he doesn't want to pay for it the way Democrats propose they do — by closing a payroll tax loophole used by business owners. Instead, Republicans want to pay for it by eliminating a preventive health care fund.

After meeting with Portman's staff, Tiffany Loftin, a student at the University of California at Santa Cruz, sounds upset about something one of the senator's staff members said.

"I have $38,000 in debt, like I told her," Loftin says. "It doesn't seem like she understood how urgent that was because she said it wasn't an urgent matter. I was disappointed."

Policy wonks who've been watching the political skirmish unfold also seem disappointed, especially after President Obama started pummeling Republicans with the issue.

"This small-policy issue that the president has made a big deal out of has, in many ways, been overblown," says Matthew Chingos of the Brookings Institution. "I think interest rates are certainly important, but the policy he's talking about is really about an interest rate of one type of federal loan and only on new loans that'll be issued in July and going forward."

For Republicans and Democrats, Chingos says, it's just one more issue with which to attack each other. But more importantly, it's a lost opportunity.

"I think the president got the whole country talking about higher education focused on this one piece when there's this much broader set of issues about affordability," he says.

According to Chingos, a serious conversation about college access, costs and reforming the federal student loan program has given way to political bickering that does little to help students. Now, Congress has less than eight weeks to come up with a relief plan.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

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The Senate took up competing proposals today to keep the interest rate for federal student loans from doubling. Neither Democrats nor Republicans want to be blamed for a rate jump in a few weeks, but lawmakers can agree on how to pay for keeping the rate low.

As NPR's Claudio Sanchez reports, the political stalemate has mobilized student who are on Capitol Hill pleading with lawmakers to stop the bickering.

CLAUDIO SANCHEZ, BYLINE: Clarise McCants and Patrick Johnson, both undergraduates at Howard University, are running late. They're joining students from California and Ohio who've come to Capitol Hill to deliver a message to Congress: Don't let the interest rate on federal Stafford loans double. It would be devastating, says Patrick.

PATRICK JOHNSON: Because there's a chance that after leaving college that I may not have a job immediately after, and I'm still going to have to pay back these loans eventually. It would really set me back in debt even further.

CLARISE MCCANTS: A thousand dollars means a lot to me, you know what I mean?

SANCHEZ: That's how much more would be added on average to every new Stafford loan for every year a student is in college if the interest rate jumps from 3.4 percent to 6.8 percent on July 1st. Clarise says, for her, it's a lot.

MCCANTS: The student loan rate increase will effectively make college even less affordable for me next year, and, you know, these additional costs may seem minimal compared to, you know, the fiscal budget or, frankly, the salary of a congressman, but they're a big burden to people like me who are, you know, economically disadvantaged, so...

SANCHEZ: Clarise, Patrick and the other students organized with the help of the liberal Center for American Progress. Their first visit is with Senator Rob Portman, Republican from Ohio. Portman is all for the idea of keeping rates down but doesn't want to pay for it by doing what Democrats propose, which is to close a payroll tax loophole used by business owners. Republicans want to pay for it by eliminating a preventive health care fund.

UNIDENTIFIED WOMAN #1: Thank you. Appreciate it.

UNIDENTIFIED WOMAN #2: You're welcome.

UNIDENTIFIED WOMAN #1: Have a good day.

UNIDENTIFIED WOMAN #2: You too.

UNIDENTIFIED WOMAN #1: Thank you.

SANCHEZ: After meeting with Portman's staff, Tiffany Loftin, a student at the University of California at Santa Cruz, sounds upset about something one of the senator's staff members said.

TIFFANY LOFTIN: I have $38,000 in debt, like I told her, and it doesn't seem like she understood how urgent that was because she said it wasn't an urgent matter. I was disappointed, though.

SANCHEZ: Another group of people who also seem disappointed are policy wonks who've been watching this political skirmish unfold, especially after President Obama began pummeling Republicans with the issue.

MATTHEW CHINGOS: This small policy issue that the president has made a big deal out of has in many ways been overblown.

SANCHEZ: Mathew Chingos is with the Brookings Institution.

CHINGOS: I think interest rates are certainly important, but the policy he's talking about is really about an interest rate on one type of federal loan and only on new loans that will be issued on - in July and going forward.

SANCHEZ: For Republicans and Democrats, says Chingos, it's just one more issue with which to attack each other. But more importantly, it's a lost opportunity.

CHINGOS: So I think the president got the whole country talking about higher education focused on this one piece when there's a much broader set of issues about affordability.

SANCHEZ: Chingos says a serious conversation about college access, costs and reforming the federal student loan program has given way to political bickering that does little to help students. Congress has less than eight weeks to come up with a relief plan. Claudio Sanchez, NPR News. Transcript provided by NPR, Copyright National Public Radio.

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