Debate persists over student loan interest rates

The debate over student loan interest rates continues as Congress Democrats and Republicans flounder trying to find common ground. The Republican-controlled House of Representatives passed the Interest Rate Reduction Act on Friday, April 27 with a 215-195 vote and the Democrat-controlled Senate vows to shut it down. With both sides of the aisle struggling to find a solution and President Barack Obama issuing veto notification for the reduction act, the impending July 1 doubling of student loans approaches with no resolution in sight.

Last Thursday, May 3, Portland State hosted U.S. Rep. Suzanne Bonamici, D-Ore., at a town hall meeting in Smith Memorial Student Union, where Bonamici spoke with students and recent graduates, discussing student loan interest rates and possible solutions Congress is working on to avoid rates doubling this summer.

Adam Rahmlow, president of the Associated Students of Portland State University, introduced Bonamici at the meeting. Rahmlow said that prior to her Jan. 31 election, Bonamicispent a few of her precious final hours campaigning at PSU. “We like to think that students played a large part in her victory,” Rahmlow said.

In 2007, the College Cost Reduction and Access Act lowered the interest rates on subsidized Stafford loans to 3.4 percent. Bonamici said since that law was enacted, about 15 million students have benefited from the reduced rates. However, the act was only a temporary fix and will be expiring on July 1. “Unless Congress acts, the rates are set to double to 6.8 percent this July,” Bonamici said. “That’s going to mean that about seven million low- and middle-income students around the country, including about 120,000 here in Oregon, will have to pay more for their student loans,” she added.

For each year that Congress does not act to change this, each student will be paying an average of $1,000 more in repayment than they are now. That means that across the nation, students will be paying an additional total of $6.3 billion for the 2012–13 year.

“With interest rates across the board historically low and unemployment rates for graduates exceptionally high, doubling the student loan interest rate makes no sense,” Bonamici said. “So it’s clear that we have to do something to keep those rates low.”

Bonamici said that she believes most of her colleagues, Democrats and Republicans alike, with the exception of a small few, truly want to solve this issue. She explained that Congress is exploring ways to try to solve this issue and has a few different proposals on the table.

The idea is that if Congress is going to pass a bill to keep the interest rates low, it will essentially need to find another way to get that $6.3 billion in revenue.

Bonamici, along with several other Congress members, have sponsored the Stop the Rate Hike of 2012 bill. It would offset the costs of helping students pay for college and meet the $6.3 billion shortfall by closing tax loopholes for big oil companies.

“It’s good policy and a good way to do this,” Bonamici said. “I don’t think we need to be subsidizing big oil companies that are making record profits. To me, investment in higher education and making sure students can pay for that higher education makes more sense than giving tax breaks to big oil companies,” she added.

Bonamici said that House Speaker John Boehner, R-Ohio, supported the Interest Rate Reduction Act, which has the same end goal of keeping the interest rates at 3.4 percent, but would pay for the $6.3 billion by cutting the preventative public health fund; a program that helps pay for breast cancer screening, childhood immunizations and other life-saving services.

“If I took a survey in this room, and I said, ‘Who thinks we should pay for keeping interest rates low by closing tax breaks for big oil companies?’ and ‘Who thinks we should pay for the interest rate reduction by cutting cancer screenings, childhood immunizations?’ I could guess that probably most of you said it would make more sense to keep the rates low by ending tax breaks to big oil companies. But that’s not what the House did,” Bonamici said.

Bonamici said she and many of her colleagues knew that Obama would issue a veto notification and hope the bill will not go through the Senate.

“So when faced with that really difficult decision, I voted no on that bill as much I want to keep the rates down,” Bonamici said. “I want to pay for it with a way that doesn’t hurt low income communities and doesn’t jeopardize health services, and, importantly, I want a bill that’s going to go through both chambers and be signed by the president.”

Liberal studies senior and former Vanguard staff writer Theo Burke attended the meeting and told a bit of his story. When he first went to college years ago, he left not quite graduated with a total of $600 in debt. “Can anybody in this room even imagine coming out of college with only $600 in debt?” Burke asked.

Now, with a small mortgage and various other expenses, Burke is back in college and, after only one year at PSU, is $10,000 in debt. Burke said he could only imagine what will continue to happen in years to come. “The 6.8 percent is totally unacceptable,” he said.

Burke said that part of his reason for bringing up this story is that during an internship in the state legislature, some of the members would make comments about how lazy college students are and that they just want to take the money. “So I’m telling this story just to tell people somewhere along the way, your colleagues, that we’ve got lots of hard working students, younger and older,” Burke explained.

“This should not be a partisan issue, it’s a student issue,” Bonamici said. “It’s going to affect people across the nation whether they’re Democrats, Republicans, Independents or non-affiliated. So it’s really time that we take action and do something that makes sense for students, and I’m going to continue to work on that.”