By Edgardo Cervano-Soto, May 7, 2012
Edgardo Cervano-Soto is a fellow with New America Media’s Youth Education Fellowship. The fellowship is a six-month long program for youth reporters aged 16-24 on education reporting. It is sponsored by the California Education Policy Fund.
Student loans became an election issue last week when President Obama said he supports the idea of maintaining a 3.4 percent rate on college loans. The President, speaking at a high school in Arlington, Virginia, urged Congress to extend a 2007 law that avoids a rate hike this summer. If Congress takes no action on the extension, the interest rate on college loans will automatically double to 6.4 percent on July 1, 2012.
Opinions on the rate increase do not follow partisan lines. GOP Presidential candidate Mitt Romney is also of the opinion that student loan interest rates should not be allowed to double this summer – a feeling shared by most other Democratic and Republican lawmakers.
Then why is this a contentious issue? The argument is not so much about keeping the interest rate down — everyone, apparently, is in agreement about that — but about how the government will pay for it.
Neither party has come forth with a detailed plan showing how they would offset the cost of keeping the interest rate at 3.4 percent, but GOP lawmakers are expected to propose cutting health programs for women (a move Democrats will oppose), while Democrats will propose closing a loophole that allows private companies to avoid paying Social Security and Medi-Cal taxes (a move the Republicans will oppose).
And again, loud public support for a bill that college students, especially low and middle-income students, need.
There’s no clear path forward. The only plan for both parties, up to this point, is to create a rhetoric that attracts young voters to their party.
Coincidentally, the Campaign for College Opportunity (CCO) in California released a study in April that demonstrates the economic returns college graduates will generate for the state. For every dollar California invests in higher education, according to the report, the state will get a net return of $4.50. Combined, UC and CSU college graduates are expected to contribute $12 billion annually to the state economy. CCO also reported that college graduates in California are far less likely to live in poverty.
The GOP argues that Obama is using the student loan issue as a tool to persuade young voters. He should be focusing on the economy, they say, and not on making student loan interest rates such a big deal. Well, it is a big deal. And it should come as no surprise that more college graduates equals a stronger economy.
On average, by the time a California college graduate turns 38 years old, the state’s investment in that student is completely paid, nothing owed. Unfortunately, the same logic doesn’t apply on Capitol Hill, where in order to get anything good done – even when both parties agree — something is always owed.