Best option is passing student loan deal
When it comes to the debate over student loan interest rates, Connecticut Sens. Richard Blumenthal and Chris Murphy are right. So, too, is 2nd District Congressman Joe Courtney, the Democrat representing eastern Connecticut in the House.
But Rep. Courtney is a bit more right and a lot more practical.
The debate over what to do about the widely used Stafford loan program has divided Connecticut's all-Democratic delegation. In that intra-party debate, Rep. Courtney correctly recognizes that in politics it is sometimes better to get a flawed deal than no deal, especially when it leaves the potential to fight another day. This is such a case.
The story goes back more than a year ago when interest charged on the Stafford loans was set to double from 3.4 percent to 6.8 percent. Falling short in his fight to have the lower rate fixed going forward; Rep. Courtney played an instrumental role in an reaching an agreement to extend the rate for another year.
Unfortunately, a year later Democrats and Republicans were still at odds over how to manage the Stafford loan program, with Republicans demanding a more budget-friendly deal with an adjustable rate. With no compromise achieved, the rates jumped to 6.8 percent July 1.
The stalemate was broken when the Senate passed a bill, retroactive to July 1, which contained the adjustable rates Republicans wanted, but with caps.
The bill would offer a fixed loan rate, tied to the 10-year Treasury note at the time a loan is approved. This year that would be 3.9 percent for undergraduates, 5.4 percent for graduate students. They would pay that rate for the life of the loan.
But as interest rates go up, which they almost certainly will, so too will the cost of these loans for students in the future. The bill caps the loan rates at 8.25 percent for undergraduates, 9.5 percent for graduate students. The White House backs the deal.
That was not good enough for 18 Senate Democrats, including Sens. Blumenthal and Murphy, who voted against the bill. They make some legitimate points. Federal student loans should not be about making money for the government - $715 million more over the next decade according to the Treasury - but about helping students afford college, they argue. And while the compromise bill may help students taking out loans in the next year or two, these "teaser rates" will likely disappear and leave future students with unaffordable interest burdens.
Those are legitimate complaints. Republicans do have their priorities wrong. Helping students get a higher education - not generating revenue - should be Congress' priority. A better educated populace will fuel economic growth, which does more than anything to reduce the deficit.
But politics is often about the art of the possible, and Republicans are not budging. If this compromise fails, students will be stuck with the 6.8 percent rate.
A House vote could come in the next day or two. If the Republican majority chooses to take up the bill under suspension of the rules, a two-thirds vote in support will be necessary, and that means winning a substantial number of Democratic votes. House Minority Leader Nancy Pelosi has designated Rep. Courtney as the leader of the effort to secure those votes, recognition of the congressman's knowledge and passion about the subject.
Getting the compromise bill passed will provide students with some certainty, said Rep. Courtney. In future sessions the Congress can make adjustments, he recognizes. When interest rates go up Democrats will be in a better position to take their case to the public that student loan interest rates are growing too large.
Rep. Courtney said a discussion must also take place about the ever-rising cost of a college education and what leverage the federal government has to control those costs, such as tying tuition fees to eligibility for research and other federal grants.
For now, however, the goal must be to rollback the doubling of Stafford loan interest rates. There is a deal in place to do that. Rep. Courtney is right in trying to seize that opportunity.
The editorial board is composed of the publisher and four journalists of varied editing and reporting backgrounds. The board's discussions and information gained from its meetings with political, civic, and business leaders drive the institutional voice of The Day, as expressed in its editorials. The editorial department operates separately from the newsroom.
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