The Student Loan Crisis Everyone Saw Coming
Continued from previous page
And finally, the Consumer Finance Protection Bureau, a centerpiece of the Dodd-Frank bank reform act that Obama fought for against extraordinary GOP resistance, has made it abundantly clear that policing bad practices in the private loan industry will be a high priority of the new agency.
Taken in sum, the Obama administration has been consistent in its efforts to ease debt repayment, boost financial assistance to low-income Americans seeking a college education, and crack down on abuses in the student loan industry. As a result, many holders of student loans should be able to lower their payments, although some education activists say it’s not clear that many Americans are taking advantage of things like the income-based repayment mechanism. But perhaps the most worrisome element to consider about the reforms is how tentative they are. In fact, the tide could start turning in the opposite direction as early as this summer. On July 1, the interest rate break included in the 2007 College Cost Reduction and Access Act expires, and the current Republican-controlled House has shown no interest in funding its extension. The recently released Ryan budget also calls for the repeal of Obama’s expansion of the income-based-repayment program. As a result of the various budget and debt ceiling showdown battles of the last two years, the Pell Grant program has been steadily whittled down ever since its initial stimulus-bill-funded expansion. Indeed, Ryan’s budget would move Pell Grants from mandatory spending into the discretionary spending category, making it even easier to shrink the program in the future.
Of course, Republicans have an easy explanation for their opposition to expanding the Pell Grant program, forgiving student debt and keeping interest rates low on student loans: We can’t afford it. And there is some truth to that. If revenue increases are off the table, then the problem of how to pay for low loan rates, while at the same time providing expanded financial assistance, does become acute. But that just raises, once again, the question of priorities. We know, without any question, that college education translates into higher incomes. But the current Republican Party, by its own actions and rhetoric, has made it abundantly clear that protecting lower taxes for the wealthy is more important than ensuring that as many Americans as possible can get a good college education without consigning themselves to a lifetime of onerous debt. In contrast, Obama, working under the constraints of a system that allows him almost no freedom to operate, has consistently enacted reforms that relieve the pressure of that debt, and help ease the way to higher education. If that’s snobbery, if that’s a “government takeover,” then maybe we need more elitist big government, and not less.