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Fox 2 Video: How Should Congress Handle the Student Loan Rate Crisis?

With rates set to double in July, what do you want to see Congress do or debate?

College students and their families have been keeping tabs on Congress for the past few weeks with the possibility of federal student loan rates increasing.

If Congress doesn’t act by July, the rates for the Stafford federal loans will go from 3.4 to 6.8 percent.

While Democrats and Republicans agree that the rate needs to remain at the 3.4 level, they haven’t agreed on how to get it done.

Sen. Roy Blunt (R-MO) publicly stated that he supports a proposal to extend the low interest rates for students, according to Missouri New Horizon. In addition, the article states, “The issue at hand now is how to fund the increase. Republicans are calling to pull the funds from President (Barack) Obama’s health care law, while Democrats want the extension to be funded by closing a tax loophole on wealthy individuals.”

Earlier this week, on Fox 2 News, Rep. Russ Carnahan (D-St. Louis) said that there are better alternatives to keeping the rate low than pulling from the healthcare law. 

What would you like to see happen? What do you think should be done about the student loan rates?

Lee Presser May 07, 2012 at 12:11 AM
H.R.5 passed the U.S. House on 1-17-07. The vote was 356-Yes to 71-No (8 not voting). (Overwhelmingly bipartisan vote) The bill was introduced by George Miller (D-CA), at the time, Chairman of the House Education and Labor Committee. (Democrats controlled both Houses then.) Under the terms of the bill, the rates on subsidized Stafford loans for college students were to fall from 6.8 percent (at the time of passage) to 6.12 percent in 2007, 5.44 percent in 2008, 4.76 percent in 2009, 4.08 percent in 2010 and 3.40 percent in 2011. The Democrat leaders in 2007 wrote the language of H.R.5. They stopped with the year 2011. Now, in 2012, under the terms of the bill, the rate cuts expire and will return to 2006 levels. (Here is another example of a rate returning to a previous level: On January 1, 2013, the federal estate tax exemption and rate, signed by President Obama 12-17-10, will default to the numbers that were in effect in 2001/2002.) The cost of H.R.5 was close to $6 billion over five years, which was “paid for” by reducing the profits and increasing the fees of the top 1 percent of student loan providers that participated in the Federal Family Education Loans (FFEL) program. That top 1 percent of lenders was made up of about 30 companies that provided 90 percent of all student loans. Which employers (the businesses to be taxed are employers) would Democrats in Congress like to take money from to give to the student loan program?
Christine May 07, 2012 at 02:02 AM
I believe Congress should keep the rates at what they are today along with lowering the rated on Parent Plus Loans. The congress mismanagement of funds should not be passed down to students and parents who are supporting /seeking higher education. Maybe if congress let a year without a raise pass or gave up their health insurance for life which no American citizen has there would be no reason to raise rates. A corrupt government run by lobbyist continues to destroy this country.
Jim Davis May 07, 2012 at 02:43 AM
Student loans aren't the issue; they are merely a symptom of the disease. The real problem is the cost of college education. The cost has risen over 400% since 1980 (the only other industry that has experienced that type of inflation is health care). The reason so many kids and families feel compelled to take out a loan is because the cost has exceeded what an average family can afford. Colleges and Universities have lost touch with their mission which is to educate students. Instead they are spending millions of dollars on things like student housing akin to hotel quality and sports and recreational facilities which rival anything a private citizen could afford. This is why costs are rising at such an alarming rate and why students must now sacrifice future earnings and purchases to attain a college degree. Lowering rates will create the same overspending that we just witnessed with the housing crisis. Of course colleges and universitites want to keep the rates low to encourage more borrowing. But we have all seen the damage and destruction caused by too much leverage, especially when the only beneficiaries seem to be the ones responsible for this mess. Find and exploit efficiencies which are available through technology. Wipe out redundancies (Mizzou doesn't need an engineering school when Rolla provides the same thing). Make teachers teach! Don't provide your students with a higher standard of living than they can afford when they graduate.
Michael O'Fallon May 07, 2012 at 04:50 AM
Larry, I actually love your counter-question: What kind of country do we want to be? That question should be at the heart of every decision laid before our elected officials. Should this country always act in a way that benefits the many at the expense of a few, or should the government simply guard against violence to ensure order? Certainly, in today's world, the roll of government seems to point (sadly) more squarely to the former. So long as the policy enacted benefits more people than it hurts, then it's good policy? Well, that line of thinking disgusts me. Liberty-the freedom to succeed and the freedom to fail-should be paramount. The less we rely on the government, the better. The federal government as it exists today is so much massively bigger than what our country's founders had framed. Yet the American people continue to be told the government needs to take care of more of their needs from cradle to grave, and the people continue to take it hook, line and sinker. Franklin himself received no formal education past the age of ten. Yes, those were certainly different times, but how then with a 10-year-old's education did Franklin come to be revered as one of the greatest statesmen, inventors and authors of his time (or for that matter in the whole of American history)? The answer is his own personal desire to learn & grow.
Jim Zemenick May 08, 2012 at 04:29 PM
Jim Z Today college students are able to borrow college funds at 3.4%. Today Bank of America borrows from Federal Reserve at 1/4 of 1% (.0025). College students use the money to improve their future USA earnings potential by becoming a more educated employee. Bank of America uses funds in a variety of ways including International investing in high risk areas (e.g. Greece). Congress wants to raise the student loan rate from 3.4% to 6.8%. This proposed 6.8% is 28 times greater than the FRS rate to Bank of America. The Federal Reserve rate will not increase from .0025. I do not get it. As Dylan sang in the 60s we need to tell Congressmen to stop "standing in doorways and blocking up halls" because the times are achanging.

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