Summer is normally a time for sun and swimming, but this one has been a time for swindling students.
Collective student-loan debt is the second highest form of personal debt in the country, topping $1 trillion. Yet it’s set to get even higher. On July 1, the interest rate on federally subsidized Stafford loans doubled from 3.4 percent to 6.8 percent. Congress had this deadline to act to prevent it, but it took its members until Thursday to take action.
A few senators, like Elizabeth Warren, D-Mass., Jack Reed, D-R.I., and Kay Hagan, D-N.C., sought to prevent it from happening by offering reasonable proposals. Reed and Kagan’s bill would have kept the loans at the 3.4 percent rate for one year while Congress worked on long-term solutions to the student debt crisis. Those long-term solutions included increasing funding for higher education by, among other things, closing tax loopholes for the wealthiest Americans. It would also seek to eliminate the ability of the federal government to profit from student loans. Those profits will amount to $51 billion this year alone.
Warren’s bill would have reduced the interest rates to 0.75 percent for one year. Her bill did not gain enough support to go to to a vote, but Reed and Kagan’s bill, later endorsed by Warren, was to be voted on in the Senate until it was thwarted by a filibuster.
With the failure of both of these bills, we instead have a new bill, the Bipartisan Student Loan Certainty Act. Sounds nice, right?
There’s the word “bipartisan,” evoking images of compromise among our legislators. There’s emphasis on the fact that it will reduce interest rates this year, not only bringing the interest rate on undergraduate loans back down nearly to where they were, but also reducing interest rates for unsubsidized loans — those used by graduate students — from 6.8 percent to 5.4 percent. This bill passed the Senate July 24, passed the House on Thursday and is wholly supported by President Barack Obama.
Yet Warren and others have fiercely criticized this new bill, as they should.
Despite the temporary reduction of interest rates, because it ties them to 10-year U.S. Treasury notes, the rates are subject to fluctuate, meaning that in the long run, if interest rates on these notes grow, the interest rates on student loans will also grow. While the bill caps interest rates, the caps are extraordinarily high — 8.25 percent for undergraduate students and 9.5 percent for graduate students. Furthermore, the bill still allows the federal government to profit from student loans.
The rationale behind the bills proposed by Warren, Reed and Hagan is logical and just: We should not be making massive profits off the backs of our youth, and we should not be indenturing our youth to a lifetime of debt. These are moral truisms that shouldn’t even need debate.
Yet how is college supposed to become affordable?
There are plenty of solutions. When we have the greatest concentration of wealth in our nation’s history in the hands of a few and a bloated military budget used to fund the destructive atrocities of violence and war in the name of U.S. global hegemony, then it is clear we have the money to fund higher education. What prevents us from doing that is our priorities.
Prioritizing the interests of the wealthy over those of the masses is reflective of deeper, structural and ideological problems in our society. We need an entirely new economic system in which we do not view everything as a commodity — as something that only has worth if it can be used for future profit.
That is exactly what education has become, a commodity, not something used to further ethical development and a sense of duty to serve the common good. It has become an industry used to make profits and that’s useful to students only if it can, down the road, allow them to increase their individual purchasing power.
These deeper changes, though, are for the long run.
While we continue to work and struggle for them, we should support what is sensible and available to us in the present, which are policies like the ones proposed by Warren, Reed and Hagan, and vehemently oppose the one that passed and will likely be signed by the president. If we care about the well-being of future generations and want to live in a decent society, this should be a no-brainer.
Eric Collins of Orono has a bachelor’s degree in political science from the University of Maine. He is a member of the Maine Peace Action Committee, a student organization at the university, and Voices for Peace, a community chorus that sings about peace and justice.