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Over the winter break, college students across the United States received a lump of coal in their stockings as the U.S. Congress voted to increase the rate that interest is charged to student loan programs.
In an attempt to reverse more than four years of irresponsible spending, the Republican party’s coiffeurs have decided to cut spending across many popular programs.
With moderate senators balking at the attempt to increase the amount students must pay to borrow funds for their college education, Vice President Dick Cheney used his authority as Head of the Senate to cast the tie-breaking vote in-favor of the proposal.
With savings of $12.7 billion over five years from student loan programs, the new law sets student loans at a fixed rate of 6.8 percent, effective July 1. Currently, student loan rates stand at 5.375 percent. That’s an increase of 1.425 percent in fewer than six months.
Based on these numbers, graduating seniors are strongly advised to skip their six-month grace period between the time they graduate and the time they consolidate their loans in order to save thousands of dollars in loan payments.
By no fault of their own, millions of students across America will soon receive a large “tax increase” because our nation’s leaders can’t figure out their priorities. Some say tough choices must be made to tackle the issue of reducing our nation’s debt.
However, it is important to know that while Congress voted to impose this massive increase to student loans, $70 billion of new tax cuts were authorized to extend current tax cuts; like capital gains for those invested in the stock market.
I believe it is important to have tax policies that promote opportunity and growth, unfortunately, this policy increases the burden of our country’s fiscal problems on the backs of our nation’s students.
Disparagingly, our leaders believe it is OK to compromise the opportunities and hopes of future generations in the name of their short-term political goals. In three years the U.S. federal government has accrued more than $3 trillion of additional debt. Now totaling more than $8 trillion, America’s national debt has been on the rise for four consecutive years and is growing by the day. Instead of finding a real solution, our leaders have found a band aid approach already beginning to wear off.
When Pepperdine seniors walk across the stage in May and celebrate the completion of their education, they can take to heart that while they will be paying more in student loans, Congress decided to give itself a $3,100 pay increase.
The justification for this is a “cost of living increase” but it seems to me the typical American family missed out on that payment.
Over the past few years, the median household income has seen a decline while the cost of living and inflation has been on the rise.
How can a newly graduated college student afford to make it in the working world when facing another obstacle imposed by our leaders?
Many of our leaders argue the importance of free markets to allow fairness and the stride of economic opportunity but for some reason believe this does not apply to student loans. Every year, students agonize to secure loans from the federal government and private institutions looking for the best rates possible.
Most students don’t realize the federal government guarantees private institutions specific interest rates for some student loans which allow them to earn millions of dollars in profits.
If the true forces of the free market were allowed to rule and private banking institutions were forced to compete for our loan requests, we could save tens of thousands of dollars over the lifespan of our tenure of payments.
It’s confusing to hear our leaders say they believe free markets are the recipe for success but somehow believe this does not apply to our nation’s future leaders.
All the tax cuts in the world mean nothing when a large deficit and debt will inevitably result in tax increases in the future. And college students have become the first victim of this crime.
Submitted 01-19-2006
MALIBU, CA
