COMMENTARY | Today the Republican led House of Representatives, by a vote of 215-195, approved legislation that, per Yahoo, “would extend the low 3.4 percent rate on government-subsidized student loans [for one year].” One controversial aspect of the bill is its requirement that the federal government eliminate the Prevention and Public Health Fund, a key feature of the Affordable Care Act. The money saved by this move will go towards offsetting “the $5.9 billion shortfall that comes with an extension of the low rate.” The Republican Party’s decision to fund the extension in this way is a politically savvy move. However, it does a disservice to Americans of all political persuasions.
The GOP’s decision to sponsor a student loan bill that calls for the elimination of the Prevention and Public Health Fund is a brilliant political move. On the one hand, Republicans can appeal to the millions of Americans who have (or will soon incur) student loan debt by pointing to the fact that they voted to keep interest rates low. At the same time, the Republican bill is anathema to Democrats who are opposed to the elimination of the Prevention and Public Health Fund. Democrats will likely use their influence to get the Senate to veto or table the bill, thereby risking the ire of people who have large amounts of student debt. As an ABC News article implies, Republicans will achieve a major victory if the extension expires on July 1 of this year without a new agreement, as Democrats will likely be blamed for allowing the rate to double to 6.8 percent.
While the Republican Party’s move may be politically savvy, it goes against the interests of millions of Americans of both parties who have government subsidized loans. Many of these individuals are already struggling to pay down their student loan debt, and it will be even more difficult for them to achieve this goal if the rate doubles. At the same time, according to an article from a Fox News affiliate (Fox 34 News), many Americans are already under a lot of duress do to issues related to the weak economy. They do not need to deal with the added stress resulting from the uncertainty over whether or not student loan rates will be extended. Finally, these men and women are likely to spend less money over the next few months, as they wait and see what happens to student loan rates. Their decision to retrench might negatively impact the economy.
Both political parties claim that they are committed to keeping student loan rates at 3.4 percent, at least for another year. If that is the case, Republicans and Democrats should work together to craft a bill that is palatable to both sides. At the very least, the parties should agree to extend the current student loan rate until after the November elections. This is one issue that neither side should play politics with.