The Jeffersonian: Politicks, Sports, and Culture

Monday, January 30, 2006

Note To Self: Take Congressman's Advice

Not words you see or hear everyday, but consolidating my student loans is something that needs to be done sooner rather than later. Congressman Chet Edwards talks to us today about the federal boondoggle that is the Republican party these days. As also seen over at Pink Dome and Common Sense: Link

On January 31st, Congress begins its 2006 session. While public attention is focused on the Jack Abramoff lobbying scandal, there is a little-noticed scandal brewing that will hurt millions of college students and their hard-working families. Hidden inside an innocuous sounding “reconciliation” bill is an $11.9 billion cut in student financial aid. The House leadership intends to bring this vote up quickly, so most college students and their families won’t know until after it is too late that a huge tax has been put on the backs of present and future college students who must borrow money to attend college.

This $11.9 billion cut in student loan programs over the next five years is the largest cut in our nation’s history. It could not come at a worse time. Hard-working families are already facing fast rising costs for tuition, college textbooks, gasoline and home utility bills. Last year the United States had the largest international trade deficit in history—over $700 billion—and we are competing with China, Japan, India and other countries for good-paying jobs. Thus, the Congressional leadership’s plan will hurt both working families and our nation’s future economic competitiveness. It flunks the test of fairness and vision.

Interest rates on the popular Stafford loans and on Parent Loans for Undergraduate Students (PLUS) will be permanently increased on July 1st, to 6.8 percent for federal Stafford Loans from rates as low as 4.7 percent. Also included is a jump from 7.9 percent to 8.5 percent for PLUS fixed interest rates.

Unless we can stop this shortsighted bill from being passed into law, these changes will amount to an expensive new “student tax” that will place a tremendous burden on countless college students in our district and across the country. The student tax could force some students to take on a second or third job, and for others it might mean dropping out of college. For high-achieving, middle and low-income high school students, it might mean many of them have to give up their dream of a college education and a brighter future.

If this bill becomes law, which will probably happen, students and graduates should act quickly to consolidate their loans now as current consolidation rates can be as low as 2.75 percent with benefits applied. Other incentives to consolidate include a longer payment term, one monthly payment and no prepayment penalties.

To consolidate, you first need to know all your outstanding loans and their interest rates. If you are like many college students and your loan records are not quite up to date, you can visit the National Student Clearinghouse Web site at http://www.studentclearinghouse.org/; click on "students and alumni," then on "loan locator." You must have your Social Security number and date of birth to receive your loan information.

If these cuts were being made as a belt-tightening policy that applied to all Americans to reduce the deficit, then at least I could respect it as bad policy pushed for principled reasons. Unfortunately, this is not the case. The $11.9 billion student aid cuts won’t reduce the deficit. Instead, they are being pushed so the Congressional leadership can pass a few weeks from now an extension of recent temporary dividend cuts that give a $220,000 annual tax break to those making $1 million a year in dividend income. It is hard to imagine that Members of Congress and people making $1 million a year in dividend income will get huge tax cuts, while working families pay for them with an $11.9 billion student tax.

If that isn’t scandalous, I don’t know what is.

I believe the House leadership is out of touch with the values and priorities of American families, Democrats, Republicans and Independents alike. If Congress would ask those making a million dollars a year in dividend income to give up just a part of their $220,000 annual tax cut, it wouldn’t be necessary to pass a $11.9 billion student tax that will hurt high achieving students and their families and harm our nation’s future competitiveness.

With tuition rates skyrocketing in Texas since the state Legislature deregulated tuition in 2003 and the state’s share of funding for higher education dropping to historic lows, the federal government must do more, not less, to ensure financial aid is available for deserving students working hard to receive a quality college education. Access to higher education should be based on a student’s hard work and achievement, not on a family’s bank statement.

The House already voted on this partisan budget bill in December, approving it by just six votes. But slight changes that the Senate made to the bill are forcing it back to the House for another vote in early February. Congress should put the interests of college students and our nation’s future above special interests. The college student tax scandal should be stopped.

Pink Dome lets us know that this vote might take place as early as today. That means you should call your local Representative TODAY and let him/her know what you think of this ridiculous bill.