Fox News reports that the deal struck Thursday to lower student loan rates back to their pre-July terms is already prompting criticism from some who called it a stopgap measure instead of a permanent solution:
A highly touted student loan “deal” began to run into criticism Thursday as advocacy groups and Democratic lawmakers complained it would merely provide short-term relief in exchange for higher borrowing costs on future students.
A few years from now, students with subsidized loans could easily be paying far higher rates than the average person paying off a car loan. In the near-term, the college agreement would rein in student loan rates, which for new subsidized Stafford loans had doubled from 3.4 percent to 6.8 percent at the beginning of the month.
Under the deal, undergraduates this fall could borrow at a 3.9 percent interest rate.
But higher rates would still loom. The rates would only last through the 2015 academic year, after which interest rates are expected to climb above where they were when students left campus in the spring. Rates for undergrads would be capped at 8.25 percent.
Sen. Jack Reed, D-R.I., was one of the first senators to criticize the plan, after the official roll-out of the proposal earlier Thursday.
“Instead of preventing the doubling of these rates to 6.8 percent, it would gradually raise these rates above 6.8 percent,” he said in a statement. “We might see one or two or three years of rates that are relatively below that number, but inevitably, mathematically those rates will go beyond 6.8 percent. And the caps are rather high.”
Some leading voices in the black community have recently sharply criticized President Barack Obama over his efforts – or lack thereof - to help young African Americans pursue college.
United Negro College Fund President Michael Lomax called the Obama administration’s denial of “student loans to disproportionately large numbers of black parents because of blemished credit histories” a “nasty surprise,” summarized Courtland Milloy in The Washington Post, citing an op-ed Lomax penned for The Root.
Milloy went on to note that:
“We’re getting calls and e-mails from parents, at least two and three a day, saying the denial of their student loans is a disaster,” said Johnny Taylor, president of the Washington-based Thurgood Marshall College Fund. “You have black students from low-income households about to enter college or already there and pressing towards graduation, persisting just as Obama urged them to do, only to have his administration pull the rug out from under them.”
Nevertheless, from Howard University in the District to Morehouse and Spelman colleges in Atlanta, enrollment at HBCUs is declining as the realities of Obama’s revamped loan policies make a mockery of his high-flung rhetoric.
“It is particularly ironic that at a time when this administration has set a goal to increase the nation’s college graduation rate to 60 percent by 2020, this policy shift occurs that will make reaching the goal impossible,” said Cheryl Smith, senior vice president for public policy and government at the United Negro College Fund. “The tougher credit criteria are having a disparate impact on underrepresented minority students, the very ones that stand to benefit the most from a college education.”
It sounds like a fiscally conservative stance is not popular among Obama’s typically biggest fans.
It’s also important to note that all families with low incomes and poor credit have been hit with this, not just minority ones.
All this week, the White House is sponsoring a “text the president about student loans” gimmick, intended, apparently, to convince young people that the president himself is so interested in their lives that he is sitting around with his phone answering questions from random young people about student loans.
Former College Fix assistant editor Robby Soave has written a humorous article for The Daily Caller about his attempts to text chat with Barack Obama.
TheDC News Foundation: PREZ.
Automatic Response: Welcome to Text with the Prez! He’ll answer 1 Q each day on student debt. Got a Q? Reply w/ it in 160 characters or less. (Seriously, the Pres. will text u.)
TheDC News Foundation: If we keep subsidizing students’ education, won’t colleges respond like they always do — by raising tuition?
AR: Awesome. Got ur question! Now just reply with your first name, last name & age to confirm. (e.g. Ron Weasley, 17)
TheDC News Foundation: Robby Soave, 24
AR: Sweet, got it. Stay tuned: the President will txt u from 38383 to answer 1 Q submitted by a DoSomething member each day this week Got another Q? Reply QUESTION
Despite the president’s enthusiastic “Sweet, got it,” response. Robby never does get any of his probing questions answered by the Prezzie-in-chief.
I have to shake my head at these kinds of gimmicky campaign tactics the Obama administration uses in order to make young people feel like the president is their buddy. I don’t know, just strikes me as silly and condescending. Most likely, this is just a way for the Democrats to gather tens of thousands of cell phone numbers for use in future political campaigns.
Check out the rest of Robby Soave’s text conversation with “the president” at The Daily Caller.
There is an entertaining new book out about a young man who discovered just how far he would go to avoid student loans:
By the time Ken Ilgunas was wrapping up his last year of undergraduate studies at the University of Buffalo in 2005, he had no idea what kind of debt hole he’d dug himself into.
He had majored in the least marketable fields of study possible — English and History — and had zero job prospects after getting turned down for no fewer than 25 paid internships.
“That was a wake-up call,” he told Business Insider. “I had this huge $32,000 student debt and at the time I was pushing carts at Home Depot, making $8 an hour. I was just getting kind of frantic.” …He moved to Alaska and spent two years paying back every dime. And when he enrolled at Duke University for graduate school later, he lived out of his van to be sure he wouldn’t have to take out loans again.