After listening to Education Secretary Arne Duncan make his pitch for a Senate compromise bill that lowers a July 1 hike in interest rates on student loans, I give him a C.
It stands for “contempt” — because that’s what he showed for average American parents who are struggling to pay their children’s college tuition with whatever money they can scrounge up.
On Tuesday, Duncan hosted a media conference call to sell a bipartisan proposal that will lower interest rates for now, but raise them in the future. Given the haplessness of the Obama administration when it comes to getting much of anything out of Congress, it’s probably the best option the White House can sign onto. But Duncan’s dodge when it comes to acknowledging the money the government makes off the backs of students — as Senator Elizabeth Warren rightly describes it — is insulting.
It’s not profit, argues Duncan, because “most people” think of profit in terms of what “a company made last year”; in contrast, he said, what the goverment stands to make “is a projection.”
Please. Anyone paying off a credit card or mortgage knows the money a lender will make is also a projection. At least to the great unwashed, the money squeezed out of them over time adds up to profit — as in someone else’s. In this case, the “someone else” is the US government, which is paying off its debt with our debt.
For pointing out that truth, Warren has been labeled a party pooper and left-wing demagogue. Warren is urging colleagues to vote against the compromise proposal, which she said amounted to little more than a “teaser rate for our student loan system.” In May, she proposed lending students money at the same low rates granted to big banks.
Newly elected Senator Edward Markey is standing with Warren, along with a small group of Senate liberals.
While it’s true that politics is the art of the possible, it’s also true that sometimes the possible just isn’t good enough. When it isn’t, principle is worth the fight. Warren built a campaign around a promise to speak up for the middle class, so it’s not surprising she would stand her ground, even if it means bucking a White House-backed compromise — and especially if the compromise is as flawed as she believes. As a New York Times editorial put it, “Ms. Warren got it exactly right when she said the bill pits students against one another, requiring future college students to pay for the financial break enjoyed by students who precede them.”
Warren’s passion for principle over party has precedence in Massachusetts. She was elected to the seat once held by Ted Kennedy, after all, and he was never shy about standing up to Democrats — even those who worked out of the Oval Office.
Of course, Warren doesn’t have Kennedy’s seniority or clout, and that as much as anything makes her a target in the clubby Senate. But she has a track record for standing up to insiders; in fact, that’s why Massachusetts voters elected her.
Warren will have to pick her fights. But she’s on the right side of this one. Parents of college-bound students should cheer her spine.
During the conference call with reporters, Duncan acknowledged that Washington still needs to address the reality that middle-class Americans are being “priced out of college.” This compromise, he said, was “an important first step” and clearly the Obama administration has accepted it as the best first step they can take.
It would bring interest rates down to 3.9 percent for undergraduate students — higher than the pre-July 1 interest rate of 3.4 percent. For graduate students, the rate would be 5.4 percent. Warren is proposing to at least cap most loans at 6.8 percent, but there’s resistance to that, too.
Despite Duncan’s protestations, the federal government is making money from the loan program — and will make more under this compromise. Citing estimates from the Congressional Budget Office, Warren notes that the new, higher rates will generate about $184 billion over the next 10 years.
“I can’t support a proposal that squeezes even more profits out of our kids,” she said. “In fact, I think this whole system stinks.”
So does the Obama administration’s refusal to accept that truth.