Congress needs to keep a federally subsidized student loan program from lapsing at the end of June, but it shouldn’t pay for the subsidies by making reform of the nation’s health care or entitlement systems more complicated.
To keep rates on new Stafford student loans from doubling on July 1 — from 3.4 to 6.8 percent — Republicans have pushed for weeks for taking $5.9 billion from a fund for preventive health care. Senate Democrats have argued for closing a loophole that keeps some stockholders from having to pay Social Security and Medicare taxes. Each side’s plan looks more political than practical, and lawmakers ought to look for a different source for the funds.
The need to extend the loan subsidies for another year is evident. The troubles in education finance run deep: Cuts in state aid to public colleges have pushed tuition upward. Ham-handed efforts to make higher ed more affordable have, perversely, encouraged that upward spiral as well, forcing students to borrow more. Yet an abrupt withdrawal of current loan subsidies won’t fix that problem; it’ll just mean higher rates on Stafford loans, one of the standard elements of educational financing, for students who badly need the assistance.
Each party’s plan to pay for the subsidies would make a different problem worse. Republicans’ desire to plunder the health care funds reflects a general hostility to the Obama health care overhaul. Meanwhile, the Senate Democrats’ desire to close Medicare and Social Security tax loopholes makes sense, but the futures of the two major entitlements are cloudy enough that any proceeds should be put aside to strengthen and reform those plans. Meanwhile, House Democrats have a proposal — eliminating an oil- and gas-drilling tax break — that seems calculated to cause maximum resistance among Republicans. Similarly, when GOP lawmakers shifted gears Thursday, by suggesting loan subsidies could be funded through higher pension contributions from federal workers, their new offer appeared certain to antagonize Democrats.
There’s a larger pattern at work here: The two sides’ desire to contrive weapons to use against each other exceeds their ability or willingness to help younger Americans.