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Republicans Win Again

[ 106 ] June 27, 2012 |

Yet again, the Republicans roll back a piece of the 20th century. Congress agreed to freeze student loan rates for a year. At first, I figured, whatever, typical kicking the can down the road. I should have known better.

Even as Congress moves to prevent undergraduate student loan rates from doubling, lawmakers have decided to eliminate two federal subsidies that will increase the cost of higher education.

One would hit the same college students who are benefiting from the interest rate freeze. Though their rates will be only 3.4 percent, they will be responsible for paying that interest as soon as they throw their graduation caps in the air — a change that is expected to cost them more than $2 billion.

Meanwhile, students hoping to earn the advanced degrees that have become mandatory for many white-collar jobs will no longer be eligible for federally subsidized loans. That means graduate students are facing an $18 billion increase in interest rate payments over the next decade, about three times the amount at stake in the debate over undergrad interest rates.

Both measures will take effect Sunday.

Yep, that’s right. No more federally subsidized student loans for graduate students.

But hey, this managed to freeze student loan rates for one whole year! I’m sure that next year at this time, we’ll see a much better deal for students!!!

And once again, thanks to the Democratic Party for standing strong for everyday Americans…..

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  1. Karl says:

    I don’t know where your block quote comes from, but it doesn’t appear to be from that link.

  2. Anderson says:

    I am not immediately convinced that higher interest rates on student loans for grad students (SUCH AS LAW STUDENTS?) are necessarily a bad thing.

    Maybe it was something or other I read on some blog somewhere. Oh, wait, this one.

    The whole tuition/student-loan spiral is flawed. I don’t know what to do about it, but decreasing the demand for grad school doesn’t seem obviously wrong.

    (Winces & braces self for enlightenment.)

    • Matthew says:

      8.5% isn’t high enough for you? Do you have any idea how much that amounts to if you want to do public service and actually have to pay it off over 30 years…?

      • Anderson says:

        Okay, sure, but not everyone is in grad school to do public service. That sounds like an argument for targeted loan forgiveness, not for across-the-board subsidized loans.

        Like I said, I’m willing to have the evil of the legislation explained, but I would like to have reasons. Looking forward to seeing them in this thread. “Reality-based” and all that.

        • DocAmazing says:

          That sounds like an argument for targeted loan forgiveness

          Speaking as a former med student who works primarily with the poor and medically indigent and who paid off every dime of his student loans out of my earnings, I can only say ha ha ha ha ha ha. Loan forgiveness exists, but it’s pretty damned rare.

          • Warren Terra says:

            And please do note those words “med student” there. The US is, I believe, extraordinarily unusual in that it makes Med Students cover their own living expenses and pay huge tuition costs for four or more years. Credit is extended to these budding doctors, because they will later earn enough to pay it back (which is a cost the whole society bears, of course, and also constrains the choices of the new doctors regarding what sort of medicine they will practice, and where), but for years a med student will be putting their living expenses and their tuition on the charge card.

            Compare that to graduate school in the sciences, where PhD students pay no tuition and receive an adequate stipend. Or to graduate school in the humanities, where students often receive partial tuition waivers and are exploited as ludicrously lowly paid teachers for the undergrads – but at least they’re paid something.

            • Adequately Paid Grad Student says:

              Adequate stipend?

              I have the standard assistanceship in my department, which puts me at a 75% pay. Now, if I was in a science or engineering lab, I would be paid for an entire year and it wouldn’t be so bad. If I was at a private school, my overall pay would be greater. But, because I’m in a lesser department at a state university, I am only paid for 9 months of the year and at a lesser rate than my private university peers, thus, I depend on student loans to bridge the summer months.

              I’ve never been so happy to find out that I qualify for energy assistance from the state this winter. Yippee!

          • Anderson says:

            Argument for, I said. Lack of good policy may support a bad policy, true.

        • Matthew says:

          I agree, we shouldn’t be subsidizing loans for people who are going to make good money. I just really doubt that in the current political climate (or the foreseeable future) that something like that would ever happen. Instead, we just chopped the whole thing and we’ll deal with it (or not) later.

          The income based repayment option may be a start, but there are lots of problems with the system as it operates currently, and no one has had their loans forgiven yet (and who knows whether the program will still be around when people start hitting the forgiveness point).

          I should have been less confrontational originally, it is just really frustrating to see Mr. Obama and the Democrats piss on their supporters over and over and over and over again.

          • Anderson says:

            Thanks, Matt. I’m really just trying to think this through.

            NB I’m getting hit for $900/mo in student loan repayments myself, most incurred in grad schools (yes, plural).

          • Warren Terra says:

            Why shouldn’t we be subsidizing the educations of people who will make good money?

            Think of it this way: if a certain education costs a large sum, and provides the credentials for a career in which the educated person can earn enough to repay that large sum plus interest, the person who’s gained that education is under something of an obligation to shape their career to make that money; if it’s medicine, say, they may have a financial reason to specialize rather than enter general practice, and to work in a rich city rather than an underserved rural area. And their income for the next several decades has to be based around the expectation of paying off massive accumulated student debt within a manageable time – an income bump that will then persist thereafter. You point out that these education-dependent careers pay enough to repay these debts – but you’re overlooking the possible causal relationship there.

          • DrDick says:

            I would argue that public education at least should be publicly subsidized completely up through a doctorate for those who qualify as it is in Scandinavia and formerly was in the Eastern bloc. This is a critical investment in human capital, the key to increased social mobility, and essential for maintaining an open, democratic society. I would add I also support publicly funded post-secondary vocational training programs for those who are not interested in or qualified for college.

            • somethingblue says:

              … the key to increased social mobility, and essential for maintaining an open, democratic society

              Bug, not a feature. (Also, why do you hate Freedom?)

            • Lurker says:

              In fact, in Nordic countries, the vocational training is mainly “secondary”, i.e. a type of specialised high-school curriculum. You become e.g. a journeyman electrician in a vocational school in three years (ages 16-19), and also get the qualification to go on to college, if you like. Although in practice, the vocational school prepares you quite badly for the entrance exams of the better universities. However, you can quite easily get to an electrical engineering program with that kind of background.

              I have, personally, a doctoral degree from a Finnish university. I got it without lending a penny. The only thing I paid for was the obligatory student union membership, which included health insurance, ca. 70 euros per year. As a grad student, even that was voluntary.

              In fact, during the grad school, I was able to save from my pay. This kind of a situation is a boon for Finnish industry. I, and great many of my present colleagues with similar qualifications, are quite content to work for ca. 50 k€ per annum (of which I pay ca. 33 % taxes and insurance), because I have no student loans to pay.

        • BruceMcF says:

          Its an argument for a single flat charge added to the loan and then pay it off as a given percentage of income in excess of the poverty line, with no compound interest. The higher the income, the higher the effective interest rate paid.

          • Heron says:

            Why not just go all the way and make them non-interest-bearing loans? Pay off the principle and you’re done. I mean, let’s be realistic here; the justification for interest is that by letting you use the money, the lender is choosing not to use the money for something else and they ought to be compensated for that, but if we’re talking about federal-backed loans slated specifically for education, there’s no such opportunity cost paid by the lender (the Federal government), and certainly not by the servicer (whatever bank they award your loans to). As such, there’s no justification for charging interest in education loans to begin with; we merely accept that all loans will charge interest because as members of a over-leveraged capitalist society we’ve been raised to believe interest is a natural thing outside the reach of morality.

      • Anonymous says:

        Where does that number come from?

    • Anonymous says:

      I agree.

      There have to be better ways to lower the cost, the cost of student debt can’t be a leading cause of it.

      It is a tricky one, though, as one has to basically say that we should stop encouraging people to go to grad school, and that doesn’t feel good at all.

    • Lea says:

      If this includes medical school, we may all be in trouble. We’ll be handing out H1 Visa’s to Cuban trained doc’s as a result.

      • firefall says:

        Well given that the theory seems to be, rely on foreign-trained postgrads and the children of the upper bourgeoisie for everything, thats more of a design implementation.

    • fud says:

      If one is taking out loans to pay for graduate school, they better make sure the ‘payoff’ is worth it.

      Boosting the cost of earning a graduate degree will likely sort out the pool by financial means rather than merit or any other criteria.

  3. James E. Powell says:

    If Obama wants a nice chunk of middle class white voters to slide over to his side, he should just veto this one.

    • Holden Pattern says:

      He’ll sign it and there will be a celebration of the good hard work that the legislature did to stave off the increase in loan rates for a year. And we will be expected to applaud loud and long.

    • rea says:

      Well, right. He should veto it, so that instead of a bad program, we have no program at all. That will do the trick!

      • Scott Lemieux says:

        Well, right. He should veto it, so that instead of a bad program, we have no program at all. That will do the trick!

        But you don’t understand — Republicans really want to pass a progressive bill, so if Obama vetoes this one they’ll have no choice to make it better. Paul Ryan would be right on that. A little BULLY PULPIT and Obama could probably get the entire student loan program replaced with Pell Grants.

  4. shah8 says:

    I can only go “Ho….ly…”

  5. Joshua says:

    That $12 billion pallet of money that the government “lost” in Iraq would really come in handy right now.

    • mike in dc says:

      That’s enough to hire every unemployed and underemployed law school grad from 2008-2012 for 60k for maybe 2 years.

    • agorabum says:

      I suppose we could just print up another pallet…

      • Murc says:

        I sense that you’re joking, but we abso-fucking-lutely should be doing this.

        Seriously. The Federal Government should literally be giving money away. That would be one of the best things it could possibly be doing right now.

        • Bill Murray says:

          yes, especially as real interest rates are negative

        • firefall says:

          I definitely agree about printing and giving away money, but I’m not sure giving it to recent law graduates, thus encouraging MORE oversupply of lawyers, is exactly the right target to choose. All in all, I’d rather see it go to recent high school graduates unable to find a job, of which there seems to be a considerably larger pool.

  6. Joshua says:

    “Somebody else” paid for my subsidized loans in school, and now I make a good salary thanks to my college education and pay lots of taxes.

    I would be a huge asshole if I were to say that people younger than me don’t deserve that opportunity.

  7. Yossarian says:

    Before posting, please identify where you are from. Thanks.

  8. Sherm says:

    Hey jerkoff, what percentage of federal spending goes toward subsidizing student loans or any of the other examples of socialism you have cited? And what were the income tax rates before the damn liberals came along and ruined everything in the 60′s?

  9. lawguy says:

    Yes, it is so much better to cut everything, that will make the economy recover Rick. Also, screw young people who want to get an education that should also help us in the long run.

  10. Furious Jorge says:

    The “profligate spending” you’re talking about happened about 8 years ago or so – it’s Bush’s wars and Bush’s upper class tax cuts. *That’s* what the problem is.

    Because it ain’t anything Obama’s done. But please, go ahead and detail his “profligate spending” – how much more than his predecesors he has spent, and what he’s spent it on.

    Otherwise, if you can’t, just shut your pig-ignorant goddamn mouth.

  11. Scott Lemieux says:

    And once again, thanks to the Democratic Party for standing strong for everyday Americans…..

    Do you have a strategy for getting a better bill through a Republican House?

    • joe from Lowell says:

      Let me make sure I’ve got this straight:

      Republicans win the House in the election.

      The subsequent spending bills that come out of Congress are worse than the ones that came out of the Democratic Congress.

      So, therefore…those stupid Democrats. They should have visualized an unchanged student loan program. With a lot of will.

    • Erik Loomis says:

      Scott–So what is the end game here? Are we supposed to accept Democrats did all they could when in 2018 or whatever the Democrats acquiesce to the repeal of the National Labor Relations Act but get the Republican-controlled House. At what point do Democrats force the issue and make a big public stink about it, in this case painting the Republicans as anti-student? Or do Democrats keep giving and giving to a Republican caucus that sees no reason not to take an extremist position on every issue?

      I mean, I know you have your Bully Pulpit thing and I don’t even disagree necessarily, but even people like Rick Perlstein is saying that Obama is showing a lack of leadership on these issues.

      • Dirk Gently says:

        Agreed. Show some backbone, spittle and even a bit of knife-wielding lunacy. In other words, where are OUR hardline crazies willing to go all Solomon on the Congressional dome?

        • Richard says:

          That’s a great election year strategy. Allow student loan interest rates to double AS OF THIS SUNDAY and then complain about it and blame the Republicans. I’m sure that would lead to taking back Congress and reelecting the President. You’re a political genius

          • Dirk Gently says:

            I’m not saying don’t do this deal–I’m glad they finally hammered something out, that isn’t AWFUL, even if it’s SHIT. I’m saying raise a huge stink about it ahead of time, set a far left position as a baseline, and then get whatever you can. In other words, act like the Republicans are, and not every “deal” is necessarily a capitulation.

            Of course, this assumes that our finance industry-backed Dem Senators would ever want such a thing in the first place.

            • Erik Loomis says:

              “I’m saying raise a huge stink about it ahead of time, set a far left position as a baseline, and then get whatever you can. In other words, act like the Republicans are, and not every “deal” is necessarily a capitulation”

              Yes–this is the baseline of what we should expect. Instead no one even knew this had happened or was even on the table until tonight after the deal was made.

              Once again, Republicans play the political game a lot better than Democrats.

              • Dirk Gently says:

                And/or: just as Republicans gin up nonsense for and take advantage of “the rubes”, I’m beginning to wonder whether some Dems feign political incompetence because that’s an easier sell to their supporters than the fact that they don’t actually stand for what they claim to stand for, and feel they cannot be elected if they really stood for what we expect them to, since they’d get nuked in this post-Citizens world.

        • Scott Lemieux says:

          But the problem is that the respective leverage between the parties isn’t symmetrical. You seem to be assuming that Republicans really want to make a deal, but actually existing Republicans don’t actually give a shit if non-affluent graduates get screwed over. And a separation-of-powers governments means that accountability is always diffused; no matter how good the messaging given that the overwhelmingly large majority of the public pays zero attention to the legislative process. (I mean, we have commenters who believe that Obama vetoing this legislation would magically produce a better bill, and people who comment on this blog are probably more informed than 99% of the population.)

          • Dirk Gently says:

            Good point, but if Dems had true political competency, they’d try a few rhetorical tricks in the same vein, while also implementing similar sunset policies on issues that the GOP actually cares about. I mean, maybe I’m just ignorant about these processes, but why is it that the rates were set to rise again, anyway? Wouldn’t that have been the result of political land mines planted awhile back to create just this sort of situation, or is there a more mundane reason?

      • Anderson says:

        True re lack of leadership. Acquiesce if you must, but fight first, and fight to teach the public what happened.

        I think what gets mocked as “bully pulpit” can be frustration at the Dems’ inability to sell water in the Sahara. When the public likes the parts of the ACA but says it hates the whole, that means you blew the sale.

      • Scott Lemieux says:

        Scott–So what is the end game here? Are we supposed to accept Democrats did all they could when in 2018 or whatever the Democrats acquiesce to the repeal of the National Labor Relations Act

        Well, obviously not, because it’s impossible to imagine anything they could get in return for repealing the NLRB Act that would make the deal worthwhile. That isn’t the case here, and there’s no strategy that is going to get good legislation through a House controlled by Republicans and a Senate controlled by Republicans and conservative Democrats.

        • RhZ says:

          What would seem like the most useful tactic would be to make the GOP pay a political price for this. Highlight it, make a stink, and make it clear that its the GOP who is forcing this change in policy.

          The Dems are of course not very good at doing that.

          The way it is, whose to say this hasn’t been pushed forward by Dems? All we have is an agreement; no way to determine which side pushed for these changes.

        • I really don’t get why “conservatives control Congress, so there’s not much of anything progressives *can* do” is seen as such an outrageous thing to say around here sometimes.

        • dangermouse@manger.hermionegranger says:

          It’s a good thing the Democrats do their damndest to keep conservative Democrats Liebertarians like Lieberman in the Senate, so they can keep controlling it.

      • dangermouse@manger.hermionegranger says:

        what is the end game here?

        Learned helplessness and cowardice under a pretense of rationalism and tied up with a sneer, while everyone else gets fucked to death by inches, same as it’s always been.

    • Anonymous says:

      I feel like this is the same contentious point that always comes up. The real question is whether this would be corrected if we elect a Democratic Congress in 2012.

      Is there any reason to think a Democratic Congress will change it back?

  12. Dirk Gently says:

    Take back Congress. That should be our #1 priority. I think Obama will be okay. TAKE BACK THE MOTHERFUCKING CONGRESS.

    • joe from Lowell says:

      Remember in 2009, when everyone was arguing about whether the bills that passed Congress moved the ball far enough our direction?

      “That’s half a loaf! I won’t accept half a loaf! What a sell-out!”

      “No way, that’s 7/8 of a loaf!”

      Anyone see any loafs lately?

      • Dirk Gently says:

        We are suitably chastened. I’d give anything to be hating on the likes of Nelson and Lieberman again.

      • wengler says:

        Well, the Republicans used their 41 votes in the Senate to stuff most of the bills that came their way.

        And Obama’s biggest problem is his failure to prosecute Bush administration officials for the many criminal acts they committed during their eight years in office. No Congressional involvement in that one.

        • joe from Lowell says:

          So you don’t think it matters very much which party controls Congress.

          • wengler says:

            Not at all. I just am trying to break this endless bully pulpit circlejerk by pointing out that Obama’s major failure was outside of the Congressional orbit.

            It is fairly clear that Progressives will require a House majority and a Senate super-majority. The second part is a pretty high hurdle.

            • Chatham says:

              Or they could just get rid of the two-track filibuster system put in in the 70′s. That would probably kill most of the filibusters.

            • John says:

              I’m going to push back against the idea that not prosecuting Bush administration officials was the primary failure of the Obama administration.

              Of course many Bush administration officials deserved to be prosecuted. But it would have been an awful, awful idea for Obama to actually do so. The media would have hated it. Half of the Democratic Party would have hated it. It would have destroyed any ability for Obama to get any legislation passed, any treaties signed, any nominees confirmed.

              Not prosecuting Cheney, or whoever, was an absolutely necessary political decision.

              • You’re wasting your breath because everyone knows PONY!!!!!

              • Lurker says:

                The prosecutions are not yet a foregone conclusion: the statute of limitations on the GWOT cases is not going to run out for decades. Those cases can be prosecuted quite well by a democratic president in 2017. Or in 2030′s. Just like certain civil rights cases from 1960s have been prosecuted quite recently.

                If Obama had wanted to let those guys scoff-free, he could have issued a blanket pardon for everyone and everything done by government employees and contractors since 9/11.

        • Richard says:

          Although you never fail to state that, how can that possibly be Obamas ” biggest problem”. Do you actually think that there was popular support for that, that a prosecution would have galvanized support or that there would have been convictions? If so, you’re somewhat delusional

          • wengler says:

            There was a lot of popular support for it. Bush had just blown up the economy through inaction and misappropriation. If you think there was no popular pressure for prosecutions, then you are delusional.

            Instead Obama started looking forward instead of looking back, and charging every whistle blower of a certain class.

            The troublesome nature of this will reveal itself in either the near or medium future when Republicans take back the White House.

            • John says:

              Wait, you think Bush administration officials should have been prosecuted for the financial meltdown?? This is total madness.

              And, no, there was no popular pressure for prosecutions. It’s a divisive issue for Democrats, to say nothing of Independents.

        • joe from Lowell says:

          The question isn’t whether the Democrats (a) walked away from the table with as much money as want.

          The question is whether (b) there was money they left on the table.

          It’s certainly possible to argue that they did, but what gets tedious is the unexamined assumption that If a, therefore b.

      • dangermouse@manger.hermionegranger says:

        Remember in 2009, when everyone was arguing about whether the bills that passed Congress moved the ball far enough our direction?

        Yeah i remember in 2009 when we elected massive majorities of Democrats and they passed shitty bills for two years and then lost the house.

        • jeer9 says:

          The important thing to remember is that while conservadems may water down good legislation and support the shittiest policies, it’s essential that they remain in the caucus so that the Party occasionally wields something resembling power, if not for reform then for institutional stability (which is often undervalued). Plus, conservadems provide the additional advantage of refusing to filibuster any obviously unqualified SC nominees like Alito. Fortunately, our leadership is growing ever more progressive each election, and it is only through their canny pragmatism, yes pragmatism, that we avert even worse catastrophes.

          • Scott Lemieux says:

            Very astute analysis. Obviously, the viable alternative to conservadems is liberal Democrats. Liberal candidates from Nebraska and Indiana and Arkansas and Montana would win elections if you clap really loudly.

  13. mike in dc says:

    The good news is that recent grads can always find work at the world’s largest Arby’s Restaurant, conveniently located in Colonial Heights, Virginia.

    mike
    northeast dc, nowhere near an Arby’s
    (or a Sonic burger, dammit)

  14. Chatham says:

    Not sure why liberals should support a voucher program for higher education. We don’t need the government to subsidize private institutions that then raise their tuition accordingly. Take that money and use it for affordable and reliable public institutions.

    • Dirk Gently says:

      Over the long haul, I agree–especially since it’s federal debt, and therefore viewed as effectively limitless. But in the short term, it’s pretty stupid and shitty to punish the borrowers quite suddenly without even the merest sniff of the big project of significant reform of higher education.

      • Chatham says:

        Well, of course we wouldn’t solve the problem by cutting off funding to education. Just like if we had a K – 12 voucher program, it would be better to keep such a program than to get rid of it, if those were our only two options. But it doesn’t make such a program any less broken.

  15. actor212 says:

    ::blink::

    W? T? F?

    Who are these idiots? Do they not understand the incredible brain drain that this will create?

  16. dave says:

    Where’s Campos? I saw that there were a hundred+ comments and assumed Campos had weighed in against Loomis on this issue. Instead I get yet another firebagger v. Obot debate!!???!

  17. [...] the bitterly sarcastic words of labor historian Erik Loomis, “No more federally subsidized student loans for graduate students… once again, thanks [...]

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