April 27, 2012
Statement of American Federation of Teachers President Randi Weingarten on passage by the U.S. House of Representatives of the Interest Rate Reduction Act:
"Higher education is a down payment on a lifetime of success and future earnings, so we are glad the majority in the U.S. House of Representatives finally decided to support keeping the interest rate on federally subsidized Stafford student loans from doubling. However, the Republican House majority chose a scheme to pay for the cost of keeping the interest rate at 3.4 percent by robbing billions of dollars from the prevention and public health fund in the Affordable Care Act.
"It is unconscionable to solve the student loan problems by undercutting healthcare to women, children and others most in need of assistance. A wiser option to prevent higher loan rates would be to end unfair tax loopholes that benefit wealthy individuals and corporations.
"College students are graduating with record levels of debt and facing a precarious job market, so it hardly could be a worse time to raise student loan interest rates. Snatching public funding for breast and cervical cancer screenings, child immunizations and community health centers, while refusing to require wealthy individuals and corporations to pay their fair share of taxes, is just plain wrong."
Congress originally lowered student loan interest rates to 3.4 percent in 2007. This was supposed to be a temporary reduction lasting only five years. Interest rates are not imaginary numbers the government makes up but meaningful pieces of information conveyed by the market. The Interest Rate Reduction Act would extend the subsidies for yet another year which will cost taxpayers $6 billion. It is interesting to note that the bill would be paid for by taking funds from ObamaCare’s Prevention and Public Health Fund. While this “slush fund” should be repealed, we support repealing the entire ObamaCare law and not just parts of it.
The rapidly rising cost of college is a major cause for concern. But these taxpayer subsidies will not reduce tuition costs. The opposite is likely true. Subsidizing student loans actually drives up the tuition cost for all students. Extending the subsidies for another year will also increase the likelihood that taxpayers will be on the hook for student loan defaults. The Interest Rate Reduction Act is bad policy that will cost taxpayers billions of dollars and make college even more expensive.
I urge you to call your representatives and ask them to vote NO on H.R. 4628, the Interest Rate Reduction Act. We will count their vote as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.
The Administration strongly supports serious, bipartisan efforts to prevent interest rates from doubling for over 7 million college students in the coming year. Absent Congressional action, on July 1, the interest rate on new subsidized Federal Direct Stafford Loans for undergraduate students is set to double, from 3.4% to 6.8%. Taking action to stop the doubling of these rates will save students $1,000, on average, over the life of their loans. Students are increasingly relying on loans to finance postsecondary education, often absorbing tuition hikes stemming from reductions in State funding and institutional support. Graduates should not be burdened with unmanageable college debt as they seek to launch a career or a business, start a family, or buy a house.
Unfortunately, rather than finding common ground on a way to pay for this critical policy, H.R. 4628 includes an attempt to repeal the Prevention and Public Health Fund, created to help prevent disease, detect it early, and manage conditions before they become severe. Women, in particular, will benefit from this Prevention Fund, which would provide for hundreds of thousands of screenings for breast and cervical cancer. This is a politically-motivated proposal and not the serious response that the problem facing America’s college students deserves. If the President is presented with H.R. 4628, his senior advisors would recommend that he veto the bill.