The political combat over freezing student-loan interest rates is about much more than whether the rate will double July 1. It’s also an important flash point in the battle for young people’s votes.
President Barack Obama won about two-thirds of the 18- to 29-year-old vote in 2008, but he’s getting somewhat less in recent polls. And the issue could resonate with a broader constituency, as both parties try to show it as emblematic of the other guy’s inability to get things done.
The fight is over the interest rate for taxpayer-subsidized Stafford loans. The 3.4 percent rate will rise to 6.8 percent for more than 7 million students on July 1 if no changes are made. Such loans, which benefit undergraduates, then would add another $1,000 in debt to the average student, according to the White House.
Both parties want to extend the low interest rate. The impasse is largely over how to pay the $5.9 billion price.
Democrats want to increase payroll taxes on some privately held companies. Republicans countered with several spending-cut proposals, including reductions to a fund aimed at promoting disease prevention and public health. The House of Representatives, with mostly Republican votes, approved that plan in April, but it’s going nowhere in the Democratic-run Senate.
Both sides privately think that the dispute will be settled this month. Senate Majority Leader Harry Reid, D-Nev., offered a plan last week that raises money with some changes in pension policy, and Republicans didn’t instantly dismiss the idea.
At the same time, the two sides keep finger-pointing, knowing that the stakes are huge for whoever emerges as the champion of college students, because the 18- to 29-year-old vote is considered crucial – and volatile. Obama holds a 56-34 percent lead so far over former Massachusetts Gov. Mitt Romney, the presumptive Republican presidential nominee, according to Gallup polls conducted May 14 to June 3. That’s sharply down from 2008.
It’s unclear how much Romney can continue cutting into that support, if at all. Young people tend to decide on their votes late in the election year, said Kei Kawashima-Ginsberg, the lead researcher for CIRCLE, a Massachusetts-based group that studies youth voting. “It’s an awareness issue. Young people have other things on their mind, and are less likely to talk about politics with their peers than older people,” she said. “They also tend to think more about the short term than older people.”
Students and college administrators see loan interest rates as part of a bigger issue – the ailing economy – that could motivate students to turn out to vote.
A rate increase would add to a confluence of troubles that already are hammering college students. Changes in state and federal funding – with the prospect of more budget cuts – coupled with a sputtering economy are hitting student and family wallets hard. And all face a dim job market after graduation.
“It has the impact of discouraging borrowing, which will lead to a decrease in enrollment,” said Charlie Nelms, the chancellor of North Carolina Central University, in Durham. “If students are borrowing more money at a higher rate, they will have to pay back more. Most students aren’t entering the workforce making enough money to pay the higher rates.”
At Wofford College in Spartanburg, S.C., Ron Norman, 21, plans on a $2,500 Stafford loan next semester. He’s not sure how much his costs will increase if the interest rate jumps.
He blames the entire political system for the inertia. “I wouldn’t blame either party. If we don’t begin to work together we’ll be stuck. How are we ever going to move forward?” asked Norman, who’s the student body president.
Students everywhere echoed that attitude and those concerns.
Brandon Fisher, 24, an Obama supporter and a law student at North Carolina Central, pays $13,000 a year for tuition, all of it financed through government student loans.
“It’ll probably be $50,000 by the time I graduate,” Fisher said of his debt. “Most students who graduate from Central make about $50,000. That salary on top of the bills I already have to pay.”
Deon Tedder, 22, who also backs Obama, recently graduated from South Carolina State University with a degree in political science. He had a full scholarship to the historically black college in Orangeburg.
Through scholarships and other packages, Tedder said, he’ll pay $18,000 a year at the University of South Carolina law school. He’ll have to take out about $24,000 a year in government student loans to make up the rest of the tuition and living expenses.
“It’s so upsetting because education is supposed to be one of the priorities of America. A jump to 6.8 percent is a lot. Hopefully, Congress can reach some compromise,” said Tedder, a native of Durham, N.C.
So far, almost all they hear is biting rhetoric.
On three of the four days the Senate was in session last week, Senate Minority Leader Mitch McConnell, R-Ky., made floor speeches blasting the Obama administration for its student loan policies.
McConnell noted that Obama was in Las Vegas on Thursday at the University of Nevada campus there, talking to students. “Unfortunately, the president is more interested in campaigning for the students at UNLV then actually working with Congress to find a solution,” McConnell said
Democrats keep roaring back.
“This is all just a game that’s being played,” Reid said. “If they want to negotiate in good faith, we’ll do that.”