While the battle has resumed, the fevered pitch is absent and the lines of debate are oddly blurred. House Republicans passed a measure that would replace the 6.8% rate with one pegged to high-yield 10-year Treasury notes plus 2.5%. In 2013 and 2014, that is expected to be only 4.4% and 5.0% respectively, which would increase the cost to taxpayers. If interest rates increase, as many now expect, the loan rate will increase until it reaches a cap of 8.5%.
The approach is problematic for a host of reasons, including continued government dominance of the student loan industry and absence of “fair-value” accounting. Nonetheless, for political reasons, many Republicans are going on the offense.
Just look at Holtz-Eakin. Remember, last year he explained Obama’s political stunt “would lower monthly payments by an average of only $7” while costing taxpayers nearly $6 billion. This year, as Republicans sought to leverage the issue for their political advantage he chastised Senate Democrats for inaction:
“The resulting stalemate means that interest rates will now be fixed at 6.8 percent. This may be good politics for some. But there is one clear loser: students.”
Like most Americans, young Americans are struggling under the burden of Obama’s economy, but partisan pandering won’t win votes. We can – and should – make the case to them and every other voting group conservatives solutions can and will improve their lives.