Miami Herald | EDITORIAL

Student-loan debacle


OUR OPINION: Partisan gridlock in Congress stymies helpful legislation

The student-loan bill that came up in the Senate last week was a modest proposal. It merely allowed overburdened borrowers to refinance their loans at today’s lower market rates, as other borrowers can do for mortgages and consumer loans.

And yet, narrowly tailored as it was, it fell victim to the politics of obstruction on Capitol Hill. The bill, opposed by all but three Republicans, failed to muster the 60 votes needed to overcome a threatened filibuster. It went nowhere, even though it probably would have passed if put to an up-or-down vote.

This rank display of partisanship is as good a measure as any of Congress’ dysfunction.

Just last year, lawmakers were able to strike a deal with President Obama to stop student-loan rates from doubling by tying the repayment to a variable rate determined by interest on a 10-year T-note — instead of a (high) fixed rate.

That was a victory for those who believe that helping students improve their education represents an investment in America’s future. Both Democrats and Republicans understood the basic fairness of the measure and worked together to enact it. It was a rare win for common sense.

Last week’s proposal was equally good, and equally necessary. Some 40 million Americans are trying to cope with $1.2 trillion in college debt (nearly twice as much as all credit-card debt), and of those, 25 million would have been eligible for refinancing.

The debt has seen a huge increase during the past decade because average college tuition increased 79.5 percent between 2003-2013, according to data from the U.S. Labor Department, compared to an increase of only 26.7 percent in the Consumer Price Index.

At the time most of the outstanding loans were issued, federal loan rates were at 6.8 percent or higher. The act that stalled on the Senate floor would have allowed federal and private student-loan borrowers to refinance to rates set for first-time borrowers — approximately 3.86 percent. It doesn’t take a math major to understand those numbers.

The difference in the repayments to federal agencies would have been financed by higher taxes on individuals earning $1 million or more. That’s why Republicans balked, calling it an election-year gimmick by Democrats.

That’s a political objection, not a practical one. In addition to rewarding students trying to improve themselves and raise the general level of education, reducing interest rates on college loans would also help unclog a sluggish economy by freeing up disposable income for college graduates unable to buy homes and otherwise invest in the economy.

A day before the vote in the Senate, President Obama approved an executive order that caps repayments on college loans at 10 percent of the borrowers’ monthly income. That covers 5 million younger Americans, far fewer than the Senate bill would have, and will have less of an impact — but it’s something.

If lawmakers are condemned to inaction because of partisan politics, they should not object when the president acts on his own to grapple with serious issues.

Ultimately, changes to the student-debt situation will come through an update to the Higher Education Act, the main law on student-loan policy. But that could take years, assuming partisan passions eventually die down. Meanwhile, lawmakers have passed up a good opportunity to help younger Americans struggling with student loans.

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