The federal student loan program became the latest battleground in President Obama’s re-election campaign, as Republicans buckled under intense pressure and voted last week to extend a 3.4 percent interest rate rather than let it double. The existing $6 billion subsidy to federal student loans was due to expire in July, pushing the rate to 6.8 percent and saddling 7 million undergraduates with an average of $2,800 more in interest. Obama made congressional Republicans’ refusal to retain the subsidy a theme in several speeches on college campuses last week. House Republicans finally passed a bill extending the measure for one year, but insisted it be paid for through cuts to Obama’s signature health-care law. Their bill is likely to fail in the Senate, where the Democratic majority wants to finance the subsidy by ending tax breaks.
This “frenzied, bipartisan panderfest” to student voters is shameful, said Frederick M. Hess in NationalReview.com. The subsidy in question is a “middle-class entitlement,” whose expiration would cost students only $25 extra a month at most. It’s discouraging that Romney and the GOP chose to “match Obama pander for pander.”
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The problem here is not just college’s expense, said Frank Bruni in The New York Times, but its “newly uncertain returns.” Even a degree in philosophy or anthropology was once a “reliable engine of social mobility,” but today it’s all but useless. Subsidies might be better spent steering students toward degrees that will actually get them jobs. “We use taxes to influence behavior. Why not student aid?”