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Thursday, May 3, 2012 |

Obama Slow-Jams the Student-Loan News

With subsidized Stafford loan rates set to double this July, the White House is turning up the media blitz to inform students of the issue with the hopes of rallying their energy for the upcoming 2012 elections.

 

Photo: Brendan Smialowski / AFP/Getty Images

Talking about student loan debt is a surefire way to get the attention of young voters, the same demographic that helped Obama get elected in 2008. Combining that with Jimmy Fallon and The Roots just makes the message that much more entertaining.

The video basically speaks for itself, and brings the message home for students; low subsidized Stafford loan rates should be maintained so that college can remain affordable.

While most conservative sentiment stands with allowing the rates to increase to 6.8% as scheduled, Obama has shifted the political game in his favor by aggressively bringing the topic to the attention of college-attending voters. As a result, if you asked most politicians in D.C. today what their stance is on this topic, they will say that the low 3.4% interest rate should be maintained for subsidized Stafford loans. Even presidential candidate Mitt Romney was quick to back the extension of low rates as well, demonstrating his concern for the youth vote.

However, a debate still remains about how this can be paid for considering budgetary constraints.

From Peter Baker and Jennifer Steinhauer at New York Times:

“…Mr. Obama pressed his attack on Republicans, depicting them as unsympathetic to college students in need. Republicans countered by accusing the president and his Democratic allies of playing politics with the issue and trying to raise taxes on small businesses to pay for the subsidized rate.”

“Senator Harry M. Reid of Nevada, the Democratic majority leader, introduced a bill to extend the cuts and pay for that extension by preventing some business owners from sheltering their income from Medicare and Social Security taxes.”

“Senator Lamar Alexander, Republican of Tennessee, responded with legislation introduced Wednesday to keep the low rate and pay for it by taking money from Mr. Obama’s health care program.”

So while on face, every politician will agree that students should keep access to this low-rate loan, what they really do not know is how it will all be paid for. The controversy will continue as they look to make cuts from other programs to find extra funding.

The bigger questions still remain: How can the federal government continue to guarantee loans without a credit check to any college student who applies without considering more details of their ability to repay? Is it “predatory lending” to allow borrowers access to guaranteed federal funding that cannot be discharged in bankruptcy in the event it cannot be repaid? Should college loans be guaranteed to every student regardless of what field they are studying and what employment prospects result from those studies? And finally, does the guaranteed federal loan program itself allow colleges to continually increase costs without regard to the financial needs of students? Surely these are the most interesting times to be paying for college.

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