By Bill Press - 06/03/13 11:20 PM EDT
Most likely, nobody knows how much the Republican Party is paying for public relations advice these days. But if I were a Republican, no matter how much or how little they’re shelling out, I’d want my money back.
Whose bright idea was it, for example, to vote to repeal ObamaCare — for the 37th time? And how much did they pay the consultant who advised them to oppose renewal of Violence Against Women Act? But now Republicans are walking into yet another public relations disaster: appearing to stand by and let student loan rates double on July 1.
So, it’s serious. But it’s not rocket science. This should not be difficult — today’s interest rate on federal government student loans is fixed at 3.4 percent. Unless Congress acts, it will double to 6.8 percent on July 1. The solution? Easy. Do what Congress did last year, and what Obama has asked Congress to do again in the short term: Enact special legislation to keep the rate at 3.4 percent for at least another year, or maybe two.
Instead, Republicans in Congress have proposed some cockamamie, market-based plan, whereby rates would be recalculated every year and pegged to 10-year Treasury notes, plus 2.5 percentage points, with a cap of 8.5 percent. This is bad news for students. The nonpartisan Congressional Research Office estimates that, under the Republican plan, a student who borrows the maximum amount of subsidized and unsubsidized Stafford loans over five years would pay $14,430 in interest. If rates were allowed to double on July 1, that same student would pay $12,598, compared to $7,965 if rates were to remain at 3.4 percent. So students would actually be better off if Congress did nothing, rather than pass the Republican plan.
The best plan is neither Obama’s nor House Republicans. It’s the one put forward by Sen. Elizabeth Warren (D-Mass.), offering students the same rate big banks receive from the Federal Reserve: 0.75 percent. Why should students pay more than banks? They don’t default any more often than banks. More importantly, why should the federal government continue to make 36 cents on every dollar it loans to students? That’s $51 billion a year, more than the annual profit of any Fortune 500 company. As Warren and Rep. John Tierney (D-Mass.) wrote recently in an op-ed for The Boston Globe, “We should not be profiting from students who are drowning in debt.”
Ironically, Republican fuzziness on the student loan issue looms at the same time a new report by the College Republican National Committee is branding the party as “closed-minded, racist, rigid, and old-fashioned.” Now you know why.
Press is host of “The Full-Court Press” on Current TV and author of The Obama Hate Machine.