- The federal government is slated to borrow more than a trillion dollars this year.
- The federal government needs to cut spending and raise taxes, and is in no place to be cooking up new commitments.
- Taxpayers should feel just fine asking students who accepted subsidized loans to pony up that $6 a week.
- We need to stop suggesting it's okay to renege on obligations of contracts we voluntarily signed.
This piece is part of a debate on the National Journal's Education Experts Blog.
Five years ago, in a maneuver that some of us regarded as a troubling move for a federal government swimming in red ink, Congress decided to temporarily supersize the subsidy on student loans. Knowing how advocacy groups tend to regard any largesse as a permanent entitlement, no matter how temporary it's supposed to be, the risk was that taxpayers were being tapped to induce students to borrow more-- only to have PIRG later complain that their loan burdens were too big and the reset rates were too high. Shockingly, this has come to pass. Wow, hard to see that one coming, right?
Just three thoughts really:
1] The federal government is slated to borrow more than a trillion dollars this year. It needs to cut spending and raise taxes, and is in no place to be cooking up new commitments.
2] The outcry is about an increase of $2,800 in the amount being paid to Uncle Sam in the course of a 10-year repayment. That's about $280 a year, or less than $25 a month. Taxpayers should feel just fine asking students who accepted subsidized loans to pony up that $6 a week (which is precisely what the student committed to when taking the loan).
3] We really need to stop suggesting that it's okay renege on obligations when we decide we no longer like the terms of contracts we voluntarily signed. It's been a meme the last few years, especially with Occupy Wall Street, and it makes it makes it really hard to teach students to value promises, honor their obligations, or take responsibility for the consequences of their actions.
Frederick M. Hess is a resident scholar and director of Education Policy Studies at AEI.