Our View: The Deficit Reduction Act is no more than an attempt to tax college students through loan interest.
Proposed changes to student loan provisions in the Deficit Reduction Act before Congress are not only a just quick-fix to the immense problem of a growing deficit, but also showcase an increasingly short-sighted U.S. education policy.
The bill, which hopes to save $12.7 billion through modifications to the student loan system, is another example of the government’s misplacement of priorities in federal spending. The provisions will raise interest rates on student loans, meaning that the changes will not affect current levels of financial aid, but will make loan payments significantly more expensive in the future. In this manner, congress is effectively taxing anyone who uses student loans to pay for their college education – a poor tax.
The federal government should be looking for ways to grow access to higher education rather than make it less affordable. Higher interest rates and reduced availability of student loans inhibits the ability for many in our society to obtain a college degree. In an increasingly competitive and globalized employment market, a college degree is no longer an option – it’s a necessity.
America pioneered the idea that a college education was almost a right when other areas of the world were relegating members of their society to vocational schools or limiting higher education admissions. Higher education is a facilitator of the American dream – ensuring that wealth is not the sole determinant for success.
Provisions such as those contained in the Deficit Reduction Act revert to a time when only the most privileged in our society had the means to climb the educational ladder. The worst part about the plan is that its effects are not immediately noticeable. By increasing interest rates on student loans, congress is able to lump the burden of the national deficit on current college students, who will see its effects only after graduation.
The United States continues to lose its dominance over the higher education market to growing competition from developing countries. Instead of confronting the problem directly, Congress is attempting to back-handedly profit from education loans.
Before ever attempting to reduce the availability of education funds, Congress needs to discontinue the practice of spending billions of dollars on pork-barrel projects for their respective districts and focus on drafting an education policy that ensures access to higher education.