Obama vs Romney: What Both Candidates Get Wrong About Student Loan Reform
Before 2010, the government paid subsidies to private lenders and guaranteed the amounts loaned. These federally-guaranteed student loans granted banks access to an increasingly sizable and profitable market (middle and working class students) while insulating the same banks from major risks or losses — all at the expense of the American taxpayer. By shifting from federally-guaranteed student loan programs to direct loan programs from the Department of Education, the Obama administration ended government-financed subsidies to private lenders and prevented over $60 million of government waste, the majority of which is being directed to federal aid (like Pell Grants) and community college programs.
In sum, Obama’s reform was a single step forward in preventing predatory banks from lining their pockets at the expense of students and taxpayers. This step, however, was just one of many demands by consumer and student advocates, most of whom support more grant options, increased loan forgiveness, and the idea of education as both a human right and an economic necessity. In light of the soaring cost of higher education, heightened youth unemployment from the recession, and the staggering burden of the student debt crisis, Obama’s reform is not enough to ensure America’s youth the educational opportunities they deserve or to provide the American economy the skilled workforce it needs.
Furthermore, as dropout rates among low-income students, first generation college students, and students of color continue to increase, the president’s plan fails to fulfill the American promise to provide all of its student’s access to an excellent education and illuminates our country’s ugliest and most shameful legacies of privilege and power.
In response to Romney for President’s vague proposal of “innovation and competition,” the GOP’s plan to combat the student debt crisis was perhaps better articulated weeks ago at the Republican National Convention. The GOP called for an end to the federal direct loan program in favor of federally-guaranteed student loans — essentially demanding the reinstatement of banks to their former position of profiteering middlemen. The move would reverse the $60 billion dollars of taxpayer savings and effectively defund the increases to direct aid and community college packages. A recent Boston Globe investigation revealed that Romney has ties to the formerly-lucrative private student lending sector and that even prominent Republican-leaning economists found Romney’s plan “just ridiculous.”
More alarming than the Republican Party’s platform is the approach of their vice presidential candidate, Paul Ryan, to budget cuts for education programs, particularly for programs that serve America’s most vulnerable families. Ryan’s budget proposal calls for significant cuts to discretionary spending, including a $170 billion cut, an approximate 19% decrease, to Pell Grant funding, a program that supports millions of low-income Americans in financing their higher education. The majority of Americans reject the kinds of budget cuts proposed in Ryan’s budget — particularly those that impact America’s most vulnerable populations — yet only a minority of Americans actually associate Ryan and Romney with the agenda Ryan proposed.
The combination of Romney and Ryan not only reverses the minimal progress of the Obama administration, but also risks the steps forward we’ve made as a country since the days when college was accessible only to our nation’s elite. Higher education — whether two-year, four-year or vocational institutions — pays for itself in terms of lower unemployment and higher earnings. The failure of both parties to embrace this fact with urgency is as short-sighted as it is indicative of the vacuum of leadership we see across the spectrum at the federal level.
This year, as young people approach the polls — saddled in debt, dropping out of school, or making choices dictated by poverty — we are forced to make the insulting decision between taking baby steps forward or giant leaps back. #Occupy #S17