Congressional Republicans last week agreed to a massive disinvestment in higher education, at just the wrong time. America's technological and intellectual supremacy is threatened internationally by major pushes in China, India and other nations to dull this country's edge with a flood of graduates.
The House deficit-reduction bill headed toward a rough reconciliation with a Senate version includes the most sweeping cuts seen in the student loan program. The changes would make it more expensive and thus far more difficult for lower-income and middle-income students to finance a college education, and burden those who do with higher long-term debt.
The Congressional Budget Office says the cuts would amount to $20.5 billion over the next 10 years -- a major chunk of the Republican-instigated $39.7 billion spending cut that also trims Medicaid eligibility and sets tougher work standards for welfare recipients. These cuts are put forward with the backdrop of war in Iraq and spending on hurricane aid.
The assault on student loans has a lot of aspects, many of which benefit lenders by limiting competition and hiking interest rates. The House version -- pegged by GOP House leadership at $12.6 billion over five years is still higher than the $8.8 billion in the Senate version -- is being pushed as cutting back a $37 billion program that includes unjustified subsidies to lenders. But the bottom line is less money for students who need it to afford an education that, ultimately, benefits America through brainpower and higher taxable lifetime earnings.
The House measure would also make permanent a limit on refinancing loans. Student borrowers can now do that, usually while consolidating, just once. After that, they're locked into whatever interest rate they got -- and are unable to refinance again, the way homeowners can do with their mortgages, whenever interest rates drop. That's an unfair economic restraint, and astounding because it comes from the party that supposedly champions free-market economies. Students and their parents borrow $62 billion per year, and locking in higher interest means higher profits for the lending industry. But education is critical to the future of this nation. Congress should not boot it out of reach.