House GOP Throws College Students Under Bus

Continuing their attack on the American middle-class, House Republicans have shamelessly passed a bill that would not only increase interest rates on student loans, but also make students susceptible to the same “teaser rates” scam that led to the housing crisis and subsequent Bush Recession.

Defying a veto threat from President Obama, House Republicans passed the Smarter Solutions for Students Act, HR 1911, in a party-line 221 to 198 vote.

Although the Democratically-controlled House temporarily lowered student interest-rates in 2007, they are set to rise from 3.4% to 6.8% on July 1 of this year.

While Pres. Obama’s plan would set student loan rates to equal the ten-year U.S. Treasury rate +0.9%, the GOP Bill would set them at +2.5%.

Adding insult to injury, while Obama’s plan will have a fixed interest rate for the life of the loan, the Republican plan will create a variable loan rate system for students, forcing them to pay higher interest rates on old loans when rates rise.

Just like the toxic loans with variable interest rates that led to the housing market crisis only a few years ago, Republicans are proposing a dangerous “teaser rate” for students that could rise later. That’s right, sub-prime student loans are the new sub-prime mortgage loans.

Of course, the GOP is cynically billing their proposal as a free market solution, saying that putting Congress in control only politicizes the rates.

Shortly after the passage of the bill, Speaker John Boehner released a statement:

“Today we are one step closer to taking the politics out of student loans, which will make paying for college easier and fairer for students. With our bill, students will have access to the best interest rates available and won’t have to worry about politicians holding those rates hostage every year. It’s the kind of market-based, bipartisan, long-term solution students and families deserve – and it reflects our commitment to focusing on jobs, making life work and expanding opportunities for all Americans without expanding government.”

How in the world is the government making sure that students won’t be burdened by potentially large downward fluctuations in their student loan interest rates considered overbearing federal intrusion? Would students be better off being at the mercy of the free market? House Republicans certainly seem to think so.

House Democrats argued that the bill is even worse for students than doing nothing and letting the rates jump to 6.8%.

“Even though the student interest rate is scheduled on July 1 to double from 3.4 to 6.8, the bill presented on this floor today is worse than that for students and their families,” said Education and Workforce Committee ranking member George Miller (D-Calif.).

Today’s Republican party is relentless in their efforts to squeeze every last penny out of the American people on behalf of big banks and corporations. Maybe, they figure that desperate college graduates with spiraling college debt will be more likely to accept a future of 21st-century indentured servitude to greedy multinational corporations that share increasingly diminishing allegiance to the American middle-class.

Watch Vermont’s Democratic Representative Peter Welch blast the GOP bill on the House floor here: