Obama, GOP fight over student loans as young people struggle

(CBS News) The clock is ticking down to the day when new student loan interest rates are expected to double, and President Obama made his latest appeal to Congress today to extend the current low rate.

If Congress doesn't act by July 1, the interest rate on new subsidized Federal Direct Stafford Loans for undergraduate students will double from 3.4 percent to 6.8 percent. Both Democrats and Republicans (with some exceptions) have agreed they should extend the low rates, but they've been arguing for months over how to pay for the $6 billion extension.

"Congress has had the time to fix this for months," President Obama chided today from the White House, addressing a group of students. "We can't control every economic headwind we face, but this is something we can control... There's 10 days for Congress to do the right thing. They haven't done it yet, and we've got to keep the pressure on."

Republicans emphatically point out that the GOP-led House already passed a version of the bill and have reached out to the White House with more ideas on how to pay for the measure. Senate Republican Leader Mitch McConnell suggested the president and Democrats were only objecting to their proposals so they can demonize Republicans to voters.

"The only reason this issue isn't already resolved -- the only reason -- is that the President wants to keep it alive," McConnell said on the Senate floor today. "He thinks it benefits him politically for college students to believe we're the problem."

Regardless of who's at fault, it is definitely clear that young people are strapped with student loan debt like never before and that it is taking a striking toll on their lives and the national economy. Student loan debt last year hit $1 trillion, surpassing even credit card and auto-loan debt.

"The lines of job-seekers are long, states are reducing their higher education budgets, and household budgets are straining," writes Rohit Chopra of the Consumer Financial Protection Bureau. "Young consumers are shouldering much of the punishment in the form of substantial student loan bills for doing exactly what they were told would be the key to a better life. Large levels of debt might also pose immediate problems for the rest of us."

A new report from the Census Bureau sheds light on the how student loan debt may be taking a toll. The number of "shared households" -- a measure of Americans living with roommates or relatives (aside from spouses or cohabiting partners) -- increased by 2.25 million between 2007 and 2010, according to the report. This spike can be largely attributed to 1.2 million adult children moving back in with their parents. Two-thirds of those adult children were between the ages of 25 and 34.

The Census cannot from its data explain the reason for this spike. However, the report notes that if poverty status were determined by personal income, 45.3 percent of young adults aged 25 to 34 living with their parents would have been in poverty in 2010. The official poverty rate for that demographic was 8.4 percent, since official poverty is based on family income.

Republicans are pointing to those dismal stats to explain the political gridlock over what should be a simple issue. "College graduates are struggling to find work and pay their bills in the Obama economy," McConnell said today. "He'd like them to believe it's someone else's fault."

Mr. Obama said today that it wouldn't make any sense for him to talk about student loans if he wanted to distract from his economic record.

"This is all about the economy, whether we are going to have the best-trained, the best-educated workforce in the world," he said. "Higher education... is an economic necessity for every family."

McConnell noted that Republican congressional leaders sent a series of proposals to the White House a few weeks ago on possible ways to pay for the extension, which included upping the contributions federal employees would pay toward retirement. Vice President Joe Biden said the White House was open to GOP proposals, but that "we're not going to trade off student loans for other vital, vital programs."

While the House passed a student loan interest rate extension bill, most Democrats opposed it because its $6 billion price tag was paid for by repealing the Prevention and Public Health Fund -- a fund that would provide for hundreds of thousands of screenings for breast and cervical cancer. Democrats in the Senate filibustered that version of the bill, while Senate Republicans blocked the Democratic version. That bill would have required some privately owned companies to pay higher payroll taxes for Social Security and Medicare.

[marychgo]

I'm so VERY weary of the "I did it; why can't you?" argument.

I was lucky: I had a four-year, full-tuition scholarship. The dollar value of that scholarship in the mid-'60s was $4,396. That amount of money wouldn't cover a SEMESTER at the same school today. My parents paid for room and board, but after I moved away from home and went on to grad school, I took student loans, which totaled $3,000 by the time I earned my M.A. It took me five years to pay that off, at a subsidized interest rate.

I'll be happy to support anyone who wants to get the slimiest for-profit colleges off the loan-eligibility list, but when Obama's Education Secretary tried to do that, Orrin Hatch and other GOP legislators screamed bloody murder. Strange how anything "for-profit," no matter how vile, is 100% good from their point of view.

The Democrats' proposed "pay-for" for keeping the loan interest rate at 3.4% was something most Americans would probably support. A few million people, filing as S corporations or personal or service corporations -- mostly doctors, lawyers, consultants, etc. -- cut their taxes by understating "salary" and overstating "dividends." (Some "salary" may be taxable at 28% or 35%, while "dividends" are taxed at 15%.) But the GOP opposes ending this form of tax evasion.

[truthseeker94]

Look! I am so sick of this notion that these loan rates are going to have some major effet on anything! I worked 50 hours a week to support my wife and two kids while I took 18 hours of college. I then worked full time while I finished my master's degree. I then completed a disssertation for my Ph.D while working full time! The reason these kids have so much angst about student loans is they want the socialists like Obama to "take care" of them instead of them having to "earn" something. Where else can you get a loan for anyting at 6%. I am tired of paying for your education! Get a job!

[retmw2]

There are car loans less then 6%.

[jesscreitz]

Where do you propose we get a job? Specifically as a TV/Film major, where do you propose I get a job in NJ...where there are little to no jobs available here because people with more experience have them. And in what way am I not "earning" my degree. I am going to classes six times a week...I do all the extra curricular stuff (like raise money for Relay for Life, volunteer for animal shelters, work as an E-board member of our film club and work as a member of our TV network, all things that should HELP me get a job), get good grades, and job search literally every day. You don't know because you already had a job and some money (I'm sure you must have had some money to start with considering you worked 50 hours a week and supported a wife and two kids) so you don't know what it's like coming out with nothing but debt, nowhere to get jobs (I can't even get an unpaid internship at this point...and I've interviewed for four of them for the summer term). I understand your anger as a taxpayer, but don't tell me I'm not earning it. I'm doing everything I can. Getting a job isn't as easy for us as it was for you when you went into your career.

[Freedom7Capsule]

Our federal government shouldn't be involved in education. Period. That includes student loans. I worked my way through college. I owe zero. And I don't have credit card debt either. That's the old-fashioned way. Works great. Try it. Stop whining.

[KnowerseekerReturns]

Work your way through college, and it'll take you so long that your classes will become outdated (classes are good for 5 years in Florida) and the college administration will require you to take them over again. Yeah, I knew some kids that were *trying* to work their way through college; they were lucky if they managed to get their 2-year degree.

[TimeToEvolve]

If you are not rich and you do not have a job "Blame Yo'self" - Herman Cain, 2012.

[retiredgustav]

Herman was right (extremely). The problem as I see it children when they are born pick the wrong parents. They should make it a point to pick rich parents like the Romney boys did.

[KnowerseekerReturns]

lol, plus 1 likes to both of you.

[John782011]

For those who are eager to have Romney economics support the recovery of educated jobs and the rest of the job market please think about this. We are a market driven economy, people buy, people produce labor goes up. Now as we offshore under Romney economics, the production goes up but our economy does not go up half as fast, why, because the laborers and thus the earners are now offshore also. This we have a growing economy with corporate profits going through the roof, but maintain stagnant employment. That brings me to the discussion of education, the great surge in American productivity was the education of the soldiers who came back from WWII and went to college under the GI-Bill. That brought a new level of expertise in manufacturing, research and development. We need the educated as much now as then. So to say lets charge interest rates at 10 times what a company can borrow for is wrong.

[realtimecoffee]

manufacturing, research and development...
---
Right, and how many of these walking debt bombs have those degrees? If you are going to borrow $100,000 kids, choose your major wisely.

"Median annual earnings among recent college graduates vary from $55,000 among engineering majors to $30,000 in the arts. Education, psychology and social work majors have relatively low unemployment, but their earnings are also low and only improve marginally with experience and graduate education. "
http://www.washingtonpost.com/business/not-all-college-majors-are-created-equal/2012/01/12/gIQAfz4XzP_story.html

[ThomasSense]

Thank God that a Democrat was in office to save all of those auto worker, dealer, supplier, grocer,... jobs, jobs, jobs.

[TimeToEvolve]

If the Republicons would do anything to create good American jobs (they have not lifted a finger yet), the young might have a future in America. This is exactly why Occupy started and why it will come back 10 times stronger if Robmee gets selected.

[ThomasSense]

ad: you are so disconnected from life. If people had jobs, they wouldn't be demonstrating.

[KnowerseekerReturns]

Romney will reduce jobs even more; Obama will do nothing and keep them the same. Some choice.

[Davisrad]

while I empathize with those students who are having trouble with student loans, they made the clear choice to borrow the money in the first place. I had to pay my own way through school as many people do. It took me 10 years to finish my undergraduate degree. I didn't want to graduate with a huge pile of loans to pay off so I worked 30+ hours/week while going to school. It meant I didn't have much in the way of "fun" time hitting the bars with friends or hanging out with the sorority set, but my debt level was less than $5,000 when I graduated. It can be done. I don't think Congress should just forgive these debts - you borrow it, you pay it back.

[John782011]

This is not about forgiving the current or future debt, but the cost of the debt.

[retiredgustav]

John.... You are arguing with morons who probably never seen the inside of a college even though they say they did. It's like the woman's issue that the conservative were trying to frame to look like they wanted free health care when in reality all they wanted was for their insurance companies to cover their needs.

[realtimecoffee]

"This is all about the economy, whether we are going to have the best-trained, the best-educated workforce in the world," he said. "Higher education... is an economic necessity for every family."
---
But aren't these people with all that crushing debt ALREADY the beneficiaries of this higher education. Obviously many of them have been sold a bill of goods. The only people getting rich off this are the folks working the scam at a university near you.

[hillzhavays]

What they all think is that Degree = Job. It doesn't. Entry level is all you get to start with and college grads are pretty much like infants when they start out. Granted, a grad may mature into a higher paying position more quickly than a non-college grad, but this by no means a given.

All a degree tells me is that you can stick with a project and see it through to completion, not much else. And if that's all it tells me, then maybe it's not worth $100,000.

[John782011]

hillz generally a college graduate can expect to earn over 500K more than a high school only grad. So 100K is worth it.

[hillzhavays]

by WHAT-IS-HE-SMOKING June 21, 2012 4:23 PM EDT
by hillzhavays June 21, 2012 3:26 PM EDT


So let's see the whole object of getting a higher education is to get a better paying job. But in order to pay for your education you want only one section of the working population to pay for it. Yea, you sound like a nitwit.
_______________________________

LMAO!! They aren't paying for it you nitwit. Tell me you are just being purposely ignorant and you're not that dumb. It's still their money. It goes to their retirement. They are just getting less of a free ride is all. They are being brought closer to the rest of us who are paying an average 7.14 times their federally mandated contribution. You libbies all scream about "Fair!" when it's someone you don't like, like the rich guy who contributes more to the wonderful comforts and services you so enjoy than you will in 200 lifetimes. But not Federal employees, god forbid such a thing.

It's your tax dollars going to them - I'd think you'd be more worried about that. But I guess not since your contribution is probably so pathetically small that it won't make much difference anyway.

[WHAT-IS-HE-SMOKING]

So tell me, which part of this DON'T YOU UNDERSTAND? This is what the republicans want to do to paty for the extension.

"McConnell noted that Republican congressional leaders sent a series of proposals to the White House a few weeks ago on possible ways to pay for the extension, which included upping the contributions federal employees would pay toward retirement"

Then again, like you have told people to do l, we could just defer their payment. What a nitwit.

[WHAT-IS-HE-SMOKING]

By the way, the republicans also wanted the federal employees to help pay for the highway bill.
"Federal employees would pay more toward their pensions and new employees would receive less generous retirement benefits under a House Republican plan to pay for highway programs."
http://www.huffingtonpost.com/2012/02/08/federal-pensions_n_1263733.html

[hypnotoad72]

Who are the exceptions, on both sides of the aisle?

Even then, some around here will still keep their blinders on and feel their one-liners can be twisted to fit any condition in reality...