April 29, 2012

IN JULY, THE interest rate on certain federal student loans will double, to 6.8 percent. Who could want that? Not President Obama or Mitt Romney, both of whom railed against the scheduled increase last week. And not Senate Democrats or House Republicans, who have competing plans for preventing the hike. The only question in Washington seems to be whether the two sides will agree on how to pay for extending the lower rate for a year.

We hope they don’t.

This isn’t the first election in which this superficially appealing line has appeared; the current 3.4 percent rate began as a campaign gimmick that Democrats cooked up to help them retake Congress in 2006. It has all of the drawbacks it did then, and more: It’s expensive, it’s poorly targeted, and it diverts attention and money from bigger problems facing federal support for higher education.

(Before explaining how, we should note that The Washington Post Co.’s education division includes Kaplan University, whose students use federal loans to finance their course work.)

According to the New America Foundation’s Jason Delisle, a former GOP Senate Budget Committee staffer, Democratic lawmakers were shocked at the cost of their campaign promise to halve student-loan rates after they assumed control of Congress in 2007. So, among other things, they decreed that the rate would revert back to 6.8 percent after five years, which made costs look lower over a decade. At least Democrats could say they kept their promise — for a time, anyway.

It’s no surprise that extending the lower rate now comes at a high price: $6 billion for a year, according to the Congressional Budget Office, and much more if the rate is extended year after year. That spending would be more defensible if the rate cut reflected something other than a number picked in a years-ago campaign pledge. It would make more sense if the alternative were truly bleak, instead of a return to what was still a good deal compared with the rates and terms of loans in the private market. Keeping the federal rate extra-low would be less a concern if it didn’t risk encouraging runaway higher-education costs. Most important, spending those billions would be better policy if hiking student loan subsidies was the best way to get aid to the neediest students.

The best way is Pell Grants, which unlike the loans go only to the poorest students and which are more in need of funding. Mr. Obama has enlarged the program but, as Mr. Delisle points out, has failed to show where he’d get the money to keep it at current levels, as the program faces a roughly $7 billion annual shortfall after 2014.

The president is right that college access is a critical priority. But the country can’t afford every appealing initiative. Mr. Obama and his allies in Congress could best demonstrate their commitment by explaining how they will pay for the robust Pell program he favors. Instead, he seems more interested in pumping up a sense of emergency to justify a $6 billion-dollar commitment to a less important cause.