I applaud the Nov. 3 editorial "Making Students Pay" for highlighting the student loan program under attack in Congress. The largest cut in its history is proposed -- more than $14 billion. Since that editorial was published, the Congressional Budget Office has released a report demonstrating just how much students will pay under the proposed cuts.
According to the report, some of the proposed increases include $5.46 billion in new charges to student and parent borrowers when they consolidate their college loans, $1.82 billion in new taxes on student and parent borrowers, and $505 million in new charges on student and parent loans when raising the maximum interest rate on both.
The average student borrower already is saddled with $17,500 in debt. That student could pay an additional $5,800 for his or her college loans.
When completed, this shakedown and shake-up of the student loan program will have been orchestrated by those who want additional tax giveaways. Such a move will hamper U.S. innovation and our ability to compete in the global economy. Many could lose out on their college dream and, as a consequence, our nation's future could be placed at risk.
U.S. Representative (D-Mo.)
Guaranteed student loans help millions of students attend college each year, as do grants. Since 1965 the percentage of Americans holding a bachelor's degree increased from 9 percent to 28 percent.
True, lenders make a profit and receive an incentive to offset default risks and below-market interest rates. But Congress understood that private-sector involvement has been necessary to get more young people into college.
The Post may think the government should be the only lender, but here are statistics on the government's direct-loan program, which was created in 1994:
Eighty percent of schools have chosen the private-sector guaranteed-loan program -- and 500 schools returned to the program after trying direct lending.
Congressional budget counters never said guaranteed loans are more expensive. What they said is that if administrative costs, taxes and risk of prepayment are not taken into account and if a favorable interest rate is assumed, direct lending may be cheaper.
Figuring out program costs is "complicated," but nothing is complicated about how competition has benefited students, parents and schools.
America's Student Loan Providers