CONGRESS FACES two deadlines at week’s end, when federal surface transportation funding stops flowing and the interest rate doubles on one class of subsidized student loans. The House and Senate are searching under every federal cushion for cash, hoping to find a way to pay to stave off both deadlines. In fact, Congress should fund the transportation bill and let the politically inspired loan rate lapse.
The student-loan rate is hardly an established standard; only students who took out loans this year got it. It resulted from a Democratic campaign gimmick — promising to halve student loan rates — and it’s expiring because, after making the promise, Democrats didn’t really want to pay for it. “Doubling” the rate would not affect existing student loans, only new ones. There are better ways to encourage college access, such as shoring up the Pell Grant program. The subsidized loan program would still give students a good deal, with terms far more generous than the market could offer borrowers with little or no credit history. Extending today’s low loan rate for a year — yes, lawmakers want to extend it for just a single year — is not worth the $6 billion it would cost.
Leaving student-loan rates alone would also free up the week’s legislative calendar for a much larger priority: transportation. Congress has pushed off passing a comprehensive highway bill nine times since the last one expired in 2009, on account of disagreements over the Keystone XL pipeline, environmental requirements and spending levels. Meanwhile, the Highway Trust Fund dwindles; it will be gone sometime next year.
The Senate passed a bill in March that is far from ideal. It wouldn’t raise the gasoline tax — the logical and traditional way to pay for highway construction and maintenance. But it does, more or less, find ways to pay for spending, and it would give lawmakers a couple of years to produce a transportation funding plan that makes more sense. The bill is considerably better than yet another stop-gap extension, an option only second-worst to letting funding authority lapse entirely. House Republicans should finally accept a deal based on the Senate’s proposal and move on.
President Obama, Mitt Romney and politicians all over Washington have described the scheduled student-loan hike as some sort of economic emergency. It isn’t. Keeping the student-loan rate extra low is an expensive gimmick. Funding highways is a basic federal responsibility.