The New Republican Education Bill: What's In It for Students
On July 1, unless action is taken in Congress, federal student loan interest rates will double from 3.4% to 6.8%. Last year, President Obama managed to get Congress to hold the interest rate at 3.4% for one year. This year, however, the pressure is on to develop a new solution—so this problem doesn’t crop up again every year.
The Republican proposal is an attempt at that. Several proposals cover both public secondary and pre-secondary education and programs that help college students—including student loan programs. Here’s a look at what’s in the Republican education proposals for college students.
A change in the way interest rates are applied
Under the new program, rates wouldn’t be fixed by law as they are now. Instead, they would rise and fall on a yearly basis in conjunction with the government’s cost of borrowing. Under the Republican plan, these would be variable rates—much like those under private student loans.
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As to whether those interest rates would be lower than private loans, the answer is unclear. According to the Republican plan, the interest rates for student loans would be set lower in the first few years, but with the annual reset, it’s projected that the interest would rise to as much as 7.4%--or more.
The Republican plan would set the interest rate based on the 10-year Treasury T-note every year. Once the interest rate was set, it would stay as it is for the year—but fluctuate again with the market in the next year. Theoretically, it would also eliminate the continual political battle over whether to increase the rates every year.
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President Obama recently put forward a budget proposal that would have also tied student loan interest rates for traditional and accredited online schools to the market. However, the difference is that under his proposal, the rates would be fixed once a student took out a loan. Variable rates are often less than optimal because they make it more difficult for students and families to predict the costs of college—and budget their college tuition spending.
According to the Congressional Budget Office, the Republicans’ measure would save the government more than $1 billion over a five-year period. However, it would also push the majority of those costs on students and families. Because of this, the measure has received significant criticism.
A reduction in requirements for elementary, middle, and high schools
Representative John Kline, chairman of the House Education Committee, introduced a bill that would dramatically roll back requirements set by the Bush Administration’s No Child Left Behind legislation. Under the new rules, requirements for public schools that receive federal funding would be loosened. While much of this affects younger students, it could also have an effect on those about to enter college as well—as it eliminates the requirement for high schools to have college preparatory classes and programs.
Under this program, states would have the freedom to set their own requirements based on former No Child Left Behind guidelines—including those for curriculum quality, testing, and teacher qualifications.
This bill demonstrates a clear desire on the Republican side to lessen the government footprint in traditional and accredited online education [http://www.distance-education.org/Schools/]—by slashing programs for public schools at the elementary-to-high-school level as well as increasing the costs of federal loans for college students. Those who advocate for smaller government may see this as a good thing; however, the concrete effect on college students and their families is likely to be costly. Still, it’s unclear at this writing whether the measure will pass—and President Obama has promised to veto it if it does.