Generation Debt

The Minneapolis Star Tribune (free subscription) ran an editorial this week about the continued need for student loan consolidation. Citing the Republican backed legislation in the works the newspaper is arguing the needs of loan consolidation to help recent grads manage the growing cost of higher education.

"Now, in the face of tightening fiscal pressure, congressional Republicans instead are portraying fixed-rate student loan consolidation as a federal subsidy for well-heeled young professionals. They say it is consuming tax money that might otherwise be used to provide more help to needy students.

A skeptical view of that argument is warranted, given how little eagerness Congress has been displaying for helping students. Texas Democratic Rep. Silvestre Reyes voiced an alternative theory about GOP thinking: "The White House is again resorting to penalties against the most vulnerable Americans in order to finance the war in Iraq," he told the El Paso Times. Other critics say the change is being sold to Congress by big players in the student loan industry, which stand to gain financially if fixed-rate consolidation disappears. Besides, the Bush administration has never shown a reluctance to finance tax-cut benefits for really well-heeled Americans that reduce government's ability to finance program benefits for the poor.

Whether the real goal is more money for the military, the lenders or needy college students, the way to get it should not be to add to the repayment cost of student loans. Congress had it right in 1986: The nation has an interest in helping recent college grads establish their careers. Loan consolidations fixed at today's low rate levels will give those careers important financial breathing room. Providing that opportunity is the least the federal government can and should do for debt-burdened college students."