Saving the Education Ladder
College has been the essential ladder of economic opportunity in America since Congress passed the G.I. Bill after World War II, opening the doors of higher education to farmers and mechanics.
As a study released last week by the nonprofit National Center for Public Policy and Higher Education shows, however, many rungs on the ladder have broken. “Only the wealthiest families have seen their incomes keep pace with tuition,” the study concluded, and “the lowest-income families have lost the most ground.”
Last week, White House Budget Director Mitchell E. Daniels Jr. floated a proposal that might have made the ladder even more rickety. Daniels suggested that Congress trim about $1.3 billion from the $70-billion “loan consolidation program” that Washington began in 1986. That loan program allows college graduates to lock in their loans for up to 30 years at a fixed, federally subsidized rate of 8.5% a year.
Bush administration officials quickly retreated from Daniels’ proposal after Democrats hammered it as amounting to “more tax cuts for Enron paid for by effectively raising taxes on middle-class students and their families.”
Although Democratic leaders are right to stress that federal leaders, in today’s recession, should be doing more to help families afford college, they also were too quick to dismiss Daniels’ underlying point. He had suggested trimming the loan program, after all, not to help Enron but rather to make up for a $1.3-billion shortfall in the Pell grant program. Unlike the loan consolidation program, the grants are targeted sharply at low-income Americans, and Pell underfunding is as much the fault of Democrats as Republicans.
Last week, Rep. John A. Boehner (R-Ohio), the chairman of the House Education and the Workforce Committee, sensibly asked the General Accounting Office to begin studying which Americans are benefiting the most from the loan consolidation program: the needy ones whom the center’s study found to be losing ground or Stanford Law graduates making more than $100,000 a year. It’s a fair question that Daniels was right to raise.
Until that study comes in, however, Congress should be careful to protect a loan program that encourages Americans to seek higher education. Such government foresight was critical after World War II. Today, when a highly skilled work force has become the key to helping lift the United States out of recession, low-interest student loans have become essential.
