Student Loan Debate, Redux, as Donor Schools Weigh In

A feeling of déjà vu permeates the current student loan debate. Just last June, President Barack Obama and Congress agreed on holding the interest rate for unsubsidized Stafford loans at 3.4 percent. But that agreement expires on July 1. If Congress does not pass negotiate another deal, unsubsidized Stafford loan interest those rates will double — meaning more than 7 million students will need to pay $1,000 more per loan per year, according to the White House.

Opensecrets.org data shows that the education industry has invested heavily in members of the House and Senate who currently are working on bills to address the issue. 

Rep. John Kline’s proposal, H.R. 1911: Smarter Solutions for Students Act, gained House approval with a vote of 221-198 on May 23. The bill aims to peg subsidized and unsubsidized Stafford loan rates to the rates of 10-year Treasury notes plus 2.5 percent — with a cap of 8.5 percent for undergraduate loans. This year, the interest rate would be 4.4 percent according to the Washington Post, but it would increase in subsequent years. 

As the House Education in the Workforce Committee chairman, Kline — a Minnesota Republican — has contributors in both the nonprofit and for-profit education realms. For the 2011-2012 election, education was his top industry donor, with individuals donating a little less than $200,000 and education PACs donating more than $70,000. His top contributor for 2011-2012 was the Apollo Group, a corporation that owns for-profit schools, including the University of Phoenix. In 2011-2012, he was the second top recipient of contributions from the for-profit education industry, receiving more than $193,000, and the 10th top recipient of funds from the education industry overall at $268,000. 

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