Interest issue

By The Hawk Eye

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President Barack Obama picked an easy - but important - issue to share with college students last week, including some at the University of Iowa.

The interest rate on the popular Stafford student loans is due to double at the end of June from 3.4 percent to 6.8 percent. Underwriting that portion of student debt costs the federal government about $6 billion.

In these days when everything is viewed through partisan lenses, it's important to note that deadline was set by Democrats when the rate was halved two years ago. It's also important to note there's little, if any, interest among Republicans in seeing the rate go back up.

In other words, despite an effort Friday by the House to pay for the Stafford loans with cuts to the president's health care initiative, there's every expectation a deal will get done. And at a time when interest rates for banks are practically zero, it would be a crime if a deal didn't get done.

Here's the but: There's a reason student loan rates have zoomed in recent years, a reason few people are wont to discuss.

Over the past generation, states, including Iowa and Illinois, have been shedding their responsibility to educate their citizens.

In 1977, states helped fund roughly half the cost of higher education, according to research by Thomas Kane and Peter Orzag, two former presidential economic advisers. By 2002, that shrank to about a third. In the past 10 years, the reductions have continued.

Colleges have responded by aggressively raising tuition fees. Students are having to shoulder more and more of the cost of their education, and they do that by borrowing.

States have been in the education business as long as there have been states. Since the early days of the republic, there's been recognition a functioning democracy requires an educated public. Since World War II, a college degree has been the surest way for families to move up the economic ladder. Governments were rewarded for their investments through taxes collected on the higher incomes graduates earned.

In that spirit, nearly every education mission statement includes a throw-away line that rhapsodizes about students representing our future.

If only we acted as though that were true.