Editorial: Education can only endure so many cuts

There is no clearer indicator of a government’s priorities
than its budget, and the 637-page document released last week told
the world that when there are cuts to be made, education is sure to
be among the first to get slashed.

The budget for the post-secondary division of the Education
Department, which includes almost all federal higher-education
programs, would be cut nearly in half, from $1.95 billion to $1
billion in the next 10 years.

The most tangible cuts in the education budget are ones that
will affect students’ wallets.

Projections show that in the coming years, there will be less
aid in the form of both grants and loans, and higher interest rates
for loan repayment.

Projections show federal financial assistance for higher
education dropping from its current level of $19.2 billion to $13.8
billion by 2010.

This drastic cut in aid will mean more students will be taking
out larger loans and more high-interest loans from private lenders
to pay for their education.

The cuts come at a time when direct-loan programs are pegged to
be eliminated over the next five years. These loans were
traditionally preferred by students for their lower interest rates
since they are given directly through the universities, eliminating
the involvement of profit-driven banks and other private lending
institutions.

Aside from the cuts in the budget, there is a bill currently
being reviewed by lawmakers that will increase the interest rates
for government-guaranteed college loans, given to both students and
their parents. These loans are given by banks or loan agencies, but
at a government-controlled rate that is currently fixed at 6.1
percent.

The bill will allow for an increase in the interest rate to 8.5
percent, which would save the government an additional $645 million
over five years and $1.9 billion over 10, according a Congressional
Budget Office estimate. However, this government savings comes at
the expense of students and their families, who will be repaying
their loans at higher interest rates.

Federal loan repayments and deferment criteria are already
drastically in need of an overhaul.

Under the current system, low-income graduates who work
full-time are penalized, while those who make more but only work
part-time are more likely to qualify for a deferment, where loan
payments are suspended and no interest or penalties accrue. And the
system discourages those who do qualify for deferment from making
any payments at all, even if they can afford small ones.

The increase in interest rates for direct-loan programs is a
part of the bigger Deficit Reduction Act of 2005. It is
understandable that our country needs a serious plan to resolve its
budget deficit, but how much more in cuts can higher education
endure before the system becomes obsolete?

Federal cuts are making higher education less and less
affordable and accessible, and packaging these cuts with apologies
or sugarcoating them is not going to make up for the reality that
education is simply not a priority to the United States
anymore.

Money allocated to the different line items of the budget by the
federal government is its way of investing in the future of this
country. We just wish that policy-makers would agree that education
is a national priority and fund it accordingly.