Editorial: The Government Taxes Students to Help the Rich

In justifying trimming federal student loans by billions of dollars earlier this year, Capitol Hill Republicans pointed to a ballooning national debt. However, the deficit didn’t appear to stop them last week, when President George W. Bush approved the extension of lower taxes for capital gains and dividends; essentially, tax cuts for the wealthy.

The juxtaposition of the two issues is striking: In general, most agree that wider access to higher education and lower taxes contribute to economic growth. Indeed, every argument used to justify extending the tax cuts applies equally well to financial aid and explains why it makes economic sense to keep interest on student loans low.

When the financial aid bill moved through Congress, this board urged lawmakers to take a pragmatic stance. Though we knew that higher interest rates on loans would hurt students in the short-term, we also understood that the alternative was paying off a different debt down the line — one of the national variety. The same pragmatism, however, is absent in the government’s current tax policy.

Despite the mathematical acrobatics used to show that tax cuts would not increase the nation’s deficit, there is no doubt that the bill signed by Bush will widen the gap between the government’s revenue and expenditures. Though low taxes may boost the economy now, higher interest rates that accompany growing debt will hurt the economy for years to come.

For students, who are now preparing for July’s big jump in loan interest rates, this short-sighted sellout looks especially disgraceful. A nation that cannot afford financial aid certainly cannot afford more tax cuts.