Sentate passes student loan refinancing
To the Editor:
I heard this last night (June 11). I am sure it comes as very good news. And it’s about time!
After all, why should everyone else be able to refinance their loans (home mortgages, for example) down to prevailing low rates while most federal student loans are fixed at rates close to 8 percent, or higher? Why has this taken so long to get done? Most people don’t realize that interest on these student loans brings around $50 billion a year into the U.S. treasury. The government needs that income! If these loans are refinanced down to a low interest rate, what would make up the loss in revenue? Surely Congress can find a way to avoid running part of the government on the backs of students’ debt, can’t they?
It used to be that nearly zero-rate long-term federal and state loans for higher education were the norm, to make college affordable for everyone who could get in.
Oh, wait a minute. Sorry. I see now, although the bill passed with a good majority, enough Republican senators rose up to filibuster the bill to table it. I guess it is dead. Damn it! Why do you suppose? Perhaps to protect the tax benefits enjoyed by millionaires (themselves and their donors)? The bill proposed a 30 percent income tax rate on the portion of income over $1 million to make up for the loss of interest on student loans.
What is wrong with that? Don’t they already pay at the top tax rate of 39.6 percent? The answer is, they do not. The low 15 percent flat rate (no change with income brackets) on capital gains allows the wealthy to pay income taxes at rates much lower, like an effective rate of 15 percent to 20 percent. But is that fair? The very wealthy, through hedge fund and venture capital investments, can realize most of their income as capital gains, while those with incomes under $200 (to pick a number) are paying at the straight income tax rate of 25 percent to 35 percent.
A 30 percent minimum tax for those with million and billion dollar incomes, regardless of the portion that is capital gains, seems like a much-needed fix anyway, doesn’t it?
JOHN G. DAVID