Thursday, June 28, 2012

Bad Deal on Student Loans

The Obama administration would have us believe that without Washington’s help, the college dreams of millions of young Americans will be thwarted come Monday. That’s because, unless Congress can reach a deal, interest rates on federally subsidized Stafford loans are set to double, from 3.4 percent to 6.8 percent, on July 1.
President Obama talks of a doomsday scenario for college students, who, he says, will face a $1,000 spike in their college costs unless Congress takes action. Often left unsaid is that the extra $1,000 is over the life of the loan, meaning students will actually see an increase of around $7 per month if the rates are allowed to double.
Also absent from the administration’s talking points is the fact that the federal government created this mess in the first place. Back in 2007, congressional Democrats and the Bush administration halved the interest rate on federally subsidized Stafford loans for five years. But that change was only temporary, and now interest rates are set to revert to the 6.8 percent rate.
Maintaining the 3.4 percent interest rate is bad policy. Such federal subsidies do little to fundamentally reduce the cost of college. Since 1982, the cost of attending college has increased 439 percent, despite roughly proportionate increases in federal subsidies such as Pell Grants over the same time period.

Read more: http://www.nationalreview.com/articles/304225/bad-deal-student-loans-lindsey-m-burke

1 comment:

Unknown said...

Well, student loan debt is one the most serious and actual economic problems today. Government should give young Americans hope that there are some alternatives exept student loans, the education should be less expensive and it's not right that getting in debt is almost the only way to get a degree. There should be some support, quite often graduates pay off their loans through bad credit personal loans online just because they can not get a normal job and pay back from the salary. Education system should definitely change into the better.