Time is running out for Congress to act. And low-income college students will pay a high price if a deal can't be reached by Monday's deadline.
Interest rates on many new subsidized Stafford loans will skyrocket—from 3.4 percent to 6.8 percent—on Monday, unless the Senate reaches a compromise.
The likelihood of that happening dimmed Friday as Congress recessed for the Independence Day holiday week.
Most in Congress agree loan rates should to stay lower than 6.8 percent, at least for the subsidized Stafford loans used by the country's lowest-income students. But they're stuck on how to get there.
Republicans want to let the rates fluctuate with the markets every year and use the proceeds for deficit reduction. Democrats say that's unreasonable and want to cap how fast rates can rise.
I think allowing student loan interest rates to double, or, be subject to market whims is wrong and risky. However, One of the main reasons the cost of higher education has increased FAR above inflation over the last 20 years is a result of easy credit. Think about it. Who else would give you a loan of $50K without being able to prove you can pay it back? Good luck finding any lender for anything else that will lend money to you on the hope you'll pay it back if shit works out down the road. The saving grace for the lender is that student loan debt NEVER goes away. You take it to the grave, even after a BK. That's the only reason why lenders lend the money, it's secured against your living body.
I'd like to see low interest rates for those that want to go to college, but there should be tighter controls on how much money you can borrow. There are too many students getting way too much money for their dream school and have NO concept on the obligation they are entering into long term.
And, we all know the school doesn't matter in the real world anyway. It's who you know, how hard your work, and how lucky you get.