Student loan interest rates
Updated: Saturday, August 3 2013, 01:38 AM EDT
KALAMAZOO, Mich. (NEWSCHANNEL 3) - The numbers are staggering--of the 7 million or so students going to college in this country, 66 percent of them are on campus thanks to borrowed money.
With the failure of Congress on Wednesday to face down a problem that it knew was coming for a long time, the interest on new student loans has doubled.
Tonight in Tom's Corner, Tom Van Howe says our government not only doesn't see the little picture, it can't even imagine the bigger one.
I understand that the men and women who make the decisions in our congress have a lot of work to do. I get it.
But it's gotten to a point where if something is truly important—it just doesn't get done.
It's embarrassing that the Senate knew for a year—a full year—that if it didn't do something, the cost of student loans would, on July 1st, go up.
So what did it do? It went home on vacation.
And guess what; interest rates went up from 3.4 percent to 6.8 percent.
Then yesterday, the votes weren't there to come up with a temporary fix. No surprise. There were Senators looking for a permanent fix. They knew that going in.
Nonetheless, there was a lot of breathless posturing; a charade, if you will, to convey just how hard they were all working.
I don't think the rate will stay that high for very long. For one thing, it's bad politics. It could mean votes!
But what's missing is real conversation about the bigger picture.
I think we can all agree that the need for higher education has never been greater than now. The high-school-to-factory syndrome is long gone.
Even those jobs now require more than high school can provide.
Continuing education is crucial to the future of our country. Its no longer a matter of "it would be nice," it's a matter of "we have to."
Trouble is, the cost of college and specialized training schools is cold-bloodedly expensive—up about 500 percent over the past 25 years. The cost of text books has tripled over the past ten years.
More and more moms and dads find it impossible to pay as they go, so two-thirds of all students now borrow to attend class.
Students can no longer pay their way with a part time job.
And the average student graduates with a debt of $28,000. But there are tens of thousands of students who graduate with debt of up to $200,000 dollars.
Right now, Americans owe more than a trillion dollars on student loans. The second highest kind of consumer debt out there behind the mortgages.
And now for the hammer.
Lest you think students loans cost us money—last year, according to the government accounting office, the U.S. government collected $51 billion in interest payments. Fifty-one billion dollars!
Why in the world is the U.S. government making that kind of money off students who have yet to land a job?
A few months ago, freshman Senator Elizabeth Warren, of Massachusetts, suggested it might be wise to lower student loan interest rates to below one percent—the same rate that banks pay the federal reserve for short-term loans.
So simple, so reasonable, so doable.
But then—we're talking about Congress.
Making college degrees and technical certificates more affordable should be a national priority.
We need young graduates to be strong, competitive, and dynamic, just as the United States needs to be strong, competitive and dynamic.
The accumulating student debt is a drag on our economy—just think about how far those billions in interest payments could go in a world of starter houses, cars, and small business loans.
We've got lots of problems with higher education in this country. But setting a truly low, fixed interest rate, to encourage ambitious young people, instead of adding to their burdens, is a part of the answer.
Think about it.
In this corner...I'm Tom Van Howe.