Washington Tries to Play Rich Uncle Sam on Taxpayers’ Backs
In 2007, Congress halved the federal student loan rate to 3.4 percent but triggered the rates to increase to 6.8 in 2012. Now, Washington policymakers are debating whether or not to extend the 3.4 percent rate and hand the $6 billion “tuition” bill on to taxpayers.
Despite claims by President Obama on his tour of college campuses this week that keeping the loan rate artificially low is critical to keeping college affordable, the numbers suggest otherwise, as Douglas Holz-Eakin, former head of the Congressional Budget Office, points out on National Review Online.
Keeping the rates at 3.4 percent, he explains, would reduce monthly student loan payments, on average, by only $7. Plus, the lower rate applies only to new borrowers and those students who receive federally funded Stafford loans.