Today, interest rates on federally backed student loans doubled. CRITICS say the lower interest rates serve only to attract students who have no business pursuing a higher education, encouraging a massive overconsumption of higher education. One result is universities expand their offerings because of the higher enrollment rates. THOSE IN FAVOR of lower loan rates, say that without the discounts students would be unable to attend university and thus severely curtail their chances to make their way in the world. CONGRESS may punt on making a decision until mid-July.
Lack of Congressional action allowed the interest rates on the Stafford loans to go from 3.4 to 6.8 percent.
While it’s assumed public outcry will force Washington to get down to business once they return from their July 4 break, not everyone is in favor of the federal government being in the student loan business or of the loans’ attractive rates.
Ultra-conservatives view the student loan program as another example of interference by big government and a way to inflate the true costs of college.
If people had to pay with their own money up front, then college costs would contract because of a lack of demand, is the stance taken by the Cato Institute, a conservative think tank funded by Kansas’ Koch brothers, David and Charles.
Ultra-conservatives view the loan program as a government handout. Eliminating the program would make people more self-sufficient.
“The root of the problem is that Congress furnishes student loans at all, killing the natural disciple that comes from people paying with their own money ….” its website says.
Today, unemployment rates are still much better for those with bachelor’s degrees — at 3.8 percent in May — than those with only a high school diploma, which was 7.4 percent, according to the U.S. Bureau of Labor Statistics.
Those who favor keeping big government in education see student loans as the primary way lower- and middle-income students today can attend college. For those not born with a silver spoon in their mouths, student loans are one of the few ways today’s students can attend college.
It was through the G.I. Bill, a federal program for U.S. veterans enjoyed by our “Greatest Generation,” that opened the doors to higher education to the masses. As a country, we haven’t looked back.
The United States is unique in its view to higher education. In many countries and regions — Scandinavia, Argentina, Brazil, Spain, France, Italy, India, Uruguay, to name a few —those who want to pursue their educations at a university do so at the government’s expense. It’s seen as an investment in a country’s future.
The U.S. didn’t follow that model, but did make a college education affordable by the states picking up the majority of the costs. Today, the state of Kansas takes responsibility for about 22 percent of the budgets of its universities. In the 1970s, it carried 75 percent of the load. Students are left to pick up the rest of the tab.
Over the past 10 years, in-state tuition and fees at public, four-year colleges increased at an average rate of 5.6 percent a year.
At the University of Kansas, incoming freshmen will pay more than $5,000 a year in in-state tuition and fees, in addition to room and board. Forty years ago, it was less than $1,000.
Grants and scholarships are also harder to come by. Today a federal Pell Grant covers only about one-third of what it costs for a public four-year college. In the 1980s it covered about half; in the 1970s it covered more than 70 percent.
The increased costs of a college education have forced more and more students to take out student loans. An estimated 7.4 million Americans now carry such loans.
The Republican-controlled House had proposed setting interest rates on the Stafford loans to 10-year Treasury bonds with a ceiling of 8.5 percent, and with the ability to fluctuate year to year.
Democrats in the Senate balked at the upper limits and prefer a fixed rate.
“No deal is better than a bad deal,” said Sen. Jack Reed, D-R.I., in a lame defense for inaction.
The issue needs addressing how, because no education is not an acceptable solution.
— Susan Lynn
Student loans are gateway to higher ed for many
