100 Hours: Student Loan Rates

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As part of incoming speaker Nancy Pelosi's 100 hour platform for the beginning of the 110th Congress, she is proposing to cut the interest rate on, presumably federal, Student Loans by half.

A 50% reduction would take Stafford loans down to 3.4% from 6.8% and PLUS loans down to 4.25% from 8.5%.

I'm not surprised this is being proposed. Those rates, to me, seem quite high. At those levels, a home-equity loan would be cheaper by comparison. Note: I don't think home owners can apply for these loans, but you get the idea.

To me, this seems like a no-brainer, especially when you consider the decline of American prowess in education. Trickle-down economics might not work, but trickle-down is the only way education can work. We need people to go through school, become better educated and pass that knowledge on to the next generation if the crisis of education in this country is going to be reversed.

Consider some of these points from the Bill Summary for H.R. 5150, the Reverse the Raid on Student Aid Act:

  • Unemployment rates for African-Americans with no college degree are almost twice that as those with college degrees.
  • For Whites, the unemployment rate is 40% higher for those without a college education
  • With college education being the only differing factor (i.e., race, age, and gender the same), the government spends from $800 to $2,700 more per capita on social programs for those without a college education.
  • College educated citizens are nearly twice as likely to vote (75% vs. 45%) and more than twice as likely to volunteer their time (46% vs. 22%).

Again, I think this is no-brainer work that should be easy to accomplish. I would even go so far as to suggest that loan recipients that go into education should be able to apply to have their interest waived entirely.


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