Congress should freeze interest rates on student loans
Congress must put a freeze on interest rates for federally subsidized student loans. Higher-education costs and rising tuition have students relying more on loans than ever before.
Seattle Times Editorial
CONGRESS ought to heed a request by President Obama to freeze federally subsidized student loan interest rates at the current figure of 3.4 percent.
Rates are scheduled to jump to 6.8 percent on July 1, costing the country's 7.4 million federal student loan borrowers an additional $1,000 in loan debt. About 107,000 of those students are in Washington state.
The rate hike applies to loans taken out after July. But that could potentially affect a lot of people. Most students borrow in the summer to pay for the following year's schooling.
The president will be traveling to Colorado and Iowa this week to sell his plan to freeze rates on federal Stafford student loans.
It ought to work. Keeping rates low would cost taxpayers $6 billion. But the cost is worth it. The strength of our economy is inextricably tied to our educational system. We need more high-school graduates, not fewer, developing college-level skills for success.
Higher education is becoming increasingly expensive. In 2010, students who took out loans left college owing an average of $25,000.
The Stafford loans are the most common and least expensive way to pay for college. Keeping interest rates low allows more young Americans to have a fair shot at a path to the middle class.
Keeping interest rates low is part of the administration's overall strategy to leverage $10 billion in annual federal campus-based aid to keep higher education affordable and spur important reforms. Other important efforts proposed by the administration include:
• Reforming financial-aid programs to shift money away from colleges that don't keep tuition down, and rewarding with more financial aid those institutions that do.
• A $1 billion Race to the Top: College Affordability and Completion fund to spur reforms and policies, including those that increase the number of college graduates.
• A College Scorecard to provide essential information about college costs, graduation rates and potential earnings of graduates in an easy-to-read format that will help students and families.