July 19 2013
Vicki E. Alger
Yesterday a group of Senators and the Obama Administration reached a compromise on student loan interest rates with the Bipartisan Student Loan Certainty Act. According to the official public fact sheet the bill would:
Not everyone is happy. The Institute for College Access and Success called the compromise “more a missed opportunity than a cause for celebration.” Specifically:
It’s notable that the agreement directs the Government Accountability Office to complete a study of the student loan program’s costs to inform future reform. Neither this deal nor any of the other long-term proposals under discussion is based on the government’s actual costs of borrowing and running the loan program.
The Institute also notes that by 2017 rates will again reach 6.8 percent—the rate they were set to reach absent Congressional action.
In reality, government fiddling with student loan interest rates does nothing to contain college costs, much less lower them. This means students may get a break on their loan interest, but because there’s no requirement that colleges keep their costs down, students will have to borrow more just to pay for their degrees.