Below-market student loans increase the cost of college
The Buffalo News, in its July 15 editorial regarding the doubling of interest rates on college loans states, “A college education is already beyond reach for many Americans; with Congress’ failure to act on this problem, the cost is only going to rise even higher.” I am at a loss to understand how lowering rates will make college more affordable.
Below-market rates cause too much money to be borrowed for college, which fuels rampant tuition inflation. The problem is compounded as artificially low rates induce greater numbers of students to enroll in college. With the demand for jobs greater than the supply, many graduates find themselves underemployed or unemployed. Additionally, there are the roughly fifty percent who never even graduate. The result is a huge number of young people saddled with significant loan debt.
Politicians’ knee jerk reaction is to legislate lower rates. This non-solution attempts to treat the symptom, not the underlying problem of escalating tuition prices caused by cheap aid.
Martin E. Mutka