A Better Approach to Student Loans

May 6, 2013
Washington Post 
student loan news

An editorial in the Washington Post supports President Obama's plan for easing the financial burden on student loan borrowers. Last summer, he and Congress scraped up $6 billion to postpone an increase in some student loan rates to 6.8 percent from 3.4 percent; but as the expiration approaches this July, Obama has suggested what the Post believes is a much more sensible approach. His latest budget would peg student loan interest to the rate at which the government borrows, with a modest markup to balance the risks to taxpayers. Because of the government’s low borrowing rate, the early years of the program would see rates lower than the 6.8 percent; but the administration expects the program not to have an effect on the budget. One reason the reform is a good idea, according to the editorial, is that it would tie the amount students must pay to the real cost of borrowing. Jason Delisle, an expert in higher education with New America Foundation, says that Congress and the White House could save billions by unifying the various loan terms the government offers to students who come from families of differing incomes. He also suggests that Congress remove certain incentives to borrow money for graduate studies.
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