Student loan rate set to double on Monday

On Monday, the interest rate on roughly one out of every three new student loans will double, increasing from 3.4 percent to 6.8 percent.  A year ago, Congress put together a temporary fix that cost taxpayers about $6 billion, but saved students approximately $9.00 per month.

Two separate plans have been unveiled in the Senate: one plan would provide another one year patch, while the other would tie interest rates on loans to the 10-year Treasury note, adding percentage points depending on the loan type. It appears all but certain that that 6.8% rate will go into effect on Monday.

AEI resident scholar and director of the Center on Higher Education Policy Andrew P. Kelly notes that while policymakers have spent endless hours debating interest rates that will only affect 1/3 of borrowers, there are other challenges in higher education that merit serious attention from policymakers: rising tuition prices, stagnant completion rates, and a growing army of students with debt:

"Fixing the student loan interest rate won't do much of anything to solve [those thorny problems], yet it has sucked up all of the policymaking energy."

Read Andrew Kelly's recent piece, "President Obama punts away from free markets on student loan reform."

Andrew is available for interviews throughout the week of July 1st. To set up an interview, please contact a media services representative or email [email protected] (202.862.5829).

 

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Andrew P.
Kelly

What's new on AEI

Making Ryan's tax plan smarter
image The teacher evaluation confronts the future
image How to reform the US immigration system
image Inversion hysteria
AEI on Facebook
Events Calendar
  • 01
    MON
  • 02
    TUE
  • 03
    WED
  • 04
    THU
  • 05
    FRI
Wednesday, September 03, 2014 | 9:00 a.m. – 10:30 a.m.
From anarchy to Augustus: Lessons on dealing with disorder, from Rome’s first emperor

We invite you to join us for two panel discussions on how Augustus created order from chaos 2,000 years ago, and what makes for durable domestic and international political systems in the 21st century.

Wednesday, September 03, 2014 | 12:00 p.m. – 1:30 p.m.
Multiple choice: Expanding opportunity through innovation in K–12 education

Please join us for a book launch event and panel discussion about how a marketplace of education options can help today's students succeed in tomorrow's economy. Attendees will receive a complimentary copy of the featured book.

Thursday, September 04, 2014 | 12:00 p.m. – 1:30 p.m.
How conservatives can save the safety net

Please join us for a luncheon event in which our panel will discuss what conservatives can learn from how liberals talk and think about the safety net and where free-market economics, federalism, and social responsibility intersect to lift people out of poverty.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.