Should the government be making money off student loans and if so, at what rate?
Congress is struggling to tackle this issue and because democrats and republicans hadn’t come to an agreement by their July 1st deadline, interest rates on Stafford loans have spiked from 3.4% to 6.8%.
Representing Naperville, congressman bill foster is trying to bring a bill to the house floor that will eliminate the doubling rate, as he says, “no, the government should not be profiting off college students.”
I think that the argument could be made that it doesn’t really hurt itself when we run a slight loss of these programs,” said Foster, U.S. Representative for the 11th District. “Because what happens is, it encourages more kids to pursue higher education and they become higher paying taxpayers. They get higher salaries & pay more taxes so we get that money back, often, many times over.”
Students at north central college and Benedictine University say the increased interest rates only add to the pressure of an already tight job market.
“I don’t look forward to it,” said Andrew McCarey, Junior at North Central College. “I just hope that with the job outlook that I’m still able to find a job where I can live comfortably and also be able to pay off those loans.”
“If the interest rates start going up and you have to pay a lot more, then how are you going to afford to pay that if you don’t have a job? In today’s economy?” said Natalie Wilson, Senior at Benedictine.
Benedictine University’s Vice President of Student Life Marco Masini says it’s important for students to plan ahead while still in school rather than put off their approach to paying off loans.
“They tend to think of what they’re needs are now,” he said. “But we as an institution are trying to make sure they’re prepared at the front end so that when they graduate, they can pay off those loans.”
There’s still a chance legislatures could come up with a solution and reverse the interest rate increase after they return from their Fourth of July recess.
“My guess is that with the republicans wanting a big increase over the student loan rates in an effort to balance the budgets and the democrats fighting this, the most likely outcome is one where the rates get raised modestly,” said Foster.
Whatever happens, congressman foster says the federal government could be making more than $51 billion off student loans over the next year.
Some proposals are still on the table, including one from house republicans and another from President Obama.
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