There has been much handwringing over Congress’ failure to prevent the interest rate from doubling on Stafford college loans.
“Shame! Shame!” cry those who see Washington as the answer to all our ills and who cannot fathom why the great and all powerful Congress failed to “act” to prevent this catastrophe.
Well, OK. Maybe Congress should have pressed the “Pause” button on interest rates until it figured out what to do about soaring college costs. It had multiple opportunities to do so.
But the reality is that Washington got us into this mess to begin with. And Washington is much more likely to make things worse than to get us out of the mess.
Congress has only two gears: Do something, anything, even if it’s the wrong thing. Or do nothing, which is what it did last week.
The interest rate on the Stafford loans was due to rise automatically from 3.4 to 6.8 percent on July 1 unless Congress voted to continue the lower rate. Congress didn’t, and the rate rose on new Stafford loans. That will cost typical student borrowers an extra $2,600 in interest on their loans, according to one congressional committee’s estimate.
The real problem isn’t the interest rate, it’s that students are forced to borrow so much money because of the high cost of a college degree.
Higher education has become higher-and-higher education as tuition, fees and other costs have outstripped the rate of inflation by better than 2-1.
Congress has only fueled the fire by giving it more oxygen — cheaper and more readily available loans and grants.
As more money becomes available, colleges raise prices to suck it up.
The average student carries a debt of almost $30,000 into the working world. Some owe six figures.
The collective debt has become a colossal drag on the economy and on the lives of young people. Many can’t afford cars or homes. Disposable income? Sorry, I owe my soul to the college store.