Jul 16, 2012
President Obama recently signed into law a bill maintaining the government subsidy of new student loans for one more year. The interest rate on new student loans would otherwise have doubled from 3.4% to 6.8%.
During a big media blitz at the signing of the bill, Obama and Congressional leaders from both parties claimed the extension of the lower loan rates for another year was a good deal for the country’s college students. However, to pay for these lower rates the bill also will limit students to a maximum of six years of loans, whereas many students who must work nearly full-time to go to school take longer than this. And instead of having a six-month grace period after they graduate before they have to pay on their loans, students will now have to start paying immediately, job or no job. And if they go to graduate school, they will have to pay even while still in school.
This new deal will save American students a total of six billion dollars. But the permanent changes in the loan program will cost students 18 billion dollars over the next 10 years.
Not a good deal at all – but will the headlines fool people during the election campaign?