If the current student loan interest rate is allowed to expire, interest rates on student loans will double to more than 6 percent. I feel the same way about this issue that I do about the payroll tax. Something needs to be done but maybe not with the 2012 election right around the corner!
Both sides need to be aware of how pinched the middle class feels right now and wary because middle class moderates could define these elections.
Rates are locked in for life so a vote against the extension won't impact current loan holders. But the perception that the Republicans are messing with the step an education represents could be catastrophic during an election year. The Republican strategy has been to demand that the money to continue subsidizing student loans at a low rate should come from cutting parts of Obamacare. What a crafty move that was. If the Democrats don't agree, it looks like they voted to double the rate on student loans. It could be political tit for tat, though, since the Democrats refused to agree to the debt ceiling limit unless the plan included new taxes.
It's important to consider that Americans are carrying a trillion dollars in student loan debt. And that colleges and universities may not feel the pressure to rein in costs because they know Uncle Sam practically guarantees a loan to any student whose family makes less than $50,000 a year. There's also the reality that the unemployment rate for recent grads is more than 8 percent.
The solution lies within the private sector. Private scholarships from potential employers will help companies find graduates who have the skills they need. And students will have less anxiety about taking on student loans if they can see a job in front of them. It works for the Army, why wouldn't it work for the rest of us?
This post is part of a weekly conversation with our Moms Matter 2012 political bloggers. To see the original question and what the other writers have to say, read What Do You Think About the Student Loan Interest Rate?
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