Thanks to the Washington politicians and the unconstitutional Fed, the money changers on Wall Street borrow for nothing, while your granny cannot earn zilch on hard-earned retirement savings. The bond and stock markets are in another bubble phase and your kids and grand-kids are now being forced to pay an outrageous rate on their student loans. Are Americans paying a shred of attention here? Read more from Cato Institute’s Neal McCluskey.
Perhaps the most discouraging aspect of all this isn’t the financial impact of the doubling, but that Congress couldn’t get a deal done. If you are going to have federal student loans, it makes sense to peg them to interest rates such as those of the 10-year Treasury Bond rather than having Congress fix a number for several years. At least then they will fluctuate with the overall time value of money. Indeed, that concept was sufficiently agreeable that President Obama proposed such an idea, and the Republican-controlled House passed roughly similar legislation. But, in a surprise move, President Obama threatened to veto the legislation without, it seems, any effort to negotiate with House leaders first, and Democratic Senate leaders called mainly for freezing rates at 3.4 percent until they could reauthorize the Higher Education Act. There was even a bipartisan effort in the Senate to push through a bill similar to the House measure and the president’s, but it went nowhere.