Bizarrely, when Congress finally got around to addressing the problem of student loan interest rates that arbitrarily doubled a month ago, it voted to make the rates higher still. College students will pay an interest rate above 7 percent under the compromise plan approved yesterday. Congressional leaders will tell you about a rate below 4 percent, but that’s the teaser rate, which will expire long before you can pay the loan back. Congress’s message to prospective college students is as clear as mud: “We like higher education, sort of, but we need to make a profit too. We’ll think about it again in a couple of years. In the meantime, don’t read the fine print.”
The stopgap measure is absolutely good news for college seniors, who will get a chance to finish college. Students getting ready to enter college might well reconsider, though. It’s clear enough now that higher education doesn’t enjoy the kind of support in Congress that it has among the general public. It’s a lesson in political risk: with this level of commitment from Congress, students who enter college now relying the federal loan program might find the program canceled before they graduate. That would mean paying back a series of college loans, at interest rates that can’t be predicted in advance, without the benefit of a college degree. The mere fact that Congressional leaders think of college students as a profit center should make you ask what you’re getting suckered into.