So, the George Zimmerman verdict has been analyzed, written about, and talked into oblivion. There are other things going on in the world, so here's one.
Some of you already know, and i mentioned on the Morning Show, that the Senate has come up with a compromise on student loans. Due to their recent inaction, interest rates on these loans doubled, from 3.4% to 6.8% on July 1. Mind you, these are subsidized loans. The increase would add about $2600.00 to the education cost of students receiving them.
The grand compromise that was reportedly struck is this. In the fall, undergraduates would borrow at the rate of 3.85%. Graduate students would face a steeper rate, 5.4%. These rates are pegged to the financial markets, and therefore to the economic health of the nation, or so we're told. They would rise to a cap of 8.25% for undergrads. Sounds great, right? Certainly better than an immediate doubling of these rates.
So what's the problem?
I may be a minority of one, but I think charging college students interest to further their education is shooting America's future in the foot. First, these are LOANS. In theory, they'll be paid back. Why have we as a nation decided it's okay to charge interest on something that should pay us back in the long run many times over? Has anyone checked lately about the long term difference in earning power between high school and college graduates? Last I checked, we have a progressive tax system that is supposed to get more money from people making more money.
So if college graduates make more, they'll pay more in taxes over the course of their working lives. In other words, why do we not look at college as a worthwhile investment, rather than trying to wring every last dime out of students through interest on loans? I know this is heresy, but students shouldn't have to pay interest on college loans, unless they're slacking in the classroom. I know not every student receives the Stafford loans we're talking about, but think how many more deserving kids might have a better shot if they didn't have to worry about paying interest to get educated.
I've heard the doomsday stories about how much this would cost.
I believe it's worth it. What do you think?