Under Congressman John Kline’s bill on Student Loans interest rates can rise as high as 8.5% (Stafford Loans) and 10.5% (graduate and Parent Plus Loans). In addition, it would be harder for families to do future financial educational planning with interest rates varying year to year and adds more bureaucracy layers in complex tracking of loans. His bill also fails to guarantee low rates for student loans while burdening students with higher debts upon graduation.
Do the Math$: According to the government’s own accounting (C.B.O report):
The Government receives:
- 12.5 cents in revenue next year for every dollar lent through subsidized Staffords
- 33.3 cents per dollar in unsubsidized Staffords
- 54.8 cents on each dollar of graduate school loans (over half!)
- 49 cents per dollar of parent loans
- The Federal Government currently borrows money at 1.8%...
- …then lends it at 3.4%.
John Kline’s bill is asking for an immediate increase to 4.65% effectively doubling student debt and profits from the program! Currently, every student graduating with a four year degree has $27,000 in debt…under Kline’s bill…double it! A student who borrows the maximum amount of subsidized Stafford loans over five years would pay $4,174 in interest under the current rate, but more than $10,000 under Kline’s bill (can you say cash cow!).
Financial Aid for students should NOT operate as new revenue for the federal government. BTW: The government already makes more on Student Loan Interest than Ford makes on automobiles.
Congressman Kline (MN-2, R) should be helping to ensure that college remains within reach for all students who rely on federal loans to pay for their education. Instead Kline is introducing and promoting a bill that will do just the opposite. Is it any wonder the US only produce 1400 PHDs annually and that number is on the decline? Meanwhile in China, by government educational investments, 300,000 PHDs have been paid for virtually by students maintaining a grade point average.
Tell Kline that education is an investment in our nation’s future, not a ‘market’ for wall-street profiteers or a ‘cash cow’ to underwrite the government spending.