Wednesday, December 11, 2013
Philip Elliott / The Associated Press
(Continued from page 1)
A Stanford University student walks in front of Hoover Tower on campus in Palo Alto, Calif., in this 2012 photo, Congressional inaction could end up costing college students an extra $5,000 on their new loans.
But so far, the money isn't there. And if the committee wants to keep the rates where they are, they will have to find a way to pay for them, either through cuts to programs in the budget or by adding new taxes.
"Spending is measured in numbers, not words," said Jason Delisle, a former Republican staffer on the Senate Budget Committee and now director of the New America Foundation's Federal Budget Project. "The Murray budget does not include funding for any changes to student loans."
Some two-thirds of students are graduating with loans exceeding $25,000; 1 in 10 borrowers owes more than $54,000 in loans. And student-loan debt now tops $1 trillion. For those students, the rates make significant differences in how much they have to pay back each month.
The Congressional Budget Office estimates that of the almost $113 billion in new student loans the government made this year, more than $38 billion will be lost to defaults, even after Washington collects what it can through wage garnishments.
The net cost to taxpayers after most students pay back their loans with interest is $5.7 billion. If the rate increases, Washington will be collecting more interest from new students' loans.
For some, though, the interest rates seem arbitrary and have little to do with interest rates available for other purchases such as homes or cars.
"Burdening students with 6.8 percent loans when interest rates in the economy are at historic lows makes no sense," said Lauren Asher, president of the Institute for College Access and Success.