Both of North Carolinas senators, Republican Richard Burr and Democrat Kay Hagan, are involved in attempts to maintain low interest rates on federal student loans, but on Monday, some of the loan rates will double. Thats bad for students and bad for the country. Obviously, the last thing students in need of loans can afford in these still-tough economic times is a jacking-up of interest rates, something that will plunge more of them into deeper debt.
That debt is life-changing for some, driving them out of careers such as public school teaching into other endeavors that will pay them more to enable them to pay off loans. Thus, the debt deprives the country of public service from young people who simply cant afford to engage in it. And it frustrates others from going to college at all, when they assume its something they just cant afford.
As it now stands, the rate on subsidized Stafford loans, for undergraduate students with demonstrated financial need, is 3.4 percent, but it will go to 6.8 percent Monday. Burr is part of a bipartisan group that would tie the rate on Stafford loans to the yield on a 10-year Treasury bill, plus 1.85 percent. This year, that would mean an interest rate of less than 4 percent. Hagan and other Democrats want the rate to stay where it is for another year.
These loans need to be looked at not just as help for students, but as an investment in the coming generations, an investment that will pay dividends not just in public service, but in well-educated, well-trained people equipped to take on the high-tech challenges and innovation in American industry as it competes in a global marketplace. Low-interest loans help everyone.