The U.S. House of Representatives was set to vote Wednesday on a bill tying the college student Stafford loan interest rate to financial markets. It will be good news for this year's students, since the rate will fall from 6.8 percent to 3.9 percent. But the rate will rise over the next few years as the economy improves. The rate is capped at 8.5 percent for undergrads, 9.5 percent for graduate students, and 10.5 percent for parents.
It may take a decade for the loan rates to reach those levels, but we have no doubt that student advocates will be back before too long, asking Congress to lower the rate again.
This is a stop-gap measure, designed to lower the rate this year, but it doesn't affect the student loan crisis that has been growing year by year.
The cost of a college education has been growing with little to constrain it. Students intent on getting the best education and their parents haven't been in much of a position to drive a hard bargain when it comes to tuition, room and board. There are usually plenty of other students waiting to get acceptance.
College is, of course, a great investment in a young person's future, but students coming out of school with tens of thousands of dollars in debt, and finding few employment options in this economy, are finding it hard to pay back the debt they have accrued.
Students and their parents can do themselves a favor by finding lower cost, close to home college options, which don't necessarily mean lower in quality. The less they have to borrow to get a college education, the better off they will be after graduation.