Money Minute: College students need a bailout too [Video]
College students gone wild? Nope. That crowd on Capitol Hill was students protesting a pending spike in the interest rate for college loans.
The rate under the federal Stafford program is scheduled to increase to 6.8% from 3.4% for loans made after June 30. Stafford loans are typically extended to low- and medium-income undergrads to help subsidize their education.
The College Cost Reduction and Access Act of 2007 cut the interest rates on Stafford loans incrementally over four academic years. But the rate will jump back up July 1 -- unless Congress extends the current rate.
Good luck with that. Republicans and Democrats don’t see eye to eye these days on much, and providing a helping hand to struggling students isn’t high on conservatives’ agenda.
But this is a bigger problem than many realize. A recent study by the Federal Reserve Bank of New York found that outstanding student loans have surpassed the nation’s $693-billion credit card balance.
Even more eye-opening, nearly 80% of Americans held credit cards as of 2008, compared with 15% of consumers who now hold student debt. That illustrates just how small of a pool of Americans holds this huge pile of debt.
What to do? Some say a measure of debt forgiveness may be in order. Others say that, at the very least, Uncle Sam should keep rates low for federal student loans.
All I know is that if we can throw billions of dollars at troubled banks to keep them afloat, there’s a strong case to be made for investing in our country’s future leaders.
