Thursday, July 11, 2013

Student Loan Debate: What Most People Overlooked

Politics can sometimes become Bizarro world. Short term political points can be scored by one party when the other fails to live up to its rhetoric.

Republicans have Democrats on a spit over student loan rate hikes.  The interest rate doubled on July 1, despite passage of a bill in the GOP controlled House of Representatives.  A bipartisan bill in the Senate failed to pass, leaving the higher rate in place.

The GOP supports the Obama proposed plan of tying rates to the rate of 10 year Treasury notes, which will likely increase gradually over time.  Senate Democrats oppose this measure. So they went up immediately instead of later.

Hyper reactions over the rate hike drowned out those who claim that the hike will have little impact. 

Jordan Gonzalez in American Spectator argues that "the monster doesn't have teeth or talons."  He cites economists who say the increased rate will add $21 per month to the payment. 

Economists also say that the expansion of easy credit has put student solvency in jeopardy while giving colleges no incentive to restrict spending and hold tuition down.  It has created a classic price rising higher than value bubble that threatens those holding degrees that promise lower incomes.

But if you work in the bloated public sector, fear not.  You may get to keep the same old low rates.

Forbes reports that the rates will not double for many federal employees and congressional staff.  Lawmakers still labor under the delusion that federal employees make scanty livings while private sector earners live it up.  In fact a hefty percentage of federal employees take home over six figures.

Beyond that, as the Forbes writer argues, government salaries should be low.  Employees have job security unknown in the private sector.  Also, the public sector role ought to be limited.  Government does too much as it is.  And should our best and brightest be in the world of innovation and production? 

The politics of it all may be lost on some.  CampusReform reporter Kat Timpf located graduates of George Washington University who opposed what they thought were GOP attempts to raise the rates while also advocating for Republican extermination.

A sure sign that for some, investment in college education is money unwisely wasted!

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