Answer? About $39/mo for new student loans:
That brings us to the part where we stop talking strictly about numbers and start talking about values. Even if you believe that we eventually need to rejigger student loans so that their cost to borrowers better reflects their cost to taxpayers, now seems like a less than ideal time to raise rates on this particular set of loans. The economy is still tepid, particularly for the young. More than 13 percent of borrowers are defaulting on their loans within three years of going into repayment. Making the burden harder, even a tiny bit, seems a bit callous at this juncture.
On the other hand, we should realize that this is a relatively minor issue among the many and complicated issues plaguing our college finance system. Our most troubled student borrowers, on average, have relatively modest debts. Yet for whatever reason, safety valves like income based repayment programs (which cap monthly payments at a reasonable percentage of a borrowers paycheck) and forbearance (which gives students a break on payments when they run into financial trouble) aren’t saving them. I’m not sure adding or subtracting a few points from their interest rate will either.
The real kicker is this — folks who are on the lower end of the financial spectrum simply aren’t going to be able to shoulder a “mere” $39/mo.
There really are two economic recoveries going on in America right now. For the upper half? Times are great… they can afford the added increases. For the lower half who has just seen the manufacturing class evaporate, seen the cost of everything go up, watched as credit has dried up and mortgages foreclosed, and can’t seem to find employment in a workforce that is looking more to economize — effective demanding specialists while placing the cost of specialization just out of reach?
$39/mo is $480 a year. That’s not pocket change.
