Fact checking the student loan debate
The latest Congressional fight is over how to deal with a student loan interest hike set for the summer. But what's the real bottom line?
Jeremy Hobson: Remember the big brouhaha over student loan interest rates? That if Congress doesn't do something, they're going to double? Well today something is being done. The Senate will take up a bill to keep the rates from going up to 6.8 percent in July. But scary numbers aside, what would the hike in interest rates really cost students and their families?
Our Washington bureau chief John Dimsdale did the math.
John Dimsdale: President Obama has been touring college campuses from North Carolina to Iowa stumping for another year of cheaper interest charges on some student loans.
Barack Obama: And for each year that Congress doesn’t act, the average student with these loans will rack up an additional thousand dollars in debt.
Republicans and Democrats agree the lower interest rates should be extended and are only arguing over how to pay for it. But Jason Delisle at the New America Foundation says the interest rate cut won’t really be that much of a break -- only a third of student borrowers qualify for the cheaper rates. Plus, the loans are capped at $5,500 a year.
Jason Delisle: If you can’t borrow a lot of money, the interest rate starts to not become that much of an issue. You’re not talking about a lot of money in terms of 'What does this do to a borrower's sort of average monthly payment?' It’s about $9 a month.
Delisle says the president and Congress are only considering a one-year extension of the favorable interest rate, with no mention of the fact that the entire graduate student loan program comes up for refunding next year.
In Washington, I'm John Dimsdale for Marketplace.