I spoke this morning with U.S. Rep. Keith Ellison about the bill he said he has helped introduce that would prevent the Federal Direct Stafford Loan’s 3.4 percent interest rate from doubling this year.
(The rate used to be fixed at 6.8 percent, but was reduced back in 2007. It’s scheduled to return to 6.8 percent July 1.)
Ellison was short on specifics, such has how much the average student would save or how much it would cost the U.S. government, which effectively took over federally backed loans to students in 2010.
He did tell me that the savings to students:
“… would be substantial. It could be hundreds of dollars a year, depending on the loan amount. … It’s not the answer to college affordability, but it’s a part of the answer.”
The big question, he said:
“… is how to get states to make a greater contribution to (their) universities, which would make overall tuition rates lower.” Over the course of the next several years, we will lose the technology race and the competitive race with countries that are putting a lot of money into higher ed.”
And the cost to the government in lowering the amount of interest it’ll earn:
“Maybe there’s an opportunity cost, but I don’t think that’s a big factor in terms of moving forward. Based on all the fuss the Republicans make about cost, everybody wants to know how much it’s going to cost the government, what kind of hole this is going to make. But I don’t think it’s going to make one. I don’t think it’s the real issue.”
Resistance he’ll expect?
“We’re in a highly polarized political environment so we’re going to have a lot of resistance.”
Ultimately, he said, he sees education is a social investment:
“The government should give students more money. The government should subsidize education more. It shouldn’t be so focused on loans.”