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Posts Tagged ‘Monsters University’

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By Mike Kanoff | Counterpoint | July 12th, 2013 |
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While I am sure it will come up on the show at some point, I want to give a quick stance on the recent doubling of student loan interest rates. Congress recently failed to block a doubling of interest rates on federal student loans from the then-current 3.4% to the new 6.8%. Currently, both houses are trying to put something together to bring the rate back down, but there has been no official movement at the time of writing.

 

Students go to college more so now than ever before; it is almost expected that an applicant for most jobs have a college degree. Unfortunately, and I think many people can relate, college isn’t exactly cheap, so the government was nice enough to help out. Of course, like all loans, the government charges interest, which used to be a bearable 3.4%, but which is currently 6.8%. As it is, the stereotype is that after graduation, the students start working at the lowest rung and earn just enough to eek out a living after paying their rents/mortgages/bills and loans back.

 

This shouldn’t be a partisan issue: you can’t take money from people who don’t have any. As I said above, the stereotype is that college students don’t have much money, since they are most likely going to school to be able to get a job in the first place. But on the other hand, the government has no obligation to give these loans, nor does it have an obligation to keep them at 3.4%, but since it has offered, and considering the other offers, like banks getting loans with near-0% interest, interest should at least be allocated appropriately.

 

Ultimately, it is still up to the student to accept the loan, and it isn’t wrong for the government to ask for the double rate, but it simply doesn’t make sense to. Either private lenders will beat the government, like any free market has the capacity to do, or the percentage of students going to school may drop for fear of being unable to repay. We certainly don’t want to end up with a generation deeply indebted from their college educations, but at the same time, there is no obligation for the government to make it cheap. The government guarantees 12 years of schooling; a high school diploma, and everything else is optional, even if it is preferred.

 

I think I can sum up my stance here with an simple analogy: if you want orange juice, you’ll likely get more from the fat, juicy, plump orange than you will from the one that’s yet to ripen and still green.