Monday, April 30, 2012

Students! Thank the Taxpayers for That Great Loan Rate

Congress just voted to extend subsidized Stafford student loans for another year, costing taxpayers $6 billion. Before 2007, the interest rate for these loans was 6.8 percent, but House Democrats voted that year to artificially lower the rate to 3.4% for four years.

As economist Douglas Holtz-Eakin explains:

“[The interest rate increase] sounds serious. After all, there are 39 million Americans with student loans owing over a trillion dollars of debt, and interest rates doubling from 3.4 percent to 6.8 percent would be a huge hit at a time when households are already struggling.

Serious, except that the president's plan would apply only to those 23 million loans being borrowed directly from the federal government. Except that not all of those would benefit; it would apply only to the 9.5 million loans being borrowed through the so-called subsidized Stafford loans. Except that the lower rate would apply only to new borrowers who apply this year. Except that no payments are made until after graduation, so it would not help anyone for several years. Except that it would lower monthly payments by an average of only $7.”

How the U.S. House from Michigan voted:
� Rep. Justin Amash (R-3)N
Rep. Dan Benishek (R-1)Y
� Rep. Dave Camp (R-4)NV
� Rep. Hansen Clarke (D-13)N
� Rep. John Conyers, Jr. (D-14)N
� Rep. John Dingell (D-15)N
� Rep. Bill Huizenga (R-2)N
� Rep. Dale Kildee (D-5)N
� Rep. Sander Levin (D-12)N
Rep. Thaddeus McCotter (R-11)Y
Rep. Candice Miller (R-10)Y
� Rep. Gary Peters (D-9)N
Rep. Mike Rogers (R-8)Y
Rep. Fred Upton (R-6)Y
� Rep. Tim Walberg (R-7)N

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