The new Democratically controlled U.S. Congress is in the middle of its 100-hour agenda, and one hot item up for legislation today is a House proposal to cut student loan interest rates in half – to 3.4% - over the next five years. The proposal is likely to pass easily but some critics say the plan does nothing to make college more affordable to low and middle-income students. Luke Swarthout, of the U.S. Public Interest Research Group, and Brian Riedl, of the Heritage Foundation, debated the hot-button issue on “Morning Call.”
Student load interest rates are currently at 6.12%. The proposed bill would incrementally lower the rate until 2012, where it would remain at 3.4%. Swarthout argues that the policy will save low and middle-income borrowers thousands of dollars over their borrowing careers and it is a good start in helping to make college more affordable to everyone. Riedl countered that “this bill will not help one student borrow one more dollar for college,” because students don’t start paying interest until after they graduate.