Why do banks, not students, get good rates?
I am writing in response to Stephen Evensen's letter, "Kudos to Roskam for student loan bill." In his letter to the Herald, he states, "My friends and I wonder how soon we we'll be able to pay off our accumulating debt and how much the interest rates will compound that cost." He then goes on to applaud U.S. Rep. Peter Roskam for his leadership in supporting HR 1911, which will only increase the interest rate of students like Mr. Evensen.
He goes on to describe how the interest rate will be calculated, he states that "changes in interest rates will correspond to market fluctuations." That seems to contradict what Mr. Evensen, and his college friends, are concerned about. How can you possibly plan for your cost of education on the markets, when interest rates change constantly over time?
Perhaps Mr. Evensen did not consider the bill Sen. Elizabeth Warren (D-Mass) offered in the "Student Loan Fairness Act." Under her plan, the rate on government-issued loans the same rate the government charges the banks when they lend money to them. This would save students thousands of dollars over the life of their loan, due to the fact that they would know what their interest rate is, as opposed to the uncertainty and fluctuations of the market.
Mr. Evensen, I wish you luck in your pursuit of your college degree. One last thing we all should be asking ourselves: Why do the banks get a preferred rate while the students get buried in debt?
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