After all that political bickering, bipartisan mudslinging and accusation of muddling up the process, members of Congress have finally struck a deal to keep federal student loans at 3.4% for one more year.
The original plan was to cut interest rates back in ‘07 by half and then restore them back to 6.8% this 2012. The problem with this plan is that the effects of the recession continue to depress the job market of today, prompting calls to extend the interest rate cut by one more year.
And Congress came this close to preventing interest rates from reverting back to twice the current rates.
If this extension never happened, 7.4 million Americans would have had to pay an average of $1,000 on over the lifetime of their loans. This would normally not be a problem if the economy were as vibrant as decades past, but post-recession America coupled with a weak global economy makes it difficult for fresh graduates to find decent jobs and start paying off their loans in a timely manner.
This is especially important for cash-strapped students that find themselves increasingly reliant on aid to get through their academic pursuits. A growing number are turning to food stamps, with the Virginia Department of Social Services seeing a jump from student SNAP expenditures of $447,000 in ’07 to a whopping $2.9 million in January of this year.
Many die-hard conservatives frown on the idea of taxpayer money going out to aid, but the fact of the matter is that jobs just aren’t what they used to be back in the baby-boomer days. It is still a good thing that our government is stepping up to help make the lives of average Janes and Joes easier while we ride out the still-depressed economy.
And one way we can do that is to make sure our students aren’t choked by defaults and delinquent payments right after graduation.