Some congressional on both sides of the aisle were practically falling over one another last week to take credit for the "deal" preserving low interest rates on federally subsidized college loans.
On his website, Congressman John Tierney called the action "great news for more than 7 million middle-class students and their families across the country."
While Congress managed to set aside partisan posturing for at least a few hours to reach agreement on the issue is certainly a relief for many college students, prospective students and their parents, it is by no means a victory. While the agreement freezes interest rates at 3.4 percent for another year, there are other changes that elected officials are nit exactly trumpeting — changes that will add an estimated $20 billion to the cost of loans for lower- and middle-class students.
Under the deal, graduate students are now responsible for paying the interest on their federal loans while they are still in school. That will add $18 billion to their costs over the next decade. Undergraduate students, meanwhile, will have to begin paying back interest on their loans immediately after they graduate; eliminating the six-month grace period will add another $2 billion in costs.
Today, more than two-thirds of college students graduate owing money on loans. The average graduate owes about $23,000 to $25,000; some 10 percent owe more than $54,000.
Left unaddressed is the much, much larger issue of skyrocketing higher education costs. Over the past 30 years, college tuition has increased faster than the rate of inflation — and faster than incomes.
Until educators and politicians are ready to tackle that issue, there's to celebrate. What's so great about treading water?
