Recently the Obama campaign and Democrats have been pushing the issue of student loan rates front and center. The issue is that if Congress does not act then the low interest on student loans will double to 6.8%. This is the same rate currently paid by graduate and law students like me. The difference in the interest rate is a drop in the bucket compared to the amount of student loans many people have, and it is also important to note that in the last budget deal that subsidized loans for graduate students were eliminated. Meanwhile the tuition rates at colleges keep going up. Here in Connecticut UConn President Susan Herbst pledged to raise tuition 5% to 6% a year.
In the video above Obama seemed clear that as long as schools raised tuition their federal aid would go down. Yet it is not clear that anything has come of this pledge. In spite of all the rhetoric it seems that higher education exists in a bubble. The demand for seats at most schools remains strong, so there is little incentive for them to lower tuition. Unless the federal government takes the lead in fighting the rising cost of tuition, schools will continue to raise their prices and students will pay for them with easy credit. It’s sad to say that there is little boldness in this student loan rate fight. We need our leaders to do more to rein in the cost of higher education before the bubble pops.