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Cash Cow? Protest Group Says Student Loan Fees Are Milking Them Dry

NEW YORK (MainStreet)—With the clock running out on the congressional summer session, a group of education and student leaders asked the Senate to discard a short-term cap on interest rates in favor of long term reductions in cost that would make higher education more affordable.

In a joint letter, leaders of the six organizations told the Senate that "students should not be seen as a cash cow" in the continuing debate over student loan interest rates—rates that are seen as a significant source of revenue for the Department of Education. In March, the Congressional Budget Office found that the government will save $61 billion through the Direct Student Loan program, which has prevented banks from collecting fees from federal loans since 2010.

In the letter, addressed to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader McConnell (R-Ky.), the group - which includes the American Federation of Teachers, the National Education Association, the Educational Trust, the U.S. PIRG and the United States Student Association - discusses why many long-term proposals being considered would leave students worse off than if Congress did nothing at all.

In addition, the letter, which can be found here , spells out how "budget-neutral" proposals lower interest rates for today's students by charging tomorrow's students significantly more, and claims that none of these proposals is based on the government's actual cost of borrowing and running the loan program. It concludes: "We need a deal that is based on research and evidence and is good for ALL students in the short and long term, not a deal for a deal's sake. Students deserve better."

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