Editorial: Loan rate increase sets up students for failure
The Federal Reserve Bank of New York stated recently in a report that student loan delinquency rates are much higher than previous estimates. The Associated Press says that millions of college students could be in for a shock this summer when the interest rate on a popular federally subsidized student loan doubles unless Congress acts.
Climbing interest rates do not bode well for repayment.
Current measurements show about 15 percent of student loan accounts are past due, but the new report suggests that as many as one in four student loan borrowers might be delinquent. This is not chump change, as total student loan balances have topped $870 billion - higher than the nation's credit card debt and higher than total car loan debt, according to the AP.
The interest rates, by the way, are poised to increase from 3.4 to 6.8 percent, the AP said. The rate hike affects new subsidized Stafford loans, which are issued to low- and middle-income undergraduates.
We have drilled into our children the value of higher education. Youths who graduate with no debts are not only fortunate, they are in the minority.
We abhor the fact that it has become acceptable to obtain a diploma by way of debt. Unfortunately, it can be unavoidable, but that choice - made by parents and students - can ultimately determine how well the child does in society and how much more debt they accumulate.
Frankly, debt can become an anchor and bad choices have consequences. These are some of the reasons our country has problems. We are producing future leaders who often in college have no clear idea of what they want to do as responsible adults, and they get their education - with many defaulting - on the backs of government (read: taxpayers).
To know that they need a degree is not enough. Our nation's future is dependent upon the resolution of this issue.