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The Daily Wildcat

The Daily Wildcat

 

Student loan rates have become a business, creating imbalance between students, government

Student loans can make dreams a reality.

However, doubling student loan interest rates would be a hindrance.

The Stafford Loan interest rate right now is at 3.4 percent, but it will soon be doubling if Congress does not act in favor of students and lower it.

There is a winner in this situation but it’s not the student.

According to a recent article by USA Today, the government makes a preposterous profit from having a high student loan interest rate. For every dollar being borrowed, the government makes 18 cents. Not only that, according to a new analysis report, it is projected that the U.S. government will make more money off of student loans this fiscal year than ExxonMobil, Apple, J.P. Morgan, Chase, or Fannie Mae made in their respective businesses last year.

In the latest projections by the Congressional Budget Office, the federal government is estimated to make a record $50 billion profit on student loans this year. Furthermore, as found by a recent report, if Congress does not stop rates from doubling on July 1, it is estimated that profit will increase by an additional $21 billion in revenue.

Student loans have become one of the top grossing businesses in the nation and it seems that higher education has simply turned in profit-driven business, rather than an investment in student achievement and success.

If Congress has not set a fixed rate by July 1, the new policy will affect every student who takes out a new student loan. Those who are currently paying back student loan debt will not be affected.

Stafford Federal Loans are a popular choice that students use to fund their education. Where the government profits is in the unsubsidized and PLUS student loans, which parents may take out on their students behalf that charges 26 and 34 cents, respectively, for every dollar it lends.

Keeping a steady 3.4 percent on the subsidized loan means it will cost the government $41 billion over the next 10 years. On the other hand, eradicating the subsidized loan program means that the government profits $49 billion.

There is an unbalanced relationship between the government and students.

Taking out loans will help students pay for school, but will ultimately fund jobs for the government. The government should fund college degrees in order to help out students in need, not to help themselves out.

A college education goes a long way, but so does the debt accrued throughout the years. The cost of student loans paints an unsavory future for students who support their education through loans.

Student loan debt has forced students into a corner of doubt. When bragging about having a college degree, the question will not be: “A degree in what?” but rather, “How much do you owe in student loans?”

Education is an investment. For some students, that investment does not turn out to be the wisest, as it appears that this investment is benefitting the government more than anyone.

In a Los Angeles Times article, Walter Hamilton said the average student graduates with more than $26,000 in student loan debt. The article goes on to discourage students from attending college and drowning in debt afterward, if the degree is not “financially promising” meaning science and technology.

The suggestion implies that student loan debt has created an academic world of natural selection in the nation, where only those with an educational background in science and technology will survive, while everyone else will fall by the wayside.

Apparently, the government has also become another contender in this competition.

The dystopian future high cost for student loans as it is portrayed, is disturbing.

Last year, the White House launched a Twitter frenzy where students could tweet their thoughts to Congress to help them out. It also initiated a trend called “#dontdoublemyrate” where students could tweet to Congress not to double the interest rate.

There is a war on education between the government and students. The government has gone from allies to enemies for students. Now, it is up Congress to mediate a reasonable solution.

­­— Marisela Siqueirois is a senior studying English. She can be reached at letters@wildcat.arizona.edu.

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