Student Loans: College Costs Will Continue to Rise

Lindsey Burke /

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Last week, the Senate passed a bill that would peg interest rates on federal student loans to Washington’s cost of borrowing (the Treasury rate) plus 2.05 percent. The bill also caps interest rates at 8.25 percent in the event they rise in the coming years. The House has praised the move, meaning it is likely to become the law.

While this may make students happy, there are some serious policy limitations that should have taxpayers concerned:

President Obama should have taken the opportunity in his speech this week to champion reforms to the ossified accreditation system, given a nod to low-cost degrees that are under development in the states, and most importantly, talked about winding down federal intervention in the student loan market by limiting access to easy money in order to put pressure on universities to lower costs.

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