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2019
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Frank Bernheisel: The View From Here
Frank Bernheisel
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Frank Bernheisel
Posted 06.27.12
Just Outside Washington

FRANK BERNHEISEL

US student loan rates

On July 1, the US student loan program interest rates are scheduled to double from 3.4 percent to 6.8 percent.

Why?

Because some in Congress say that the program is costing too much money and we must raise the interest rate or cut some other program to pay the difference between 3.4 and 6.8 percent.

To me this makes no sense.

The prime rate for banks is 3.25 percent. The interest rate on a 30-year fixed mortgage is 3.62 percent and the interest paid on 10-year Treasury note is 1.67 percent.

Let me see -- Treasury Secretary Tim Geithner can borrow money at 1.67 percent. He can then loan it to students at 3.4 percent and the Treasury makes 1.73 percent to cover administrative costs and profit.

What is wrong with this deal?

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