Last week, the Senate passed a bill that would give college students immediate relief for their financial woes by applying the interest rate on federal loans to the 10-year Treasury note. The 10-year treasury is a government bond that buys up interest; so in other words, this will help decrease interest rates for loans. In case if you didn’t already know, the interest rate for federal loans had doubled, going from 3.4% to 6.8% at the start of last month, posing yet another problem for students desperate for financial aid. The bill that the Senate passed aims to fix this issue, but isn’t this only just a temporary fix?
One problem is that the amount of interest that the Treasury buys up is dependent on its Market value; so if its stock value gains maturity (increases), the interest rates will too. Right now, since the economy isn’t doing so well, the interest rates will be low; but if the economy somehow miraculously makes a turnaround, future buyers- or in this case, borrowers- may end up having to pay up to 8.25% in interest on student loans. Ir probably would have been better to simply just cap the interest rate at 6.8% and call it a day, but we all know that our good friends in D.C. are too smart for that. Another problem too is that it doesn’t fix the issue of college expenses- well, actually, never mind. The last thing we need is the government fixing our education system.
What really needs to be fixed is our attitude towards education. Why is college so expensive? Why is the student dept at $1 trillion? Why are we relying on the government to fix all these things? The problem is that we’ve come to view college as a necessity instead of a means to better ourselves in the trade that we love. We seemed to have bought into this lie that the only way that society will move forward is if everyone were to go to college, so we’ve all become mindless automatons, doing as we’re told with hopes that we’ll someday, somehow, amount to something in life.
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