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EconoMeter: Should we cap interest rates on student loans?

Proposed doubling of loan interest rates sparks debate


Friday, April 27, 2012

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Kelly Cunningham, National University System
Answer: NO

Half of new graduates are jobless or underemployed. Having a job would be much better than reducing student loan payments $10-$20 per month. Costs of attending college are at record highs, but there are downsides to incentivizing students to take out more loans by capping interest rates. This not only does not make college more affordable but lessens restraints on further tuition increases. Far more cost-effective higher education business models would transform and reduce costs. Commonplace innovations found throughout the private sector from an unsubsidized market would help control ever-escalating prices for education more effectively and efficiently.