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Partisan senators striking a tentative deal to restore -- lower interest rates for students.
This after rates on Stafford -- doubled from 3.4 percent to six point 8% at the start of the month.
When you lot the first the new deal would offer lower rates through 2015.
-- academic year for 2015 and then would tie the interest rate level.
Well Democrats actually want to cap.
These rates Steve Moore is the senior economics -- on the Wall Street Journal joining us now from Washington DC.
Steve how this deal in the senate differ from the one that the house has already passed -- both looking to at least in at lower rates for student borrowers.
Well mainly it's by tying the rate to the federal funds rate -- NN and I have to say that I look at this DL.
And everybody's talking about you know giving -- reducing the interest rates for student loans to help students the real the real.
People who benefited the most from that's -- the universities themselves and we've done a number of analyses at the Wall Street Journal that show very clearly.
And every time we subsidize and provide lower interest rate loans for student loans.
-- -- that what happens is the cost of tuition rises so it's like a dog chasing its tail.
I act and and one -- -- -- you don't that really.
I kind of pissed me hop about this -- news this morning.
Is that -- the Congressional Budget Office is actually gonna say that this is gonna reduce the budget deficit I'm.
By a billion dollars over ten years now how does that work -- and I mean we're actually providing subsidized loans and -- these weird accounting rules that we use a Washington this is supposed to lower than the opposite.
I noted that some of the ideas coming -- Where there's so many things wrong -- eight kids again when you read that the headlines about the staff at line rates doubling.
The Republicans Democrats liberals conservatives everybody gets up in arms about it and I'm like okay.
Well then you're willing as the American taxpayer to continue subsidizing.
I want to know long run but let me.
Just in Iraq beyond that point that that is such a critical point -- -- If you provide a subsidized student all that's fine if we as a society decide wanna do that but let's not pretend that this is a free lunch date and this is not a -- -- somebody asked the pick up the subsidy right and -- that is going to be adjusting you mention the American taxpayers are on the hook here and by the way if you look -- outstanding.
Student loan debt.
This is one of the great scandals -- America they -- I know you know this statistic a trillion dollars of outstanding student loans up out there who do you think -- on the -- for that.
Where you draw the line that because if you look back at how much the rate on the Stafford loans went -- It did it was that it was at a level -- it went up to six point 8% and compared to the ten year treasury that's a little ridiculous I am now for the federal government to be charging -- But how do you fix this long run good like the Democrats idea in the -- is to eventually after 2015 to cap.
The rates at a certain level eight point eight -- quarter percent cap.
But that doesn't but then what -- -- go higher than that then again you're gonna have a taxpayers -- yet.
Well day you -- I've known each other a lot about you know -- answer that question we should allow the market.
Not congress and from what the interest rate will be on these student loans now if we're gonna provide a subsidy we should be very straight forward.
Ought to the American taxpayer about what that's subsidy as but setting a cap on the interest rates I think is absurd because -- you just so we don't know what interest rates are gonna look like two years from our five years from now let alone ten years from now and I believe that these -- should be risk adjusted and they should be based on what the market decides not what congress decides.
Said this over and over again people complain about college and it's exactly like how thing.
You have plentiful cheap credit available to students and all that happens just as you said is colleges -- -- -- and you know it's a good I.
How about I have us on and I imagine university don't get kicked out but I am I'm.
I am page 62000.
Dollars a younger.
You know for the -- right right now and it's kind of unfair for people are paying the parade the whole right.
Did not have to be paying you know the student loans for people are paying that tuition costs I feel for pirate I've affidavit saying he's so good -- -- I'd have to do I went to wake Bartz was very cheap when I went there so -- -- yeah.
Like -- today no it is not -- good to say thank segment are.
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