May 23, 2013
New Study: Student Loan Switch to Market Rates Would Save Students Money & Save Taxpayers Billions
Proposal Would Save Students Up to $1,413 Over the Life of Their Loan; Save Taxpayers $4 Billion Over Next Decade
WASHINGTON – The American Action Forum (AAF) released a new study today examining the student loan proposal in the House of Representatives to transition to market-based interest rates. The study found that switching to market-based interest rates, would save students up to $1,413 over the life of their loan and would reduce the deficit by nearly $4 billion over the next ten years.
The authors, Scott Fleming and Chad Miller, write that “Shifting to market based rates would provide a long-term solution to the borrower interest rate issue, eliminating the need for annual fixes. In the process, such a change in policy would:
· “Reduce interest rates for all borrowers –saving students as much as $1,413;
· “Save taxpayers $4 billion over the next decade;
· “Remove federal bureaucrats from setting interest rates.”
This paper makes clear that transitioning to a market-based loan structure the most cost-effective solution for both students and taxpayers.
Read the complete paper online here.