Read on Twitter
This is an excellent overview of some of the issues related to the vexing topic of interest rates on student loans. As long and comprehensive as it is, it only addresses some of the issues . . . https://twitter.com/jakebrooksGULC/status/1337154934438031366
e.g., the statutory formulas are idiotically indexed to the yield on the 10-year T-note in the last May auction prior to start of each academic year. Leaving aside the fact that the 10-year T-note is the wrong index--91-day T-bill being the more efficient financing instrument . .
. . . the formula then locks the rate for the life of the loan, doling out some rough justice to different cohorts of borrowers based on interest-rate circumstances when they were in college
Most of the design features of the loan programs are similarly financially illiterate and are the product of political expediency rather than well-informed planning
In fact, most of the programs' features represent cumulative and random congressional choices, predictably along the path of least resistence at the time of their enactment
It is unconscionable to leave millions of people trapped in such a poorly designed system or to allow millions more to go up to their eyeballs in debt in a dysfunctional financing system that has so visibly failed
Loan forgiveness will not only rescue current victims of a system that has generated so much price inflation and outright fraud, it will also force politicians to stop their magical thinking about debt-financing of education as a panacea
