The compromise that was reached last week in the House Committee on Education and the Workforce would lower student-loan interest rates to 6.8 percent while they are enrolled in school and to 7.4 percent after graduation. This compromise could be considered a victory for those who support the ideas of higher education and its societal benefits. Lawmakers on both sides of the issue must realize that people who receive a higher education are beneficial to society. For instance, the knowledge one gains at an institution of higher education will be applied in future employment, therefore benefiting all fellow employees and the employer. Granting easier access to higher education by reducing financial strain could not only benefit those who receive it, but also the individuals around them and the market.
Higher education has a positive spillover effect for all of society.
On the other hand, legislators must be careful when reducing these rates so that lending companies do not bail out of the loan programs. In essence, lawmakers must walk a fine line between helping people afford higher education and reducing rates to a point where loan companies decide that it is not financially beneficial to participate. Thomas Butts, the University's associate vice president for government relations, says that two-thirds of all students who attend Michigan state universities and receive loans have direct loans that lenders do not control. Lenders who decide to pull out because of the reduced rates will probably not have a significant effect on students who attend state schools, including the University. But it is still a concern that representatives must keep in mind when dictating the amount of loan-rate reduction by which the lending companies must abide.