A tax on students

Middle and lower income students are paying for the rich man's new car.

From American Progress Action:

On July 1, interest rates on student loans experienced the greatest jump in history, with the variable rate on common Stafford loans shooting up almost two percent for students and graduates. The rate hike comes as a result of the Deficit Reduction Act of 2005, which was signed into law by President Bush on Feb. 8, 2006 as part of an effort to save the federal government more than $22 billion over the next five years. (By comparison, the Department of Defense spends approximately $8.1 billion a month in Iraq). In today’s global technology and information-driven society, obtaining a college diploma is more important than ever. The average college-educated worker earns about 73 percent more over a working lifetime than a high school graduate, and faces a 40 percent lower risk of unemployment. A college education opens up windows of opportunity, while leaving school prior to earning a post-secondary credential closes doors. But rising costs and shrinking financial aid are making higher education increasingly inaccessible for many Americans. Lack of academic preparation, inability to pay for a full college experience, and economic pressures to seek full-time employment already prevent many students from completing a post-secondary program. The student loan interest rate hikes will only exacerbate the problem.

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