HR 5

Looks like Nancy Pelosi's Congress is going to vote on HR 5, "The College Student Relief Act of 2007". The gang is gonna reduce interest rates that students pay on FFELP loans, increase fees that lenders must pay to the Dept of Education, and reduce fees that the Dept. of Education pays to lenders. What a great plan!

Except that interest rates will only be reduced on subsidized Stafford loans....a subset of all FFELP lending. And the fee manipulations? Well, that's going to be passed right on to the student without a doubt.

The funny thing is, that this bill doesn't really do what it's name suggests. Say you attend a school that costs $35k all in. Well, guess what? You still owe that $35k. This piece of legislation does nothing to provide any relief. It merely slightly reduces the cost of borrowing money to pay that same $35k.

You see, it's not the loan programs that cause the burden, it's the tuition, room, board, fees, books, and travel. The loan programs merely help you underwrite the ultimate cost.