Dem's Move on Student Loans

The Democratic Majority in Congress announced legislation lowering the rates on some student loans to 3.4% by 2012.

Critics are clamoring for more, but from where theLoanster sits; it's better than a sharp stick in the eye.

The legislation is to be voted on tomorrow.

"House Democrats on Friday unveiled a bill that would cut interest rates on federally subsidized loans to college students by half over the next five years. They said they would finance the $6 billion measure by increasing costs that lenders pay to the government and reducing the largest lenders’ government-guaranteed profits."

Some in the student loan industry take issue with this approach;

“What we’re really seeing is Peter being robbed to pay Paul,” said Tom Joyce, a spokesman for Sallie Mae, the nation’s largest holder of student loans. “When you continue to cut and cut again, eventually who you’re hurting is not the banks but the students and the parents themselves,” said Mr. Joyce, suggesting that such reductions would ultimately impair services to borrowers."