Like many recent college grads, Los Angeles resident Steven Lee finds himself unemployed in one of the roughest job markets in decades and saddled with a big pile of debt. He owes about $84,000 in student loans for undergrad and grad-school costs.
But what Lee's angry about isn't the slings and arrows of an outrageous economy, and it isn't the idea that he owes a ton of money for all the schooling he's received.
It's the interest rates on his government-backed student loans, which range from 6.8% to a whopping 8.5%.
"That's just ridiculous," Lee, 35, told me. "The rate for a 30-year mortgage is around 5%. Why should anyone have to pay 8.5%?"
Well, because a deal's a deal, and that's the rate Lee accepted when he received his loan.
"I disagree," he replied. "The government has bailed out homeowners. It's bailed out big businesses. Why can't it also help students?"
Good question -- and one that's especially germane as tuition continues to soar at both public and private universities. The University of California is looking to raise its fees 32% next year to more than $10,000 a year.
"If I was a student, I'd be outraged too," said Tony Hollin, chief executive of Edamerica, the seventh-largest provider of student loans nationwide, with about $1.6 billion in loans originated last year. "This is an issue that more people need to be aware of."
Edamerica lent $30,000 to Lee so he could get a master's degree in clinical psychology from the Santa Barbara campus of Antioch University. This followed Lee's earning a bachelor's degree in sociology and psychology from UC Berkeley.
Hollin said he'd love to charge market rates for student loans. Problem is, all of Edamerica's loans, and most of those provided by other lenders, fall under the Department of Education's Federal Family Education Loan Program.
The program allows private lenders to offer loans to students at subsidized rates. It helped service financial aid at more than 4,400 schools as of February, according to the National Assn. of Student Financial Aid Administrators.
By contrast, about 1,600 schools used direct loans provided by the Department of Education.
"I wish we could help students," Hollin said. "But the rates we charge are mandated by the federal government. We can't change them."
So Lee has a point. If the feds can come to the assistance of beleaguered banks and homeowners, why can't they offer a helping hand in the form of lower rates for students?
