Americans have been paying a lot of attention to student loan rates lately but as KC Deane of the American Enterprise Institute points out, we may have bigger fish to fry.

In the student loan debate, let’s move beyond ‘Don’t double my rate’

Gather people in a room with a simple three-item agenda: two complicated but important matters, and one straightforward but trivial matter. Guess which one they’ll spend the most time trying to solve. Yes, the trivial matter. It’s called bikeshedding (or Parkinson’s law of triviality) — everyone has an opinion about the color of the bike shed, but not so much how to build it.

I’m beginning to feel that this deja vú over the student loan interest rate debate is really just a very sad example of bikeshedding. The federal financial aid system is complicated, and diving into the weeds only seems to make it more so. In fact, one could argue that understanding the interest rate on federal student loans — if not the rationale behind that rate — is one of the clearest parts of the whole system. It’s set for the life of the loan, and it’s listed on each monthly billing statement.

Last summer’s one-year extension of the lower interest rate for subsidized Stafford loans — which are only one-third of the total new student loan volume each year — is set to expire on July 1, and Washington has once again given into the poetic simplicity of the Twitter hashtag #dontdoublemyrate. Barack Obama’s tweets are carbon copies of their 2012 self (2012 here; June 3, 2013 here). US Secretary of Education Arne Duncan, who on May 21 told the House education committee that he seeks a long-term fix, seems to have a short-term memory on the topic. And critics everywhere are aflutter that, once again, we’re short-changing severely indebted students by allowing the interest rates on their student loans to double.


 
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