'Nightly News' Takes Populist Tone on Student Loans
If you watch the news, youâll see financial hardship examples for everything â home prices, food prices, energy prices â you name it. âNBC Nightly Newsâ found another downbeat economic problem to harp on â the lack of funds for federal student loans on March 6.
âMore than a dozen lenders have pulled out of the federal student loan program, unable to raise enough money to make loans,â NBC correspondent Tom Costello said. âNow â
According to Costello, âmanyâ students could end up with loans that have interest rates âpushing 11 percent.â But according to Bankrate.com, the national overnight average for student loans ranged from 6.8 percent to 8.5 percent. Thatâs a distant cry from Costelloâs dire prediction.
As a solution to this problem, Costello suggested government intervention. âPressure is building on the federal government to step in as the lender of last resort,â Costello said.
Costello ignored certain market pressures, specifically from the federal government, which have forced tuition to rise. As the availability of federal aid has increased, some say it has caused the inflation of college tuition.
âWith more money available for loans, colleges feel a degree of freedom to increase tuition,â a Sept. 28, 2007 Investorâs Business Daily editorial said. âIn 1987, when he was secretary of education, William Bennett noted that rising federal aid had âenabled colleges and universities to blithely raise their tuitions, confident that federal loan subsidies would help cushion the increase.ââ
The media have shown a tendency to exaggerate the norm in its negative coverage of economic news, making conditions seem worse than they really are. Costelloâs story used a family in
The average cost of attending college at a public four-year institution is $6,185 a year, according to CollegeBoard.com. However, the cost to attend the