President Barack Obama has offered a way to keep interest rates on student loans low, but critics say it might not be a long-term solution.
Under Obama’s proposed budget, the interest rates on subsidized Stafford student loans will fall to an all-time low of 2.79 percent next year.
Each year, the interest rate on subsidized loans would be based on the market value of a 10-year Treasury note.
But his plan does not include a cap on how high the market can drive up student loan interest rates.
The 3.4 percent interest rate on subsidized student loans was scheduled to double last summer, which Obama criticized in a speech at UNC-CH in April 2012.
Congress eventually delayed the increase until July 1.
Kristin Anthony, assistant director of UNC-CH’s federal direct student loan programs, said she supports an interest rate cap.
At the same time, doubling the interest rate would harm students more than Obama’s proposal, she said.
“Unless something really bizarre happens to the U.S. economy, forecasters can successfully predict that the Treasury note will … only change a little in the next 10 years,” Anthony said.