According to analysis published by the centrist Brookings Institution, lower student loan interest rates aren’t a great way to make college affordable. But yet Hillary Clinton has made cutting interest rates on undergraduate student loans the central component of her plan to make college more affordable.
Even though interest rates affect the total lifetime cost of a student loan, they have no effect on students when they’re deciding to enroll as undergraduates. “I know of no empirical study that estimates a causal relationship between college enrollment and the interest rate charged on student loans,” writes Susan Dynarski, a nonresident senior fellow at Brookings. This is because students get the same funding from the government regardless of the interest rate, Dynarski says.
