As students return to college, they may notice that the interest rates on their loans are up. The rate on Stafford loans for undergraduates is now 4.66 percent, compared with 3.86 percent last year.

In Washington, it is frequently argued that higher interest rates hurt students; they discourage college attendance and increase defaults. Is this true? My take: Lower interest rates don’t increase college attendance, and they are an expensive way to reduce defaults. There are better ways to achieve these two important goals.

Econ 101 predicts that a lower interest rate would increase college enrollment. Why? Lower interest reduces the lifetime cost of college. A rational decision-maker would take this into account in assessing the value of schooling. The calculating rationalizer will sum up the projected, lifetime benefits of college and subtract its projected, lifetime costs, including interest due on loans after leaving college.

The rational model probably doesn’t fit in this situation. Behavioral economists, building on the work of psychologists, have shown that the rational model fails predictably when people have to pay in the present to gain benefits in the future. When do people face such a trade-off between present costs and future gains? When deciding whether to save for retirement, exercise for health or go to college.