Fed student loans set to double 3.4% to 6.8%

[deutschman]

On July 1st, the interest rate on new federal student loans is set to double from 3.4% to 6.8%. That rate is nine times higher than the rate at which the government loans money to the big banks.

That just doesn't make sense. The federal government is profiting off loans to our young people while giving a far better deal to the same Wall Street banks that crashed our economy and destroyed millions of jobs.


College students carry more than $1 trillion in student loan debt, more than all the credit card debt in the country.

That's a crushing burden on our kids and a crushing burden on our economy. Today's graduates aren't just delaying buying a home and starting a family -- they're moving back home with mom and dad and struggling to create some economic security.

The big banks that crashed our economy receive loans from the federal government at a rate of only 0.75% -- that's right, three-quarters of ONE percent. If Congress doesn't act by July 1, our students will pay nine times more than big banks. Our students are the engine of our economic future, and they deserve at least the same deal as Wall Street.

Students don't get the same Too Big to Fail guarantee as the big banks. But even though some students can't pay their loans, overall the government is making 36 cents on every dollar we put into the student loan program. Next year, student loans are expected to bring in $34 billion.

Why should the big banks get a nearly-free ride while people trying to get an education pay nine times more? It isn't right.

http://democracyforamerica.com/pages/774?akid=3199.2334391.DE4B9j&rd=1&t=1

[deutschman]

Im not really a Dem. or Rep. Guess I am a libertarian or something, but I am a student and currently have Federal loans.
I have no problem paying back what I ow with a bit of interest, but I think it is criminal to price gouge students who are trying to educate them selves to become citizens that can positively contribute to our country, while corporations and banks get hand outs for nothing. Disgusting

[ficklerx]

Just refinanced our house and added in the wife's student loans. Dropped the rate from 6.8% to 2.75%.

Doesn't make sense.

[BraveUlysses]

Fucking insane that the rates are going up that much.

[bmwstephen]

could be slightly good news as any interest hike would mean that market prices (ie, tuition) will go down in relation. If they don't.... well then that means banks will have lower rates than the fed's

[nrubenstein]

It's more insane that we are subsidizing the education system with student loan debt that is impossible to discharge through bankruptcy. This is a large part of why it is so spectacularly expensive to get a degree these days.

[bmwstephen]

It's more insane that we are subsidizing the education system with student loan debt that is impossible to discharge through bankruptcy. This is a large part of why it is so spectacularly expensive to get a degree these days.

They use to allow it, then they realize students with guaranteed high wage and strong security jobs would game the system. IE a newly graduate doctor would declare bankruptcy after accepting a job at the hospital. sure his credit would be demolished but he would recover in less than a year.

desutchman, I would not worry too much. I remember when my college tuition was avg 8% back in the early 2000's. Guess what, my tuition was 5k a year compared to my bro being at 12k year at 3%.

[nick123]

could be slightly good news as any interest hike would mean that market prices (ie, tuition) will go down in relation. If they don't.... well then that means banks will have lower rates than the fed's

That is naive wishful thinking. What the common peasant spends their money on is the last thing to come down in price, hence why inflation is legal theft.

[mrsleeve]

It's more insane that we are subsidizing the education system with student loan debt that is impossible to discharge through bankruptcy. This is a large part of why it is so spectacularly expensive to get a degree these days.

We agree on something for once

[herbivor]

The reason college education is expensive really boils down to supply and demand. People are willing to pay higher fees and more and more people think they need college when in reality many people that attend college don't really need to and shouldn't. The price will come down when the demand decreases. There are a lot of other problems that tie into the unnecessarily high demand for a college education that I'm too lazy to go into.
Take welding. There's a shortage and you can make a great salary with enough skill and certifications. And the education is actually really affordable. That's only one example of hundreds. Once enough people figure that out, hopefully only those that need to attend college will go and prices will come down.

[z31maniac]

People are willing to pay higher fees because they are able to get the financing for them.

Kind of like the housing bubble of last decade.

There is absolutely no logical reason for education costs to be rising at 3-4x the rate of inflation. Much like there was no logical reason for housing prices to appreciate 15, 20 or even 25% PER YEAR.

[mrsleeve]

^

Winner Winner Chicken Dinner

[bmwstephen]

People are willing to pay higher fees because they are able to get the financing for them.

Kind of like the housing bubble of last decade.

There is absolutely no logical reason for education costs to be rising at 3-4x the rate of inflation. Much like there was no logical reason for housing prices to appreciate 15, 20 or even 25% PER YEAR.

according to nick123 that is a naive way of thinking!

[Thizzelle]

People are willing to pay higher fees because they are able to get the financing for them.

Kind of like the housing bubble of last decade.

There is absolutely no logical reason for education costs to be rising at 3-4x the rate of inflation. Much like there was no logical reason for housing prices to appreciate 15, 20 or even 25% PER YEAR.

my house went up in value 100k in a year, cuz i played it right

[nrubenstein]

They use to allow it, then they realize students with guaranteed high wage and strong security jobs would game the system. IE a newly graduate doctor would declare bankruptcy after accepting a job at the hospital. sure his credit would be demolished but he would recover in less than a year.

desutchman, I would not worry too much. I remember when my college tuition was avg 8% back in the early 2000's. Guess what, my tuition was 5k a year compared to my bro being at 12k year at 3%.

You've got it backwards. The people with good jobs are not often gaming the system in that way. Yes, there are always some assholes, but most people don't want to risk their credit/employment/reputation in that way. A bankruptcy haunts you for longer than 7 years, depending on your line of work/need for credit.

The problem is that student loans are a VERY high risk proposition. Giving lots of credit to an 18-year old who may or may not even graduate should earn returns that more closely resemble credit cards. If not higher, given the risk inherent in loaning more than a few thousand bucks. The way that we get around that is by making student loans federally guaranteed and/or impossible to discharge. Realistically, giving someone $200K to pursue, say, an Art History major is fucking stupid. Unless, of course, you can chain them down indefinitely. If the loans weren't subsidized in this manner, you would either have a lot fewer Art History majors, or it would cost a lot less to get that degree.