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Student loan rates doubling


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#1 concert andy

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Posted 01 July 2013 - 07:18 PM

Good job congress.  Make sure the lenders make money and short change the future.  #obviousSarcasm

 

 

 

 

 

http://money.cnn.com....html?hpt=hp_t3

 

 

But hope isn't lost yet. Lawmakers are working hard behind the scenes trying to strike a deal to save the 7 million college students who are slated to take the subsidized federalStafford loans this year.

 

Senate Democratic leaders are throwing their weight behind a bill that would extend the 3.4% rates for another year, just as Congress did last year.
 
House Republicans have said they'd prefer a longer term solution, like the one they passed back in April to keep rates low for now but rise along with market rates in the future.
 
Students are being told to prepare for the worst and hope for the best.
 
"We're advising our schools to tell students that their subsidized Stafford interest rates are going to be 6.8% on July 1," said Justin Draeger, president of the National Association of Student Financial Aid Administrators.
 
Students with loans at stake have been watching the debate on Capitol Hill with worry and apprehension.
 
"I find it really frustrating that nothing is even being brought up, since Congress is now in recess," said Rachel McGovern, who will be a senior at University of Florida this fall and will be taking out $5,500 in subsidized federal loans. "It feels like they're just ignoring student needs right now."
 
The higher rates that go into effect on July 1 only apply to new loans, such as McGovern's. These loans are generally awarded to only about a third of undergraduate students in financial need. Only Congress can change the rates and any tweak to the law is expected to be retroactive July 1.
 
But there was no clear message if any deal would be reached before the end of summer, when the number of students taking out loans will ramp up ahead of the school year.
 
Generally, lawmakers in both parties in Congress and the White House agree that something should be done, but they don't agree on what.
 
"Students across this country would rather have no deal than a bad deal," said Jack Reed, a Rhode Island Democrat, at a press conference last week on student loans.
 
The Republican-controlled House passed a bill to stop rates from doubling now, but would allow them to rise later. Senate Democrats don't like it. President Obama vowed to veto it, calling it the "wrong approach." However, Obama has a plan that's very similar to the House plan.
 
Senate Democratic leaders want to extend the low rates for a year or two, and give Congress time to come up with a longer term solution as a part of the normal budget process.
 
Meanwhile, a group of two Senate Democrats and two Republicans struck a deal that also resembles the House plan.
 
Undergraduates, who take out unsubsidized student loans from the government, are already paying the higher 6.8% rate since 2007.
 
Some Washington leaders want to revamp the student loan program and peg rates to economic conditions. The President and House Republicans, for instance, have proposed ways of tying student loan rates to 10-year Treasury notes.
 
However, the two sides disagree on the details, such as how to cap rates in a way that will ensure students don't get hosed if interest rates skyrocket. They also disagree on ways to let students "lock in" their rates from year to year.
 
Outsized student debt has become a pressing issue, with many young graduates deep in debt and without jobs. It is second only to mortgages as the largest debt that consumers carry. In 2011, students on average owed nearly $27,000 in loans.  


#2 TakeAStepBack

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Posted 01 July 2013 - 07:57 PM

Govt. shouldn't be in the loan business in the first place. The moral hazard gets us to places such as this.



#3 concert andy

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Posted 01 July 2013 - 08:03 PM

Govt. shouldn't be in the loan business in the first place. The moral hazard gets us to places such as this.

 

While I agree, you know i like to play devil's advocate.  Mostly because I am a contrarian, but I also like to know both sides of an argument, which tends to get me in trouble around here.

 

 

First:  Aren't we too far down the road to consider not federally subsidizing student loans?

 

 

Second  When education is one HUGE link to the future economy.  Wouldn't that be a good bet by A government?



#4 Tim the Beek

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Posted 01 July 2013 - 08:11 PM

Govt. shouldn't be in the loan business in the first place. The moral hazard gets us to places such as this.


I definitely agree with you in principle, brehm, but in an economy where an average person can no longer make an above poverty wage with a high school diploma, and the demand for higher education (and the consequent increases in tuition) increased because of that, I'm not sure what the answer is.



#5 TakeAStepBack

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Posted 01 July 2013 - 08:12 PM

I definitely agree with you in principle, brehm, but in an economy where an average person can no longer make an above poverty wage with a high school diploma, and the demand for higher education (and the consequent increases in tuition) increased because of that, I'm not sure what the answer is.

 

More demand? More competition!!

 

:bash:



#6 Tim the Beek

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Posted 01 July 2013 - 08:16 PM

Higher education's a pretty mature industry, and a tough one to break into.

Again, I agree in principle, but I see things in more shades of gray than I used to...
 



#7 concert andy

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Posted 01 July 2013 - 08:19 PM

Higher education's a pretty mature industry, and a tough one to break into.

Again, I agree in principle, but I see things in more shades of gray than I used to...
 

 

Everything government related is some shade of gray.



#8 TakeAStepBack

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Posted 01 July 2013 - 08:19 PM

It's actually already happeining. it's just not at the pace needed to fill the void. And a lot of the inflation costs in higher education have to do with administrative costs, etc... right now, online degrees are taking the place by storm. It's the deeply seated arenas like law, medicine and certain science disciplines that have a vise grip on supply. Then there is the prestige thing in it too.

 

You're right. Lets just go watch some music.

 

I have no answers to anything. Only ideals.



#9 concert andy

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Posted 01 July 2013 - 08:23 PM

It's actually already happeining. it's just not at the pace needed to fill the void. And a lot of the inflation costs in higher education have to do with administrative costs, etc... right now, online degrees are taking the place by storm. It's the deeply seated arenas like law, medicine and certain science disciplines that have a vise grip on supply. Then there is the prestige thing in it too.

 

You're right. Lets just go watch some music.

 

I have no answers to anything. Only ideals.

 

I have nothing, except more questions.   :cow:

 

That said...

 

 

Yes, what time does the music start?   :call:



#10 Tim the Beek

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Posted 01 July 2013 - 08:26 PM

You're right. Lets just go watch some music.

 

:) Lookin' forward to seein' you in a few weeks!



#11 china cat

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Posted 01 July 2013 - 08:36 PM

Side note to discussion: students should be smarter about their choices. I see students racking up out of state tuition costs for degrees in psychology, history, English...  sorry, that is just plain d.u.m.b.  There are perfectly good in-state schools and community colleges. Regardless of interest rates, racking up 70k in student loans??? wha??    People are living in la la land, with little foresight as to how these loans are going to impact their futures. Coupled with the credit cards being thrown at them as soon as they turn 18 (cards they use while making minimum payments, believing their illusory 100k dream job is just 4 years away).

 

Mass default shit storm...

 

Maybe their first college class should be personal finance.



#12 concert andy

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Posted 01 July 2013 - 08:39 PM

Side note to discussion: students should be smarter about their choices. I see students racking up out of state tuition costs for degrees in psychology, history, English...  sorry, that is just plain d.u.m.b.  There are perfectly good in-state schools and community colleges. Regardless of interest rates, racking up 70k in student loans??? wha??    People are living in la la land, with little foresight as to how these loans are going to impact their futures. Coupled with the credit cards being thrown at them as soon as they turn 18 (cards they use while making minimum payments, believing their illusory 100k dream job is just 4 years away).

 

Mass default shit storm...

 

Maybe their first college class should be personal finance.

 

 

To add a little more, we should abolish dumb majors like "19th century french poetry".

 

 



#13 Tim the Beek

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Posted 01 July 2013 - 08:44 PM

Side note to discussion: students should be smarter about their choices. I see students racking up out of state tuition costs for degrees in psychology, history, English...  sorry, that is just plain d.u.m.b.  There are perfectly good in-state schools and community colleges. Regardless of interest rates, racking up 70k in student loans??? wha??    People are living in la la land, with little foresight as to how these loans are going to impact their futures. Coupled with the credit cards being thrown at them as soon as they turn 18 (cards they use while making minimum payments, believing their illusory 100k dream job is just 4 years away).

 

Mass default shit storm...

 

Maybe their first college class should be personal finance.


You shut up!



#14 china cat

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Posted 01 July 2013 - 08:44 PM

 

Maybe their first college class should be personal finance.

 

I'm one to talk :funny1:



#15 china cat

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Posted 01 July 2013 - 08:45 PM


You shut up!

 

you can't tell me what to do :joker:



#16 Tim the Beek

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Posted 01 July 2013 - 08:48 PM

you can't tell me what to do :joker:


You do the shushin'! NOW! Or they'rl be heck to pay!



#17 MeOmYo

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Posted 01 July 2013 - 08:51 PM

Side note to discussion: students should be smarter about their choices. I see students racking up out of state tuition costs for degrees in psychology, history, English...  sorry, that is just plain d.u.m.b.  There are perfectly good in-state schools and community colleges. Regardless of interest rates, racking up 70k in student loans??? wha??    People are living in la la land, with little foresight as to how these loans are going to impact their futures. Coupled with the credit cards being thrown at them as soon as they turn 18 (cards they use while making minimum payments, believing their illusory 100k dream job is just 4 years away).

 

Mass default shit storm...

 

Maybe their first college class should be personal finance.

 

I applied for my first CC in college so I could get a free slinky :lol:

 

I think parents should take a bit of blame as well.  Unfortunately, most of the kids are not prepared to make these kinds of decisions at 17-18 and that is where parents must help.



#18 china cat

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Posted 01 July 2013 - 08:57 PM

I applied for my first CC in college so I could get a free slinky :lol:

 

I think parents should take a bit of blame as well.  Unfortunately, most of the kids are not prepared to make these kinds of decisions at 17-18 and that is where parents must help.

 

very true. we all make decisions based on limited information - most teens aren't thinking ahead, which is why parents should be (especially when they are co-signing). Also, high school guidance counselors should be helping students look at the numbers and long term realities..  



#19 china cat

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Posted 01 July 2013 - 09:03 PM


You do the shushin'! NOW! Or they'rl be heck to pay!

 

um, I know you are trying to act all tough guy and shit around your friends.. have your fun now, sweet cakes, because mama gonna go Abu Ghraib on your ass when she gets home.



#20 concert andy

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Posted 01 July 2013 - 09:06 PM

um, I know you are trying to act all tough guy and shit around your friends.. have your fun now, sweet cakes, because mama gonna go Abu Ghraib on your ass when she gets home.

 

 

/Shackle'd  :lol:



#21 Tim the Beek

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Posted 01 July 2013 - 09:09 PM

um, I know you are trying to act all tough guy and shit around your friends.. have your fun now, sweet cakes, because mama gonna go Abu Ghraib on your ass when she gets home.


LMFAO!

I love you.



#22 china cat

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Posted 01 July 2013 - 09:10 PM

LMFAO!

I love you.

 

 

 

we even bring the schmoop to torture references

 

Black Sites new methods: forced reading of chinabeek schmoop.



#23 Tim the Beek

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Posted 01 July 2013 - 09:41 PM

That'll getcha a one way ticket to The Hague...



#24 hoagie

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Posted 02 July 2013 - 12:22 PM

Everything government related is shady

:thup:



#25 concert andy

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Posted 01 August 2013 - 06:13 PM

Congress OKs cheaper student loans

#26 concert andy

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Posted 10 June 2014 - 01:06 PM

Grad Students Could Win Big as Obama Slashes Debt Payments

http://www.businessw...ampaign_id=yhoo

 

President Obama is set to address growing concerns over student debt and, according to multiple news organizations’ reports, he’s about to roll out a plan to help borrowers lower their monthly payments. The effort would see Obama use his executive authority to make more people eligible for an existing program that caps student loan bills at 10 percent of an individual’s monthly discretionary income. If those details hold true, the changes could be helpful to millions of borrowers—but far more for some than others.

All borrowers with federal student loans are already eligible for a program calledIncome Based Repayment, which reduces a monthly bill to 15 percent of discretionary income. The executive order would extend eligibility in a similar program, known as Pay as You Earn, to further reduce monthly payments to 10 percent of income. In its current form, PAYE is available only for borrowers who took out their first loans after 2007 and borrowed as recently as October 2011. The executive order on the table would get rid of those exclusions.

 

So in practice, borrowers who were once excluded—as many as 5 million, according to the early reports—will be able to see their monthly payments cut by as much as one-third. But the biggest windfall will probably be for people who take on a lot of debt, such as business and law students. That’s for two reasons:

 

First, as Jason Delisle of the New America Foundation told Bloomberg Businessweek in 2012:

“Undergraduates can’t borrow enough, so the change [from IBR to PAYE] is very marginal to them. If you’re only paying $20 a month, a 33 percent reduction in monthly payments is not that big a deal. But if you are paying $800 a month, a 33 percent reduction is a big deal.”

 

The second reason why grad students may benefit the most is that PAYE has more generous loan forgiveness terms than IBR. Under PAYE, the remaining balance of the student loan is forgiven after 20 years of on-time payments, rather than 25 years under IBR. Delisle explained some scenarios he calculated:

We have one example of someone who might look similar to an MBA student. He starts out with a starting salary of $90,000 and, by the end of 20 years, is making $243,360. Under the old IBR program, he’ll have paid $409,445 by year 25 and be forgiven $23,892 of his loan balance. Under the new [PAYE] plan, he’ll pay less than half of that, or $202,299, and be forgiven $208,259 by year 20.

 

Earlier this year in his proposed 2015 budget, Obama outlined changes to reduce the benefits for large borrowers like grad students, but those haven’t gone through yet. None of the news reports so far have mentioned whether similar changes will be included in this executive order. Stay tuned today, and we’ll update this post as soon the administration releases more details.

 


#27 TEO

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Posted 10 June 2014 - 01:11 PM

Pretty sure my student loan rate was 7%.  Borrowed $8,200 paid back $12,400 via the 10 year payback.



#28 jnjn

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Posted 10 June 2014 - 01:45 PM

prospective borrowers should be able to shop around for the best fixed rate they can find (based on their/co-signers credit), just the same as mortgage loans. 

i'll never understand why 1-the federal gov't is involved in student loans & 2-why the rates are variable.

the one good thing that has come out of the housing crisis & subsequent shit economy is that my student loan rate went from about 8.25% to 3.4%



#29 concert andy

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Posted 10 June 2014 - 01:56 PM

prospective borrowers should be able to shop around for the best fixed rate they can find (based on their/co-signers credit), just the same as mortgage loans. 

i'll never understand why 1-the federal gov't is involved in student loans & 2-why the rates are variable.

the one good thing that has come out of the housing crisis & subsequent shit economy is that my student loan rate went from about 8.25% to 3.4%

 

Because the government subsidizes many of the student loans.

 

http://en.wikipedia....e_United_States

 

PS. that is a very good rate you got there.  Mine is at 6% now.



#30 jnjn

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Posted 10 June 2014 - 02:08 PM

gov't shouldn't be subsidizing any loans.  grants, scholarships, & additional aid is something else, but how or why gov't is involved with the lending process baffles me (could be because i never had federally subsidized loans so i don't really get it)

 

do you have a federal or private loan?



#31 concert andy

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Posted 10 June 2014 - 03:45 PM

gov't shouldn't be subsidizing any loans.  grants, scholarships, & additional aid is something else, but how or why gov't is involved with the lending process baffles me (could be because i never had federally subsidized loans so i don't really get it)

 

do you have a federal or private loan?

 

They are involved to lessen the impact on the economy.  Also they are involved to the extent that we can never default on Student Loans, in theory.  And that this debt will follow us for life.

 

I have a federal loan.  I took advantage of some program that could consolidate your debt into one account as I had 2 accounts.  

 

This was the last time you could consolidate and search for the best program.  Many of the programs started out similarly but the one I chose gave far more incentives to playing on time, which long term could reduce the interest.  I forget where it is now, but I have gotten bills for lower payments on occasion so I assume that is where this difference is going.



#32 concert andy

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Posted 11 June 2014 - 03:59 PM

But now maybe not...  Surprises, surprise...

 

Senate Republicans block student loan bill

 

http://finance.yahoo...-142945982.html

 

I think this would be good as it would stimulate the economy to have 33% of your money to spend on other stuff.



#33 jnjn

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Posted 11 June 2014 - 04:38 PM

"Republicans said the bill wouldn't have done anything to lower education costs or reduce borrowing"....true if this bill was solely focused on refinancing, although i think it's pretty disgusting that interest rates on federal student loans can be so high to begin with.

 

& now i'm really confused :lol: because i was always under the impression that federal student loans were always allowed to be refinanced or consolidated after a certain amount of time unlike personal student loans...at least that's what i was told by a few different loan institutions when i tried to consolidate my personal student loans many years ago



#34 Spidergawd

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Posted 24 June 2014 - 12:44 PM

um, I know you are trying to act all tough guy and shit around your friends.. have your fun now, sweet cakes, because mama gonna go Abu Ghraib on your ass when she gets home.

 

OH GOD - THAT'S NOT A WATERBOARD!!!