Presidential Push to Stop Sky-High Student Loan Interest Rates

[ScienceRocks]

Presidential Push to Stop Sky-High Student Loan Interest Rates
Transcript
Presidential Push to Stop Sky-High Student Loan Interest Rates | PBS NewsHour | May 31, 2013 | PBS

JEFFREY BROWN: And we turn to a July 1st deadline for interest rates on student loans and the economic consequences of growing student debt.

PRESIDENT BARACK OBAMA: Now is not the time for us to turn back on young people.



JEFFREY BROWN: Flanked by students in the Rose Garden today, President Obama again pressed Congress not to allow college loan interest rates to double in a month.

PRESIDENT OBAMA: And that means that the average student with these loans will rack up an additional $1,000 dollars in debt. That's like a $1,000 dollar tax hike. I assume most of you cannot afford that.

How would you solve student debt and rates? Me I'd break up the monopolies and help completion within college education. This simply would force the price of education down as they couldn't increase the price within a completive market, or they'd risk losing students to someone offering it for less.

Think about it.

 

[ba1614]

The interest rates on loans wouldn't be such an issue if the cost of going to college hadn't gone up 1000% since the 70s.

Easy money and low interest rate polices provide no incentive to administrators to contain costs, and that's the problem.

 

[waltky]

A good idea, but I doubt if the schools would go for it...

Student Debt Horrors: Can 'Pay It Forward' Solve the Crisis?
September 09, 2013 — Not long after I started law school, I was having lunch with a friend. Being law students, we were talking about debt.

My friend had an idea. It wasn't an original idea, but it was a good one, and it went something like this: what if, instead of collecting debt-fueled payments for tuition, schools themselves had to put some skin in the game? Instead of collecting a fixed tuition, universities would be entitled to a percentage of alumni earnings for a certain number of years. The better the graduates do, the better the school would do and vice versa.

Well, it looks like someone in Oregon may have been at the next table, because starting soon that's exactly what's going to happen. Under a bill passed unanimously by the state legislature this summer, Oregon has decided to pilot Pay It Forward, a program to waive tuition for state universities in exchange for a fixed, low percentage of students' income after graduation.

This is based on a model used in the United Kingdom and Australia. It was proposed as a solution to the student debt crisis, according to Portland State University Director of Communications Scott Gallagher, by a class taught by P.S.U. professors Mary King and Barbara Dudley.

Under the Portland State proposal, four-year graduates would pay up to 3% of their income for 20 years after graduation, and community college students would pay 1.5%. Students who do not graduate will still pay, but at a pro-rated amount based on their time spent in school. Although no one would pay traditional interest, most graduates would end up paying more than the value of tuition, thus helping to account for rising costs and inflation and "paying it forward" for the next generation.

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[TooTall]

Presidential Push to Stop Sky-High Student Loan Interest Rates
Transcript
Presidential Push to Stop Sky-High Student Loan Interest Rates | PBS NewsHour | May 31, 2013 | PBS

JEFFREY BROWN: And we turn to a July 1st deadline for interest rates on student loans and the economic consequences of growing student debt.

PRESIDENT BARACK OBAMA: Now is not the time for us to turn back on young people.



JEFFREY BROWN: Flanked by students in the Rose Garden today, President Obama again pressed Congress not to allow college loan interest rates to double in a month.

PRESIDENT OBAMA: And that means that the average student with these loans will rack up an additional $1,000 dollars in debt. That's like a $1,000 dollar tax hike. I assume most of you cannot afford that.

How would you solve student debt and rates? Me I'd break up the monopolies and help completion within college education. This simply would force the price of education down as they couldn't increase the price within a completive market, or they'd risk losing students to someone offering it for less.

Think about it.

The government is who makes student loans and is showing a profit.

The Congressional Budget Office in February estimated that the Department of Education will make $35.5 billion in profit in 2013 from student loan programs. But that number was just revised this month to $50.6 billion in profits—a 43 percent increase for the year.

"Who's making the most money right now is the federal government," Tobin Van Ostern, deputy director of the student advocacy group Campus Progress, told Yahoo News.

 

[rdean]

The Republican's plan is to stop education. Cuz they don't want to be snobs and have their children indoctrinated with knowledge and stuff. Besides everyone hates elites and knows smart people are really stupid.

 

[ScienceRocks]

The Republican's plan is to stop education. Cuz they don't want to be snobs and have their children indoctrinated with knowledge and stuff. Besides everyone hates elites and knows smart people are really stupid.

I believe in giving everyone a education. You're very right rdean...

BUT you must also agree with me that the crime stats are also solid data. How the hell can you on one hand say we should respect the officals(education, science, etc) and turn around dismissing our justice system isn't relievable.

 

[iamwhatiseem]

Is this a serious article????
WTF???
You think the interest rates are the problem?? I guess the fact that tuition has risen 257% faster than inflation is just a side issue?

Damn.

 

[rdean]

The Republican's plan is to stop education. Cuz they don't want to be snobs and have their children indoctrinated with knowledge and stuff. Besides everyone hates elites and knows smart people are really stupid.

I believe in giving everyone a education. You're very right rdean...

BUT you must also agree with me that the crime stats are also solid data. How the hell can you on one hand say we should respect the officals(education, science, etc) and turn around dismissing our justice system isn't relievable.

Crime stats are not solid data.

When I was in the service, many, if not most of the white guys were there because they had the choice of going to jail or going into the military to "straighten out". Blacks are not given that choice. They were there for the college benefits or just to have a job with medical, three squares and shoes and glasses. Half my battalion was black and I never met a single on who stood before a judge and was given the choice, "jail or military". No one even talks about because it's not supposed to happen. But it does. I know it does. I was there.

 

[waltky]

No loan pledge bite the dust...

Student Debt Prevention
December 27, 2013 — Haverford College's six-year-long experiment with a "no loan" pledge to some of its students—many from middle-income families—is set to bite the dust.

The goal was to ensure that none of its students would be forced into debt to attend the private liberal arts college located outside Philadelphia. A new plan will supposedly build in cost reductions for students from families that are not wealthy. Those from households earning under $60,000 per year will not have to take out loans of any kind and the college hopes that no one should have to borrow more than $12,000 over four years. In calculating a family's wealth, Haverford considered all home equity to be an "available asset."

The plan still needs to be approved by the College Board, which could tweak or reject it, but baring last minute changes, Haverford seems ready to join Dartmouth, Carleton and Williams College, which tried no-loan programs, then bailed following the 2008 credit freeze. Haverford's "no loan" policy would be honored until the Class of 2018 graduates and begin in 2019.

"The truth is that we've been having conversations about the long-term sustainability of the financial model since 2008, since the economy took the turn that it took in 2008," Jess Lord, dean of admissions and financial aid told Inside Higher Education earlier this month. Lord added that the college has been seeking an "equilibrium" between access and affordability and long-term sustainability.

The Great Recession, which many leading economists believe is over, continues to cast a long shadow. Philly.com reported in 2008 that Haverford's endowment dropped from $521 million that June to $375 million by the end of the year. By 2012, with the costs of educating its students on the rise, the total endowment was about $387 million, although The Clerk, Haverford's independent student newspaper, reported that it reached $433 million last May.

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[The Rabbi]

Obama doesnt want college students paying an extra $1,000 for student loans.
He wants them paying an extra $2500 for health insurance instead.
Thanks, O-man!

 

[waltky]

Mebbe it's a shell game...

Federal Student Loan Interest Rates Can't Accurately Be Calculated
February 05, 2014 — It's bad enough that student loans are so expensive. But what's worse is the notion that borrowers whose federal loans are in repayment plans may be paying too much. Bedeviled by the details — especially the interest rate they're being charged — borrowers often find it impossible to get a reliable number for what it will cost to retire their loans.

Now a report by the General Accountability Office (GAO), an independent Congressional agency that identifies waste and inefficiency in government, has concluded that it really is next to impossible to set interest rates on federal student loans in advance so that the eventual pay-off amount can be accurately predicted. The February 3 report, "Federal Student Loans: Borrower Interest Rates Cannot Be Set In Advance to Precisely and Consistently Balance Federal Revenues and Costs," was produced as part of the deal Congress made last summer to cap interest rates on federal student loans at 3.85%--but tie them to the rising rates of the 10-year Treasury Bill.

Many industry observers already knew that these interest rate calculations are complex. But the GAO report underscores the risk to borrowers—especially when loans take decades to pay off.

Direct loans from the Department of Education (ED) come in three flavors: subsidized Stafford loans, unsubsidized Stafford loans and PLUS loans. Subsidized Stafford Loans are available only to undergraduate borrowers with financial need.

Things fall apart when borrowers fall behind and have to renegotiate the terms of their loans. Interest rates begin to change and the loans can become more expensive.

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