"Stafford student loans.... generate vast income for the US government."
And now it is going to generate even more because interest rates can go nowhere but up.
"House advances student loan fix" by Philip Elliott | Associated Press, May 17, 2013
WASHINGTON — The days of fixed-rate student loans could be coming to a close, with House Republicans advancing a proposal Thursday that would link rates to financial markets.
The GOP-led House Education and the Workforce Committee sent to the full House a bill that would offer some students a better deal at first.
At first? And then?
Democratic critics warned that graduates would face steadily climbing rates and costs over the long haul if the markets change.
‘‘Our families deserve better than this bait and switch,’’ said Representative George Miller of California, the senior Democrat on the committee.
The Republican chairman of the panel, Representative John Kline of Minnesota, said critics were giving too much credence to Congressional Budget Office figures that anticipate future interest rates and don’t accurately measure real costs for the program that helps 36 million students.
‘‘We don’t know what these interest rates are going to be,’’ Kline said.
Without congressional action, interest rates for new subsidized Stafford student loans would double from 3.4 percent to 6.8 percent on July 1. Neither party wants that to happen, although there remain strong differences in the methods to dodge that.
Then WHY DID DEMOCRATS do that?
See: Obama Finds Fountain of Electoral Youth
Oh, it was ALL POLITICS for them and THIS PRESIDENT, huh?
Thought they would have another good campaign issue like Benghazi or the budget.
Besides, didn't they already fix this problem?
Yeah, now that the election is over it is time to $crew 'em again!
Democrats attempted to hold the rates at 3.4 percent while Congress considers a long-term fix. Their proposal received no votes from Republicans.
‘‘Student loan rates should not be subject to the whims of Congress,’’ said Representative Virginia Foxx, Republican of North Carolina. ‘‘Students’ families and taxpayers deserve a long-term solution. . . . This legislation offers predictability and simplicity.’’
Predictability when interest rates could go all over the place?
Democrats were not swayed.
‘‘I’ll tell you what’s predictable: they’ll be paying more,’’ said Representative John Tierney, Democrat of Salem, Mass.
And WHO BENEFIT$?
All for a job that isn't even going to be there.
Under the GOP proposal, student loans would be reset every year and be based on 10-year Treasury notes, plus an added percentage. For instance, students who receive subsidized or unsubsidized Stafford loans would pay the Treasury rate, plus 2.5 percentage points.
Using Congressional Budget Office projections, that would translate to a 5 percent interest rate on Stafford loans in 2014, but the rate would climb to 7.7 percent for loans in 2023. Stafford rates would be capped at 8.5 percent, while loans for parents and graduate students would have a 10.5 percent ceiling under the GOP proposal.
Democrats objected to increasing the rates within a program that generates vast income for the US government.
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Of course, Democrats will kill this bill in the Senate or Obama will veto it, right?
Related: Slow Saturday Special: The Business of Student Loan Debt
That's why the ARTICLES are in the BUSINESS SECTION, I guess.
Sunday Globe Special: Lip-Smacking Debt Collectors
I gue$$ you are getting an education, kids.
UPDATE: Obama loan policy rips off students by record $51b
And you kids thought he was your friend?
NEXT DAY UPDATE:
"Warren focuses on college debt; Congress must join the debate, May 18, 2013
Elizabeth Warren was elected to the Senate with the expectation that she’d make bold use of her bully pulpit. Her first proposed bill, which would dramatically lower student-loan interest rates, fits that profile. Warren has gotten considerable attention for her bill, which would reduce the interest rate on some student loans to 0.75 percent, the same rate the Federal Reserve currently charges to banks for short-term lending.
Then why is it only being covered in an editorial?
This has allowed Warren to talk about the need to invest in education, while also — in something of a non sequitur — criticizing big banks for what she has long complained is favorable treatment from the government.
I can't tell you how discouraging it is to see the allegedly liberal, Democrat paper slight her and defend the big banks. I should stop doing this and do something else. I'm tired of this.
Warren’s proposal isn’t as far-reaching as her rhetoric suggests.
Yeah, yeah, okay.
The bill applies only to Stafford loans, a common form of federally subsidized college loan available to low- and middle-income families. It is intended as a stopgap measure to stave off an automatic rise in Stafford interest rates: If Congress takes no action by July 1, the interest rate on new Stafford loans will double, from 3.4 percent to 6.8 percent.
Another stopgap.
Critics worry, with some justification, that rock-bottom interest rates on student loans would exacerbate the bubble in higher-education pricing — encouraging students to go into even greater debt, and discouraging colleges from lowering tuition costs.
And yet somehow the same solution applied to banks is fine, necessary, what is needed, and applauded?
But the Stafford loans alone aren’t likely to cause a huge distortion. The loans are currently capped at $8,500 per year. Warren’s bill would only apply to new loans, and would only be effective for one year.
Then why all the hubbub?
In other words, the bill is designed to address a short-term problem while drawing greater attention to the broader and troubling crisis of student debt.
Oh, I'm so glad the Globe explained that to me.
In an ideal world, it would prompt Congress to look at more comprehensive solutions, from finding levers that encourage colleges to curb their prices to allowing student loans to be more easily consolidated.
We are living far, far from that world.
Still, Warren should tread carefully as she feels out the balance between committing political theater and working constructively with her Senate colleagues. She has gotten the attention she desires; now, she should follow up with an effort to draw other senators into a conversation about serious education finance reform.
(Blog editor simply letting the feelings of rage and anger at the slighting insults to the woman pass. F*** the Glob!)
Congress has a number of mechanisms to address an untenable student-loan situation, starting with requiring colleges to provide students with more information on the details and implications of the loans they’ll be taking out.
Then why i$ it all $uch a me$$?
Many students are unaware of opportunities that already exist to alter their payment schedules. And the government could go further in helping those who are currently in debt to manage their finances through consolidation and deferment.
How about a bailout and the wiping away of such odious debt like what the banks got?
Meanwhile, stricter scrutiny of higher-ed institutions — by both loan applicants and loan approvers — might prompt some students to reject the entreaties of disreputable or low-quality institutions, and give all students an incentive to take out loans only for programs that help them achieve concrete ambitions.
I'm sick of lame-ass s*** excuses being offered up that didn't work in the past if they were even tried. Half-mea$ures that protect tho$e very $ame intere$t$ government and the paper are looking after.
Warren deserves credit for jump-starting a debate with implications for millions of students, thousands of institutions, and the future of the US economy. Now, Congress needs to follow through.
I'm $ure they will.
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I wonder if she has found an office yet. She's a well-meaning woman, but based upon the hits to this post you kids don't are.
