Skip to comments.Interest rates on federally subsidized college student loans officially double
Posted on 07/02/2013 7:56:33 AM PDT by SeekAndFind
In the summer heat of the election last year, Congress passed a one-year extension on keeping the interest rate for federally subsidized Stafford loans for college students at the artificially low rate of 3.4 percent — and the sand finally ran out on that temporary stopgap today, hiking the rate up to 6.8 percent. Republicans have been proposing to link students loan rates to the freer financial-market benchmarks instead of allowing Congress to arbitrarily determine what they deem to be an appropriate rate, while Democrats are looking to keep the interests rates as low as they in their infinite wisdom see fit. There’s still a possibility that Congress could pass some kind of deal in the near future, but an agreement isn’t looking likely, via Fox News:
President Obama included a variation of that market-based approach in the budget he sent to Congress earlier this year, leaving his fellow Democrats trying to block his efforts.
“Why Senate Democrats continue to attack the president’s plan is a mystery to me, but I hope he’s able to persuade them to join our bipartisan effort to assist students,” Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, said last week
Senate Majority Leader Harry Reid said that a proposal to tie loan rates to the 10-year treasury note yield could never pass the Senate and that he couldnt back something that doesnt include stronger protections for students and parents.
There is no deal on student loans that can pass the Senate because Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families, instead of closing tax loopholes for the wealthiest Americans and big corporations, Adam Jentleson, a spokesman for Reid, told Fox News last week. Senate Democrats continue to work in good faith to reach a compromise but Republicans refuse to give on this critical point.”
Er, we shouldn’t reduce the deficit on the backs of students and the middle class? How about we shouldn’t be continually growing the deficit, the consequences of which will eventually fall upon students and the middle class? Anyone?
Is this particular hike on certain student loans really such a bad thing, however, for everyone involved in the long run? As Neal McCluskey points out at Cato, the federal government’s interference is directly responsible for a lot of the massive tuition inflation that’s been going on in recent years:
In the long term, it might actually be good if these rates which will only affect some federal borrowers go up. (Congress could still lower them retroactively.) Why? Because federal aid has fueled decades of rampant price inflation, giving basically anyone whom a college would accept and many colleges will accept anyone the money necessary to pay sky-high prices. Perhaps the rates rising will dissuade some people from going to college who should be doing something else, or some people going to college who should be there from choosing a more expensive school that offers no better academics but lots of superfluous frills.
Although the uptick likely won’t have a major effect on too many consumers’ choices, higher interests rates could perhaps dissuade some potential students from taking on the costs, and force institutions to streamline their budgets and/or the market to diversify with more and more efficient and practical education options.
Young people will be the engine of the Obamacare slavery machine.
Can’t see your image because you hotlinked. Make a copy of it and upload it to imgur.com.
At 6.8% it’s till cheaper than what I had to pay. So anyone who is crying about the higher rate can KMLWA.
Yeah, they “doubled”. Now they are about the rate of my loans when I was in school. Tough noogies.
I heard about two morons this morning who borrowed for a worthless degree. One was a guy who borrowed $180,000 to get a degree at Berkley for “Bass Guitar”. Better yet his parents co-signed. He was lamenting about the depression he feels only making $7 an hour and cannot payback.
The other was a girl who borrowed over $240,000 to get a degree in photography. WTF?
I totally agree that the onus lies on the borrower and on Sallie Mae for loaning the money but there is another factor. Why are degrees costing that much at some of these schools? All things equal I don’t place much more value on a degree from an ivy league school over a school such as a major state university. It might open a few doors but only if you are already in that circle of blue-bloods.
The Democrats would give the money away interest free if they could. That would allow them to buy student votes and channel even more money into the liberal indoctrination camps, i.e. colleges. Easy access to loans raises tuition rates of course, making it more difficult for students to go it alone without government help. Students who take the loans are indebted to government for many years if not decades. It’s a win-win for big government!
I think that the Liberal Arts degrees are going to go by the wayside as not being worthwhile.
And there will probably be cuts to those departments.
Resolute Conservative: “I totally agree that the onus lies on the borrower and on Sallie Mae for loaning the money but there is another factor.”
Wait a minute! Where are all the bleeding hearts who were crying about the predatory lenders during the mortgage bust? Why is it wrong to give mortgages to people who can’t afford them but OK to hand out tuition loans for worthless degrees?
This whole student loan thing is an absolute joke, but I don’t think it’s funny at all. ALL of this could be done, and SHOULD be done, by private charity or loans. Want to help students attend college? People can voluntarily give or loan whatever they want.
Government isn’t helping. It’s only distorting the education market, making it worse in the long term for nearly everyone involved. The only ones who are really benefiting are the politicians who use our tax money to buy their way into office and the colleges who slurp up largesse like pigs at a trough.
Many colleges really ought to consider the ratio of administrators to instructors that they have.
There are probably WAY TOO MANY of the former.
There are probably WAY TOO MANY of the former.
Not to mention WAY TOO MANY of the latter -- teaching useless courses that end in "Studies".
Obamanomics. No jobs, either kids.
And you idiots voted for him.
Your Guide to the Looming Battle over Student Loans
some good info here
Out of curiosity, might that have been the Burklee College of Music in Boston?
Could be I was listening on the radio and they did not spell it nor detail location.
Regardless, still overpriced. He could have done just as well tearing a square of a flyer on a telephone pole. Making a living in that line of work is the same percentage as becoming a professional athlete, especially if you are just learning to play in college.