Payne: impending student loan interest hike will 'devastate' students

Jersey Journal ^ | June 25, 2013

[SMGFan]

With interest rates on government-subsidized student loans set to double on Monday, U.S. Rep. Donald Payne Jr., D-Newark, called on Congress to act, saying the imminent rate increase would “devastate students and their families.”

[SMGFan]

Full of garbage like his deceased father & all Dems.

[ClearCase_guy]

We need an “Affordable College Program” which will quadruple the cost of an education. I think Obama’s working on it.

[ilgipper]

What is causing this increase? I carried Direct Loans for more than 15 years, and the interest rate was always much lower than any other borrowing rate. How high is it supposed to go?

[Sopater]

It will only affect those who are foolish or desparate enough to borrow money to pay for school.

[tgusa]

So ....you borrowed a buttload of $$ to get your liberal arts degree and now you can’t find a job? Mommy and daddy don’t want to bail you out? And you voted for Obama - how could this be happening?

Sucker.

[silverleaf]

if everyone has enough extra money for higher taxes, carbon taxes, and for obamacare (which this guy’s party pushes), then why dont they have enough extra money to pay higher interest on a loan?

to democrats- why don’t higher taxes, carbon fees on coal, inflation and obamacare fees threaten to cause “devastation”?

inquiring minds want to know

[dfwgator]

[Vigilanteman]

Using the logic of the open borders crowd who insists we cannot have any piecemeal legislation on immigration, I'll offer that what we really need is "comprehensive student loan reform."

If any bank operated on the same basis as SallieMae, the government owned student loan monopoly, they would be hauled into congressional hearings and probably be litigated out of business.

Among their abuses are:

• Easy to get, hard to repay loans which make zero effort to distinguish between marketable and unmarketable degrees.
  
• Highly paid senior executives who have little or no accountability.
  
• Interest only loans and hidden fees designed to keep the borrower in debt forever.
  
• Interest rates which are typically two to three times larger than prevailing home loan rates.

  Remember BO bragging about making the student loan business more efficient during his re-election campaign by eliminating the middleman, IOW, competition to the government?

  This is the next bubble waiting to happen-- millions of borrowers saddled with debt which they have little hope of repaying and cannot discharge. A homeowner who is foreclosed, at least, can walk away from the debt through the bankruptcy process.

  The only real long-term solution is to phase out SallieMae and privatize the student loan business. The outline of such a plan to do just that:
  

• Immediate write-off of 30% of outstanding balances, 25% loan forgiveness to the borrower, 5% as a fee to the educational institution where the loan originated to collect the remaining 70%.
  
• Authorize the originating institution to suspend degrees and transcripts on loans that become delinquent or to sell them at a discount to third parties.
  
• Originating institutions still unable to collect or liquidate the loans would be subject to a lien on their endowments, real estate or other assets.
  
• Those which have sold worthwhile marketable degrees would have little to fear. Those which have not maybe deserve to have their asset base reduced accordingly.

  In conjunction with this program, all borrowers which are current on payments after provision #1 kicks in would be able to apply and get an interest rate less than or equal to the rate they are paying on their primary residence. It makes no logical sense to have people paying more than double the rate on student loans than they are paying for mortgage loans secured by real property.

[Signalman]

I think this guy majored in Feminist Lit.

[Vince Ferrer]

Encourage students to get a free online education.

[DannyTN]

"Both Democrats and Republicans in Congress have said they don’t want rates to double next week, but they have proposed different solutions.

House Republicans want to overhaul interest rates, making them variable rather than fixed. That plan would save about $3.7 billion over 10 years, according to the CBO.

I'd say No to making them variable. That will cause a crisis when rates go up. And you can't bankrupt on student loans which makes a variable rate all the more scary. Crap like this makes me ashamed to be a Republican.

An $8.3 billion Democratic plan supported by President Obama would have extended the 3.4 percent rate for two years (it didn’t muster enough votes to block GOP opposition).

I don't see any reason not to extend the rate.

Meanwhile, Sen. Elizabeth Warren, D-Mass., has proposed setting rates at .75 percent for one year, replicating a rate the Federal Reserve charges banks for emergency loans. Today, Payne said he supports Warren’s plan.

If you are going to go that low, you might as well make it 0 and be interest free.

What neither party addresses is

• whether the loans are going for reasonable degrees that are employable.
• whether the cost of a degree is reasonable.

  Perhaps there are already things in the stafford loans that cover this. I'm not that familiar with them.

[SW6906]

Elections have consequences.....

[j. earl carter]

What is causing this increase?

The interest rate isn't increasing, the temporary subsidy that you, the taxpayer, have been paying is going away.

The interest rates are going back to where they should have been all along.

[Atlas Sneezed]

Immediate write-off of 30% of outstanding balances, 25% loan forgiveness to the borrower, 5% as a fee to the educational institution where the loan originated to collect the remaining 70%.

---

I like the spirit of punishing the schools, but to be fair, I’d give 100% of the loan to the institution, and let them decide at what discount to settle with the borrower. The deadbeat borrower doesn’t deserve a freebie before the negotiation starts.

[SMARTY]

B I N G O !!!!

I didn't borrow a penny for school and I graduated owing NOTHING to anyone...

Because I

W O R K E D!!!!!!!!!!!!!!!!!

College was NOT a 4 year long party for me... it took longer to get through because I had to get the money from working... but I graduated and I didn't mind that I missed the whole campus party thing.

[RIghtwardHo]

Disagree. School is extremely expensive especially if you want an advanced degree. My old law school alma mater is about $50k a year now.

Charging interest is fine, but doubling it, or however high it is going to go, is absurd. We want a nation of idiots that can’t compete? That makes no sense to me.

[grania]

I checked a few day ago. In 2009 the average student loan upon graduation was $30,000. I figure after that we had the recession and anyone who got larger loans is just plain dumb, so the issue of them being accepted is between them and the college.

That's doable. Cheaper car, double or triple up on an apartment rental, no eating out, and these students should stop whining and pay the loan off.

I've run into people in my adventures in substituting who have these debts, then go further in debt for another degree because they can't find a job. I've met others who got Associates degrees, sub as aides and take the courses for a four year degree nights and have no debt. So why should I feel sorry for the ones who leave the work force and go further in debt? Some people make good economic choices, some bad ones. As near as I can figure, debt for a college degree is dumb.

[Vigilanteman]

The deadbeat borrower doesn’t deserve a freebie before the negotiation starts.

Morally, you may be correct.

But politically, something like this has to happen to give it a realistic chance of passing.

Think of it like a credit card company who has been charging at way above market interest rates and fees for years and then decides to settle for 70% as an attractive alternative to default.

[sitetest]

Dear Vigilanteman,

Sallie Mae isn't a government-owned entity. When started in 1972, it was a Government-Sponsored Enterprise, like Fannie Mae and Freddie Mac, but never government-owned. Its full privatization started in 1997 and was completed in 2004. It is traded on the NASDAQ exchange under the symbol SLM.

In terms of interest rates, I don't know what Sallie Mae charges generally, however my own unsubsidized student loan with Sallie Mae currently has an interest rate of sub-1%.

“It makes no logical sense to have people paying more than double the rate on student loans than they are paying for mortgage loans secured by real property.”

Actually, in that student loans are unsecured debt, one would expect their interest rates to be substantially higher than rates for real estate mortgages where the real property serves as collateral.

sitetest

[grania]

We wamt a nation of idiots that can't compete?

The reason we're getting that is that colleges are being flooded with unqualified, disinterested students.

Want to inprove education? Have state universites cut way back on enrollment, and be FREE for those whose SATs or ACTs are in the top 10%, they've taken four SAT Achievement tests and scored in the top 80%, have taken a certain percentage of challenging academic courses, and have no criminal record. Forget the GPA...that's rigged and the grades are too high in many districts.

Then let the private schools compete for what's left. If anyone is dumb enough to go into debt for an education when the truly qualified and the wealthier/connected youth won't have debt, I really can't save them from themselves.

But I would provide for them by bringing shop and job-training classes back into the high schools.