The student loan shuffle

Senator Elizabeth Warren, a Democrat of Massachusetts, spoke up for poor and middle-class Americans last week when she excoriated the federal government for making money on the student loan program. She also criticized Republicans for killing bills earlier this month that would have prevented interest rates on subsidized student loans from doubling. Rates on those loans have jumped from 3.4 percent to 6.8 percent, further burdening one-third of all college students who use them to pay for an education.

During the last decade, Congress sensibly replaced a system of variable-rate loans with fixed rates that allowed families to know what their loans would cost. It set the rate on both subsidized and unsubsidized loans at 6.8 percent, but later ordered the rate on subsidized loans — two-thirds of which go to families with incomes under $50,000 — to gradually decline by half. The refusal of Republicans in both houses to renew the lower rate means that students who start college this fall and finish in four years will be saddled, on average, with an extra $4,000 in debt.

This increase in costs comes at a time when college debt has already reached record levels, damaging the economy and hobbling young graduates. It also draws attention to the fact that the federal government is making quite a lot of money from the loan program. An analysis by the Congressional Budget Office estimated that the new, higher rate would earn the government about $184 billion over the next decade, after taking into account program costs, including potential defaults…

The government should not be making money off the backs of struggling student borrowers. In the long term, the loan program needs to be restructured so that the loans are closely linked to the government’s actual cost of borrowing, which could reduce rates for students.

A Senate compromise bill that is supposed to address the harmful rate increase falls well short. The bill, supported by the White House, would temporarily lower interest rates, while raising rates in future years to make up for lost federal revenue…Ms. Warren got it exactly right when she said the bill pits students against one another, requiring future college students to pay for the financial break enjoyed by students who precede them. “I think this whole system stinks,” she said, summing it up.

The Senate bill should pass only if it includes a provision, offered by Ms. Warren and Senator Jack Reed, a Democrat of Rhode Island, that would cap most loans at the rate of 6.8 percent. If Republicans resist that, the Senate should leave the loan rate exactly where it is. Congress should not make matters worse than they already are.

Bad enough the whole of Congress doesn’t revolt over the idea of government making profit from a service that benefits the whole nation. There is nothing this land needs more than education. A quality that has only continued to diminish over the past half-century.

Elizabeth Warren has it right and the scumbag Party of NO is guilty as ever of trying to keep down ordinary American families and their children. Lay some heat on your elected representatives in Congress and make it clear to these layabouts that we need more than lip service to lead the fightback against the Great Recession. Let’s do it with an educated generation.

15 thoughts on “The student loan shuffle

  1. calleenzach says:

    Reblogged this on calleenzach and commented:
    The price of education is constantly rising and for every year I have spent in school it will take me it will take me twice as long to pay off that year’s loan. Even with my scholarships I needed student loans to survive, eat, pay rent! I am now in a graduate program and between the loans I have from undergrad at Creighton and now UNMC. I will be an old lady before my debt is free and clear!

  2. Ray Plenty says:

    How about the responsible student? The one who worked all through her teens so she could pay for college, only to see costs have exploded because government inflated it with a trillion in easy credit. Suppression of real market rates have stolen thousands from her as she gets 0% on her hard earned savings. Sorry, but education is speculation and the risks should be a burden of the student, and not society.

    • moss says:

      Yup. Limit education to those who can afford it. We don’t need an educated nation to advance our economy. Just fight for what you can get for yourself.

      Chump. Why educate Americans when inherited caste-wealth around the world can buy smartness from our universities and Congress will hand over H1B visas to fill the jobs.

      • Ray Plenty says:

        Education used to be dirt cheap. That was when it was a free market. Simple economics says you provide a trillion in easy credit and prices rise. That is what happened…. Before government got involved there was no lack of college educated citizens. Students took the risk and paid for it, even while just being a dishwasher making minimum wage. The ones who didn’t have interest in higher education got stuck in low paying jobs. Before welfare, a parent stuck with a bad job was incentive for their kids to not do the same….

        • moss says:

          Not certain what planet you were raised on but education at the college level hasn’t been cheap or readily available except for subsidized programs from the WW2 GI Bill to the first Pell grants.

          Your understanding of society and economics must have been acquired on the cheap, I’ll agree with that. Simply out-of-touch with history or reality.

          I don’t doubt you believe every word. That’s how and why folks end up voting for nutters like Alan West or Michelle Bachmann.

          • Ray Plenty says:

            Except for the millions who did pay for their own college by only working part time low waged jobs. Reality…. Funny thing you mention the GI Bill, because looking at college costs that is when prices started really rising. Around 1965 they started skyrocketing(pell grants). Funny how easy credit inflates prices and creates inflation through artificial demand. How an industry can charge whatever they want when government is paying, instead of consumers dictating prices….

            Don’t know what the West or Bachmann comments are about as I am not a Tea Party partisan. But I do understand simple economics. Somehow your liberal school system taught you a corrupted version of it….

          • moss says:

            Your simple is about as simple as a box of chocolates. You have one inflationary factor correct – and no understanding of “free market” chicanery – from a Congress with a history of regulating only for increased profits not cost management.

            All the rest is ideology you’re stuck with.

          • god says:

            Always worth a chortle a few years after the depths of any recession to observe folks who believe conservative economics emerging from the woodwork well after Keynesian solutions have done half the job – half the job they could do with full implementation. Republicans and Blue Dog Democrats aren’t about to let that happen anymore than accepting responsibility for the deregulation that encouraged the Great Depression back in the day of Hayek and Hoover – or the Great Recession in the era that was kicked off by Stockman and Reagan and ended in a manure heap under Bush, Glen Hubbard and Greg Mankiw.

            Folks at the Fed knew what was needed – as did even the most conservative of Congressional Republicans. They just always hate to admit it and deny, deny, deny afterwards. Most other nations haven’t as much of a problem with ideology ruling the conservative side of economics. For example, dribble-down theories really have little support anywhere outside the United States and our tax attorneys. Cripes, it feels just like the religious nutballs who think they should be in charge of civil rights, civil liberties.

            The silliest and saddest self-characterization I see in Mr. Plenty’s politics is – whether it’s based in the egregious writings of Ayn Rand or just picked it up along the way from Walt Disney and John Wayne – is rejection of community responsibility.

            That’s a broad term on my side of the Left and my neck of the prairie both. Includes everything from armtwisting elected officials to live up to campaign promises – which happens with much success in northern NM. All the way over to campaigning for better education from pre-school through college even though – like Eid – I haven’t any kids.

            I didn’t choose to be born here. But, I worked my work through a reasonable life and I don’t find it difficult in my heart and mind to try to help the folks coming along after me to have at least as good a chance that I had. Congressional Republicans, Kool Aid Party idjits, other flavors of self-centered politicians try their best to stop progress as thoroughly as an invading army. One of the oldest, most consistent parts of their ideology is “look out only for yourself and your family” – and screw your neighbor if need be.

          • keaneo says:

            Too busy to drop by and be less polite than you lot. US 3 – 1 Honduras. Waiting and watching tonight to see if we’re playing Mexico or Panama in the Gold Cup Final on Sunday.

            Cowboy Stadium packed for game 1 BTW. We know it’s even more so for game 2.

          • keaneo says:

            All right. Panama 2 – 1 Mexico. It’s USA v Panama in the Gold Cup Final, Sunday afternoon.

    • girlseule says:

      How much money can a teenager possibly earn? I used to get around $80 a week working at Pizza Hut, would have taken a lot longer than my teen years to be able to pay for college doing that! Education is not speculation, everyone should have access to education. A well educated society benefits everyone.

  3. dnikias says:

    The government loan money to major corporations at minuscule interest rates (sometimes none at all) but we’re going to bleed our kids and regular families for money? – the disgusting and outrageous moral tragedies of our times seem to have no end…. when did compassion, uplifting the down trodden, and empathetic concern for others become a vice? I know generosity, common sense, and reason went out with the rise of disco but this current situation has me utterly confused – truly, we live in a death culture of exploitation.

  4. Update says:

    The U.S. official in charge of protecting student loan borrowers resigned in protest on Monday, saying the Trump administration “has turned its back on young people and their financial futures.” Seth Frotman, student loan ombudsman at the Consumer Financial Protection Bureau, said Monday he is stepping down at the end of the week while also ripping into CFPB acting director Mick Mulvaney.
    “At every turn, your political appointees have silenced warnings by those of us tasked with standing up for service members and students,” he wrote in a letter.
    Frotman also accuses the CFPB’s leadership of suppressing publication of a report prepared by the agency’s staff after new evidence surfaced late last year that the nation’s largest banks were, in his words, “ripping off students on campuses across the country by saddling them with legally dubious account fees.”
    In an emailed statement to CBS News, a CFPB spokesperson said the agency doesn’t comment on personnel matters, but also said that “we hope that all of our departing employees find fulfillment in other pursuits and we thank them for their service.”

  5. Cruella says:

    “U.S. Secretary of Education Betsy DeVos lost a lawsuit brought by 19 states and the District of Columbia, accusing her department of wrongly delaying implementation of Obama-era regulations meant to protect students who took out loans to attend college from predatory practices.” (Bloomberg 9/12/18) “A Washington federal court judge on Wednesday ruled the department’s postponement of the so-called Borrower Defense rule was procedurally improper.”

  6. Betsy Wetsy says:

    “Betsy DeVos found in contempt of court for violating order on student loans”
    Also: “A senior government official appointed by Education Secretary Betsy DeVos resigned Thursday, saying the current student loan system is “fundamentally broken” and calling for billions of dollars in debt to be forgiven.” “A. Wayne Johnson was hired as the chief operating officer of the Office of Federal Student Aid, which manages the country’s $1.6 trillion outstanding student loan portfolio. He later worked in a strategic role, directing how student loans are serviced for borrowers.”

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