Rates were set to double at the end of the month, but a huge package negotiated by Democrats and Republicans will retain the low(er) rates for another year (this only applies to federally-backed loans). The legislation passed the House and Senate today, and the White House has indicated that President Obama will sign it. So, yay! There’s a lot more policy in the bill, too, including extensions of federal highway programs and national flood insurance.
» Every walk of life now has debt: With $117 billion in new federal student loans in 2011, the amount of total student debt has tipped the scales at over $1 trillion. And it’s not just young folks who are having to deal with lingering debt, either; some middle-aged adults are finding themselves dealing with the issues decades later. “It’s just unbearable to have that type of weight on you and you can’t do anything about it,” said Brenda Small, a woman who went to nursing school in the late ’80s — and rack up $20,000 in debt — only to get injured not long after graduating, making her unable to pay for it.
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House Republicans have said the estimated $6 billion annual cost of extending low-interest rates for student loans isn’t affordable without offsetting cuts but that they are still deciding whether to support a temporary extension. Obama has started pushing Congress for the extension and planned a three-state tour this week to warn students of the potential financial catastrophe they will face if Congress fails to act.
Interest rates are set to double on July 1, from 3.4 percent to 6.8 percent, on a popular federal loan for low- and middle-income undergraduates.
“I support extending the temporary relief on interest rates for students,” Romney said Monday, a day before five states hold primaries, though he did not offer specifics on how the extension should be paid for or how long it should last. He said he supports the extension because of “extraordinarily poor conditions in the job market.”
You know what would cover over three-quarters of that $6 billion per year total the House is bandying about? The Buffett Rule, which Romney says would pay for 11 hours of government. So this is going to cost the government 12 to 13 hours of government over the next decade or something?
We cannot just cut our way to prosperity. Making it harder for our young people to afford higher education and earn their degrees is nothing more than cutting our own future off at the knees. Congress needs to keep interest rates on student loans from doubling, and they need to do it now.President Obama • Singling out stable student loan interest rates as a cause for Congress to protect, in a radio address Saturday. Back in 2007, the Congress passed legislation to hold Stafford loan interest rates at 3.2%, less than half of the 6.8% they had been at the time. Setting aside the differing merits and constituency of each policy for a moment, the political tact Obama is employing here is strikingly similar to how the GOP argues in favor of the Bush tax cuts, among other things. The lower rates eventually expiring was a built-in, fully understood part of the 2007 legislation, but as the new rates have begun to feel “normal,” so to speak, people feel as such, making any refusal to extend the policy a tidy political weapon for the party sponsoring it. source (via • follow)
» Way down in the hole: The above figure represents the average student loan debt for a graduate of a four-year, non-profit university, as measured in 2009 by the Institute for College Access & Success. In an economy that’s stifling the job prospects of even accomplished college graduates, finding yourself in this level of debt can feel a bit like you’ve been scammed. President Obama is today promoting his plan to tweak the Income-Based Repayment Plan for student loans with changes that were meant to take effect in 2014 (Obama wants 2012). The percentage of one’s discretionary monthly income that must be paid would be lowered from 15% to 10%, and all debt would be forgiven after 20 years, as opposed to the program’s current 25.
bronze-by-gold said: Brilliant? In what universe? Student loans are often used to cover living expenses while in school, and using poorly paid TAs to reduce the cost of education is exploitative.
» SFB says: The argument Cuban is making is one of efficiency. I think the idea that he’s getting at is that the price of college has gotten more expensive because student loans are easy to get. It artificially raises prices for such things like living expenses, forcing the need for more expensive loans. By limiting their spiraling cost, it forces the market value of an education down. Obviously, there is more that goes into it than that, but when schools don’t become so reliant on money that no longer exists, artificially-inflated products — say, $200 textbooks for subjects thousands of students take — will become less justifiable. Would it be perfect? No. But it’s an interesting idea that could easily be built upon. (Also worth reading is this argument against Cuban’s idea, which makes a valid argument that he’s not taking every element into account.) — Ernie @ SFB
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