<p>"While interest rates on federal Stafford loans have stepped down over the last several years from 6.8% in 2007 to 3.4% for the current school year, that number is set to bounce all the way back up to 6.8% on July 1, leading 130,000 students to deliver letters to lawmakers in protest.</p>
<p>That could come out to thousands of extra dollars over the life of the loan. It could also make it more difficult for students to pay the loan back, especially as they enter a job market that doesn't pay as well as it did a decade ago.</p>
<p>Connecticut Congressman Joe Courtney has sponsored a bill that would extend the low interest rates.</p>
<p>'We've got 110 days to fix this problem,' he said during today's rally on the Capitol steps. 'Middle class families, every single day, are struggling in terms of making sure their kids have a chance to succeed in life.'</p>
<p>The Federal Reserve says that student loan debt now stands at $870 billion, making it larger than either credit card or car loan debt. While recent reports show that an increasing number of college graduates have been defaulting on their loans. ..."</p>
<p>Honestly, if the representative from Congress wants to help these kids, which he seems to, he ought to next introduce a bill to get rid of this special undischargability. Nothing like it exists outside the loan shark world.</p>
<p>I don’t see why people should have to right to “discharge” all their debts. And why they call it “discharge” instead of default, maybe it sounds prettier. How could the federal government guarantee these loans if people can just dump them whenever they feel like it? Like usual, the taxpaying citizens are on the hook for bums.</p>
<p>On the other hand, there is no way that students should be charged these sort of loan shark rates. With interest rates as low as they are right now, that is an absolute ripoff. I just got a 1.99% loan on a paid off car from a credit union (which actually would be a much cheaper way to fund college then student loans). I think students would be more apt to pay them if they were at a reasonable, fair, market rate.</p>
<p>I think the reason I want loans above the stafford rate to be defaultable in bankruptcy is because part of the reason for the steep rise in price is the availablity of these loans and because it would bring about some responsible lending practices.</p>
<p>The reason why they are not dischargeable is because they were abused in the past when they were dischargeable, so banks stopped lending, making it harder to pay for college.</p>
<p>It seems so random. The Fed has kept interest rates at zero for over 3 years now. They are just going to increase the rate from 3.4% (where does that come from?) to 6.8% (any significance to the 2nd number other than being twice the first number?). Is there any market justification for that? In 1980, when market interest rates were heading to 20%, one of my student loans was at 2%. I did not pay it off early.</p>
<p>**Carve That In STONE!!! ** If this happens these abusive, predatory polices and practices would end immediately. </p>
<p>Question: Who profits from the present system? </p>
<p>Answer: The colleges that receive the money and the financial institutions that lend under usury terms with government guarantees.</p>
<p>Young people are especially susceptible to this game. (Betting on the bright future colleges promise them ). And the bankers, in their turn, and on cue, take advantage too.</p>
<p>Many people have more loves for fetus than for college students. This is because the latter are old enough to fend themselves.</p>
<p>Don’t you have any personal responsibilities? If you do not have enough money while in school or after graduation, get the second job, or the third job while majoring in engineering or being a premed. Those bankers treat you fairly because you are not credit-worthy. (And the people in control of the government will listen to me, the banker, not you, the poor students.) This is the American way; don’t complain about it. If you do, why don’t you move to Iraq, or go work for FoxConn in China 12 hours a day making iPhones.</p>
<p>“Isn’t the ‘profit’ from the 6.8% interest rate being used to subsidize the Pell Grant program?”</p>
<p>Is that actually true? That they are charging high interest rates for some(for the current climate) to allow others to get free grants? I thought they had allocated billions of additional taxpayer dollars for the Pell Grants.</p>
<p>I don’t know if the interest funds Pells or not but it does fund the interest-free years of the subsidized loans. This is no different than the fact that full pay students are partially funding the scholarships and financial aid given to so many of the other students. Fair? Of course not.</p>
<p>I agree 100% with the government and not being able to default on student loans. In the past the high wage earners were the top candidates for defaulting on student loans because in the long run, it didn’t hurt them any so why pay? There has to be some consequence for taking out the loans and since you can’t really use your education for collateral, the non-discharge provision is about the only think they can do.</p>
<p>As for the interest rate, it’s still lower than want I paid way back when. I think the real issue is that mortgage rates are artificially low and people don’t seem to take that into consideration. 6-7% is still a very reasonable interest rate for anything.</p>