<p>Just saw this---any thoughts on what this means ?</p>
<p>I just saw this in the paper. Finally some good news.</p>
<p>How easy do you think it will be to refinance accumulated Stafford/perkins loans taken between now and 2011 when they come due.</p>
<p>I am skeptical about how much this bill will help the financial situation of students. Here's why:</p>
<p>1) In the first paragraph of the linked article: "cut into their profits." Hmm . . . maybe in theory, but I am not sure sure how this will translate in reality. Perhaps lenders will responed to the decreased subsidies by decreasing the amount of loans offered. Bottom line is that no company ever remains indifferent to a cut in profits. Something has to give.</p>
<p>2) This bill, I presume, will be phased into the student loan system. So the government will increase the maximum Pell Grant by $1000. Yes but only by 2012. The cost of tuition has gone way way up in the past decade. This $1000 does not fall in line with the increase of tuition today, nevermind five years from now. Moreover, the cost of attendance has exploded with the housing bubble. In my case, the NYU dorm I am staying in was $2000 cheaper merely five years ago.</p>
<p>What I do like about the bill is the Parent PLUS interest rate reduction. The extension of debt forgiveness is also nice, provided you are in an eligible industry.</p>
<p>Is the interest rate decrease for parent plus loans? The only articles I can find refer to a 50% rate decrease to 3.4% for need based loans so I was assuming this meant stafford subsidised loans and possibly Perkins. I have been googling trying to find more details - without much success so far.</p>
<p>I looked again and couldn't find anything about Parent PLUS loans. I must have imagined it out of desperation.</p>
<p>So the goverment will cut its kickbacks to lenders and in turn use that money to decrease subsidised interest rates and increase the maximum Pell Grant. I wonder how well this will go, especially to students with large debts.</p>
<p>Has anyone seen any analysis on what the impact will be on UNsubsidized Stafford loans?</p>
<p>A question that perhaps simplifies everything is how much profit does one deserve if you as the lender will not lose money for any loan defaults? The lender takes no risk, guaranteed profit, and taxpayers pays for loses. Sounds like an encouragement for corruption, bribes, and moral hazards.</p>
<p>Find out what happened to the Bxxh appointees to the DOE Student Loan Program. Public service from the Party of Family Values and Morality.</p>
<p>^^^^Yeah with all that going on maybe it's time to make all the colleges Direct Lenders and eliminate the middleman...</p>
<p>Actually, the Direct Loan system is more costly to taxpayers than Lender based loan programs. And lenders to have a risk when lending student loans...they actually pay default fees to the government to help reduce the defeict caused by defaulting students.</p>
<p>The last time a ton of colleges and universities flocked to Direct Lending, the workload was so immense that it took 6+ months for schools and students to receive their funding...if the student hadn't already dropped or graduate.</p>
<p>While this bill has some issues....the biggest issue is going to be lenders leaving the student loan business...resulting in increased unemployment rates and a bad economical forecast for many regions across the United States.</p>
<p>Should we cry about a few profiteering banks having to downsize? Take a look at two paragraphs for the article:</p>
<p>
[quote]
Lending group Nelnet Inc. said on Thursday it will cut 400 jobs, or 12 percent of its work force, ahead of the expected profit-pinching legislative changes.</p>
<p>In addition, the changes could cloud the outlook for a proposed $25-billion buyout of Sallie Mae, the nation's largest student lender, by a group of private equity firms and banks, said Jaret Seiberg, an analyst at Stanford Group Co.
[/quote]
</p>
<p>So, Nelnet might cut 12% of the workforce. Not very positive, but didn't the staff up those departments by mostly exploiting the largesse of the government? Now, let's look at Sallie Mae. Here's the company that allowed theor top executives to earn hundreds of millions on the back of their cynical exploitation of student-debtors. Those obscene salaries and perks were enough for some to purchase their own private golf course. Not bad for quasi goovernmental employees who found the beauty of bribery, corruption, and cronyism. No wonder the democrats opposed the past bills with such vigor. </p>
<p>One would hope that more of those conniving and thieving executives would be sent packing.</p>
<p>The problem is, those companies such as Sallie Mae and Nelnet, who are "conniving and thieving" are not the ones who will be hurting...it will be the smaller lenders who have always obeyed federal regulations and worked for the best interest of the students. In the end, all we will be left will be those "conniving and thieving" lenders bent on sucking the students dry.</p>