<p>Student</a> Loan Interest Rate Hike Fight Bubbles Up In Congress</p>
<p>My favorite stupid Congress comment? "On the House side, Chairman of the Education and the Workforce Committee Rep. John Kline (R-Minn.) has said that while he doesn't think the loan rates should double, it's not the federal government's job." Ummm ... YES, it is. The federal government sets the Stafford interest rates, so how is it NOT the federal government's job?</p>
<p>How on earth do these people get elected?!</p>
<p>It was the government that set up the rate hike to current 6.8% level in the first place. It is way above market rate given what being charged for similar type of loan. How about simply tying it to the prime rate or something like that so that it is reasonable and properly adjusted for the current market condition. It should be a quick simple change, but no, we have to waste a lot of time and a lot of grandstanding with a lot of hoopla from various factions, then maybe something might get passed or maybe not.</p>
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<p>I interned in a Michigan Senator’s office last semester. </p>
<p>I got to meet many voters and career politicians (made me sad for our future).</p>
<p>People are politically dumb. Sorry, but it’s true. That’s how these people get elected.</p>
<p>It is way above market rate given what being charged for similar type of loan</p>
<p>So perhaps students should be using those alternatives instead?</p>
<p>^If they can get their parents to co-sign and if the parents are credit worthy. Some poor and unfortunate kids will not have that option.</p>
<p>Most don’t have the credit to do so without a credit worthy co signer. Which is why there is a premium to these rates. Students automatically qualify for these loans without a credit check.</p>
<p>Well, before making accusations, we have to understand that he is partially correct in saying it’s not the federal government’s job. Since Stafford loans are guaranteed by the government in case of student default, the rate will automatically increase if our interest rate on 91-day Treasury bills increases and that’s exactly what’s been happening. The interest rates are correlated to the actions of our Federal government, but it’s not a policy issue and it’s certainly not their job. </p>
<p>In reality, it’s a symptom of a much bigger issue - a bloated, over-expanded government that can’t even keep the interest rate on its Treasury bills from rising exorbitantly. </p>
<p>Besides, where do we get the idea that lower interest rates on Stafford loans equal a better educational future for our country? Lower interest rates mean more incentive to borrow, more demand for education and higher college costs in the long-term. The real winners in this equation are loan companies that contract with the government. </p>
<p>Our student loan program has been in high gear since the 70s and since that same time period we have seen an undisputed downturn in the quality of a college degree with respect to its cost. Are there other causes? Sure, but the point is - college is an investment - and it’s not the government’s job to invest.</p>
<p>Large increase in high school graduates attending college since the 1970s.
What other routes to the middle class do we have for our poor?</p>
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<p>Also, the beneficiaries, are the schools themselves. They are able to put these loans in the category of aid. They are able to call that “meeting need.” (whose need? theirs or the student’s?), and they are able to look good while raking in their student’s future earnings.</p>
<p>The students cannot default, these debts can be collected from estates, in fact. Like taxes.</p>
<p>*The students cannot default, these debts can be collected from estates, in fact. *</p>
<p>Only in the case of cosigned loans.
[When</a> Student Loans Live On After Death - WSJ.com](<a href=“When Student Loans Live On After Death - WSJ”>When Student Loans Live On After Death - WSJ)</p>
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<p>The best thing we can do for our lower class is give them a strong economy and a stable currency. These things combined with the determination to succeed have much more to offer than a loan-ridden, relatively worthless degree…</p>
<p>“college is an investment - and it’s not the government’s job to invest.”</p>
<p>I think that investment in human capital and infrastructure is precisely government’s job.</p>
<p>What is particularly irritating right now is that the federal government is borrowing money for about 1/2 of one percent interest rate, but is loaning that money out to college students for 6.8%.</p>
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<p>I imagine that the 6.8% subsidized federal student loans will still be preferable to private loans, because the feds pay the interest rate in college. If a parent has excellent credit and co-signs the loans, I heard a parent can do better than the PLUS loans by going to a private lender.</p>
<p>If a student has different types of student loans with different interest rates, they should carefully consider trying to pay off the ones early that have the highest interest rate.</p>
<p>They are. Those students who are creditworthy can go for a lower rate if they can find it privately. What you are paying for here, is convenience, no credit check, and flexibility in repayment terms.</p>
<p>Why was no one up in arms about grad student loan rates which never got to be 3%, they have been 6%+ all along. Why is it okay to charge everyone from future doctors & lawyers to any kid who needs some funding for a masters 6%+, but it is not okay to charge that to undergrads?</p>
<p>I see it differently. Yes people who are creditworthy and well-off will easily find a better rate. For a lot of the people who go the Stafford route, I don’t think they are going for convenience, I think it is mostly because they have no other avenue to go to. I am sure many will be willing to go through much more difficult application process if they can get much cheaper rate. And was it congress intention to charge a lot more or did they just arbitrarily set to a rate several years ago without knowing the rate will stay this low at this point?</p>
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<p>Uh, no. There are no similar loans even available. No lender in their right mind would lend money to an unemployed 18-year old.</p>
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<p>Uh, no. The 10-year Treasury – which matches the maturity of most student loans – is paying 2+%. Add in the administrative costs and default rate on the student loans…</p>
<p>I do agree with Kelsmom, however. Congress does set the rates, such as they are.</p>
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<p>Grad rates are subsidizing the Pell program.</p>
<p>^I mean a government backed loan or maybe the free money the banks get from the federal government. What rates are they getting?</p>
<p>^^and what other government-backed loans are not tied to some asset of some kind, just a future promise to pay from someone with zero ability to pay? (Even Solyndra had assets at one point.)</p>
<p>^but which government-backed loans with asset are required to be paid back and not be able to default on?</p>