<p>The interest rate does, and should, affect the rational student’s decision whether a particular college is affordable, and whether the decision to go to college at all makes economic sense. Unfortunately, you’re probably right that many students don’t rationally consider the consequences of amassing large amounts of debt, or the true cost of that debt which is a function not only of the amount borrowed, but also of the interest rate.</p>
<p>For low SES students, taking on any amount of debt may be a daunting proposition. Taking on a large debt can be downright terrifying. and taking on a large debt at a high interest rate should be even more terrifying, but many are probably not economically sophisticated enough to understand that the interest rate is a major factor in determining how burdensome their repayment obligations will be. Those who “get it” will consider the consequences, and at the margins it should deter some students from attending some schools, and will likely deter some from attending college at all.</p>
<p>Just to be clear, I am perfectly fine with none of them being subsidized. </p>
<p>I just think all the Stafford loans should offer the same rates to all students. They have yet to enter the workplace on a full-time basis and they should be treated equal. </p>
<p>However the current Stafford program discriminates not against the family that is more fortunate, but against their child that has no right to their parents income or assets and has no advantage over others. Thus they actually start at a disadvantage under the current program.</p>
<p>Also the students that are already benefiting by receiving subsidized loans over those that do not are also far more likely to recieve true financial aid. That should be enough separation as far as I am concerned.</p>
<p>I dont understand the rationale behind giving some students subsidized loans and other students unsubsidized loans. </p>
<p>As the impact of the interest rate is only felt AFTER the students leave school, are the recipients of the subsidized loans intrinsically less employable than the recipients of the unsubsidized loans?</p>
<p>Subsidized loans ARE “true financial aid” insofar as they make it possible for students of limited means to attend college at a lower cost than if they had to borrow money on an unsecured basis at market rates; the subsidy represents a modest taxpayer contribution toward that goal.</p>
<p>Do you really think that because your income and assets are such that your kids don’t qualify for any form of need-based aid, it puts your kids at a disadvantage relative to the zero EFC kid whose parents can’t rub two nickels together, and who, if s/he is to attend college at all, needs the maximum Pell grant, the maximum subsidized loan, the maximum institutional grant (which still leaves him/her well short of meeting full need), plus probably some level of unsubsidized loan as well (i.e., with likely a larger debt burden than your kids, and one that unlike yours is involuntary, in the sense that the government, and the school following government guidelines, calculates that based on your income and assets your kid shouldn’t need to borrow government money, but you elect to do so anyway?) That low SES kid has zero margin for error, and no family resources to fall back on if the going get tough.</p>
<p>I think the investment of our federal tax dollars is worth it because people with higher educational attainment make significantly more money and, therefore, will pay much more in taxes over their lifetimes. This link shows the most recent information for income level by educational attainment. In dollars and cents, it is to the country’s advantage to have more people with higher levels of education.</p>
<p>If keeping those loan interest rates down helps more people become college educating, it is revenue producing, and that additional revenue could go to K-12 education.</p>
<p>Since loan repayment dont begin until AFTER the student leaves college, how does raising the interest rate cause graduates to be less revenue producing? Does a person who has a 6.8% loan get offered a lower starting salary than a person with a 3.4% loan?</p>
<p>I have no clue what type my loans were. I did consolidate them together into one loan though.</p>
<p>I agree with emerald to an extent, however here in pa the cost is more then twenty k a year for public college. My private school cost less then our publics did. For this reason, many of the public kids go to community college for two years then transfer in. I’m not talking about Penn state either, they are even more expensive.</p>
<p>And our community colleges cost probably four to six grand a year, with living at home. This is an estimate as I’m not sure what their current tuition is.</p>
<p>I don’t know where the notion that all people have to go to college came from. If you are bright, want to go, and can work out the money, go for it. But I also agree that there should be more programs to help the lower class. Its not the kids “fault” and I think they should have the opportunity to go to school as well.</p>
<p>My family is blue collar and I was the first to go to college out of any of us. we made it work.</p>
<p>I am not sure I agree with the notion that different loan rate somehow in any significant way enables the more needy students to go to college. If that is true, then it would also adversely effect the less needy in the same way. The fact is loan is not paid until after you leave school and I don’t think employers that offer employments and salaries do it based on candidates’ parents financial situation. I think I saw a chart of GPA distribution of students that receive subsidized loans vs the rest and it was very similar. The needy students may very well have the same and similar opportunities after school, and conversely the less needy students may very well have the same and similar difficulties and challenges that they have to get through after school.</p>
<p>Take 2 kids graduating from the same school with same GPA and same major, why does one kid has to pay a lot more in interest than the other after graduation? Or a more drastic hypothetical situation, take 2 kids, again same everything, one is employed in a good job after school, the other could not find a good job and underemployed at a not such a good job. Why does the unfortunate one should pay a lot more interest than the fortunate one?</p>
<p>The bigger problem with college than loan rates is the cost of college. The availability of loans that are easy to get is that it increases demand and therefore costs. The most recent extreme example of this is the housing bubble up to 2005.</p>
<p>Yes I agree but that is a different problem. Pumping money into the situation causes the cost to go up, but without the money, less kids and especially the needy ones will not be able to go to college. Where is the right balance? I keep hearing we need more highly educated labor force, but is there such thing as too much highly educated workforce? And is it really a bubble? If so, what bubble bursting looks like in this case, there is no real asset whose value could decline and the loans are there and cannot be taken off the book.</p>
<p>We have the community college system but it clearly doesn’t work for everyone. If you are reasonably close to a community college, it can work out but it can be a problem without dorms or cheap off-campus housing. Another poster indicated that CC costs $4,000 - $6,000 but there is a $2,400 tax credit to help offset costs. If the overall economy were better, I think that there would be more jobs available to pay for the rest of community college expenses and living expenses if a student lives at home.</p>
<p>The upper two years are still a problem as student costs are a lot higher, even for students that live at home. If the job market were stronger, borrowing $20K wouldn’t be as big a problem but the job market looks like it will be a problem for quite some time.</p>
<p>Many state universities are doing what private universities have done for some time - using money from full-pay students to subsidize those on need-based aid. That’s one approach - basically increase tuition and fees so that you can increase need-based aid. </p>
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<p>A coworker with a son that just graduated from an Ivy told me that the vast majority his son’s friends didn’t secure jobs and are headed for grad school. His son only found a job just before graduation after a subpar job-search and I think that connections helped there. I live near Boston and there does seem to be a big demand for highly educated workers but it looks like the demand is for those from top schools or those with graduate degrees or those with several years of experience. I think that things are a lot harder outside employment hubs.</p>
<p>We have many local companies looking for workers in high-tech manufacturing. They are looking for employees with two-year technical degrees with decent math skills to run highly automated design and manufacturing equipment. Employers complain that it’s hard to find such employees but they say that it is easy to find four-year university graduates in business and other areas.</p>
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<p>It’s a bubble in prices. The bubble bursting looks like lower enrollments and schools closing.</p>
<p>It’s OK to spend more if you are getting more. But for public K-12 spending, the U.S. is not getting value for money.</p>
<p>Here is a graph showing education spending v. Pisa scores for OECD countries. Before you start arguing that the reason the U.S. doesn’t do as well as Finland is because the U.S. has a diverse population, this graph is normalized for race and shows data only for White students.</p>
<p>But we still need to improve K-12 and it would make more sense to do so than to put more into college education where they have to do K-12 work again.</p>
<p>I absolutely agree that K-12 needs to be improved. But I do not agree that the most strategy to do it involves throwing more taxpayer money at it, which is what other posters on this thread were advocating.</p>
<p>Massachusetts does a pretty good job at educating its students and it spends a fair amount of money doing it. It also benefits from a well-educated populace. Perhaps other states could do more of what Massachusetts does. It very well may take more money on K-12 schools to compensate for education levels of parents.</p>
![http://2.bp.blogspot.com/_-EMpadQx4hM/TSJWiEylT0I/AAAAAAAAAaA/pKQmRkmCNU4/s1600/education2.png[/url]](http://2.bp.blogspot.com/_-EMpadQx4hM/TSJWiEylT0I/AAAAAAAAAaA/pKQmRkmCNU4/s1600/education2.png%5B/url%5D){kind=link}
