<p>It is just another tax - the federal government sets the interest rate higher, makes a “profit” on the student loans to the middle-class families and uses the money for other political priorities.</p>
<p>As a holder of Parent PLUS loans, I absolutely cringed at the usurious 7.9% interest rate, but I took 'em, and I’ll eventually pay 'em. The profit of 49 cents on the dollar does not surprise me–I figured it was around that much.</p>
<p>Whether this administration WANTS to do anything about it is completely different than whether they SHOULD–this is almost irrespective of political parties, because the GOP was in power when I took my first PLUS loan out.</p>
<p>It’s all about votes that translate to the pocketbook, and the reality that we Americans, rightly or wrongly, will follow something/anything that will help our standard of living, and dull the feeling that we’re getting scroogied on a regular basis.</p>
<p>For Parent PLUS loan owners, this would help the pain a little:</p>
<p>1) cut the 7.9% in half–even at four percent they’re still making money hand over fist.</p>
<p>2) allow consolidation/refinancing for existing loans at the new rate.</p>
<p>3) allow retirement money specifically earmarked to pay off PLUS loans to be taxed at a flat 10% or even 15%, rather than as ordinary income in the year withdrawn. Oh, and for those of us under 59-and-a-half, lose the 10% penalty as well.</p>
<p>That’s my wish list. The stupid tax code is already 15,000 pages. Why not make it 15,002? :)</p>
<p>ariesathena, that would also keep them from going to college. The whole point of student loans is to make college accessible. If the government is profiting too much from student loans, then it really doesn’t need to cut accessibility; it should cut interest rate. </p>
<p>Also, I thought the whole point of the president’s changes on student loans was for the federal govt to pocket the profits instead of the banks and use those profits to offset the price of the health care overhaul?</p>
<p>
</p>
<p>Interest should reflect risk associated with loan. In a perfect world, the government would incentivize education more so for those that study a more lucrative field because those people are more likely to be able to repay their loans. The government should raise interest rates for those who are not “creditworthy”.</p>
<p>Private lenders should bear more risk and therefore create additional eligibility criteria to make sure loans stay loans. We should differentiate a grant from a loan. Call them what they really are.</p>
<p>
It’s a redistribution of debt.</p>
<p>Polo, to what version of an economic utopian society are you speaking? :)</p>
<p>Of COURSE, the loan rates should reflect the risk of the holder. Unfortunately, we who actually pay back our loans are subsidizing the ones that potentially won’t, thus the high rate of 7.9%, and up until recently the government gave PLUS loans to virtually anybody–it’s still pretty darn loosey-goosey to my way of thinking. And the rate probably won’t change with the attempted defaults on the horizon, and I use the word ‘attempted’ because of the non-forgiveness of PLUS loans in bankruptcy thing that went into effect. </p>
<p>And even THAT is only a band-aid. Bottom line is the old saying that you can’t get blood from a turnip. Will the government actually garnish wages, cut welfare checks & not let folks have an existence because they can’t pay off a PLUS loan? That doesn’t translate to votes. I think some type of bailout is coming at some point (we’re not there yet), but when it does it should include some benefits for those who actually plan to or have the means to pay the loans off.</p>