Warren: Student Loans Should Have Same Rate Big Banks Get

[CosmicCowboy]

Student loan interest/limits should be somewhat based off someone's GPA/major/etc.. A political science major with a 2.5 GPA is a much higher credit risk than a petroleum engineering major with a 3.5 GPA.

X2

Liberals that disagree could start their own 501(c)3 to fund the liberal arts losers.

[DUNCANownsKOBE]

X2

Liberals that disagree could start their own 501(c)3 to fund the liberal arts losers.

Yeah imo someone taking out 100k in debt for a liberal arts degree at a private school shouldn't even be a partisan issue, it's a common sense issue as something that both liberals and conservatives should try to stop.

The counter argument I hear a lot is, "If everyone was an engineering/math/technical major then we'd have the same problem with them fighting over a select few jobs!" which is a bridge we're nowhere near having to cross at least from personal experience. I've gotten at least 10 calls in the last months for accounting/finance related jobs from employers who somehow got my resume. Most of them were pretty mediocre entry level finance jobs I'd never take, but the point is the job market is still starved for college grads with actual technical/analytical skills.

[MannyIsGod]

Things have gotten tougher for everyone - and that includes STEM type majors - but STEM majors are still in much better positions than most people.

[Jacob1983]

Where is my handout, hypocritical liberals and war mongering neo-cons? Anyways, I had success with the IBR and got it applied to some of my loans which was nice and it's one of the few times I will give props to Obama.

[boutons_deux]

5 Ways Student Loans Hurt Middle-Class Kids

1. The $51 billion heist. As Washington prepares for another epic battle over keeping federal student loan rates at 3.4 percent rather than allowing them to double to 6.8 percent, an important fact goes overlooked: Federal student loans are already a significant profit center for the feds. Indeed, these loans earn Uncle Sam some 36 cents for every dollar it puts out. Bottom line: the government will reap $51 billion in profit in 2013 alone.

So instead of arguing for weeks over whether we should hold the line on federal student loan interest rates, perhaps the debate is better focused on how we might cut them to a level sufficient to cover administrative costs and provide a slight cushion. That should help to make college more affordable for the middle class.


2. Student loans fund tuition inflation. Average college debt has grown from $9,188 in 1993 to $35,200 now.

Here's the dirty little secret why colleges and universities charge so much: Because they can. Their operating budgets are funded largely by student loans, which are repaid by students themselves. So why not pay your college president $3 million a year, spend $194 million to build or renovate a football stadium or "invest" $70 million in a pool?

Experts have suggested a panoply of solutions, including capping the maximum loan amount available to people who plan to pursue low-paying majors such as art history, or making student loans pay for education only, and not facilities like dorms, arenas or sports stadiums. (Credit.com contributor Mitc Weiss explores more ideas along these lines.)

Whatever the solution, we have to stop this crazy cycle before it shuts the middle class out of college entirely.

3. Till death do us part...really! You can never shake student loans, because unlike other types of loans they cannot be discharged in bankruptcy (with a few rare exceptions). It doesn't matter if you get laid off, are financially devastated by the illness or death of the family breadwinner or take up residence in your car. Student lenders will hound you until your last breath or they are repaid, whichever comes first.

This change to the bankruptcy laws was originally conceived to protect taxpayers, who otherwise would be on the hook if (and when) borrowers default on federal loans. After years of aggressive lobbying, private lenders eventually won the same benefit, i.e., they have the same risk of not getting repaid: Essentially zero. Yet they still charge a premium.

In addition to being a Credit.com contributor, Weiss is a finance professor at University of Hartford and says he regularly counsels students whose private loans boast 12 percent or 15 percent interest rates. The same loan from the government costs a quarter of the price.

It's the cornerstone of credit that interest rates are based on risk: the higher the risk that a borrower won't pay a debt, the higher his or her interest rate. Private lenders flout this rule, pumping more money into the higher education system and driving tuition inflation.

Maybe it's time for private lenders to play by the rules. Lending means risk. If they are unwilling to accept that risk, perhaps they should open a chain of newsstands.

4. Limited tax benefit. When you get a mortgage, the federal government allows you to deduct the interest on your taxes to help incentivize homeownership. Having a well-educated population is no less important to our nation's future than buying a house. We should demand that student loans get the same tax treatment.

Currently, only people who earn below $75,000 can write off a portion of their student loan interest. That's a problem. If you graduated from an expensive school, you may owe $100,000 or more in student debt -- as much as many mortgages. But even if you get a good-paying job, you could face a crippling student loan payment every month. It's a slippery slope from there to a tepid economy, because if all of your money is going to pay rent and service student loan debt, you're not going to be in a position to buy a house, a car, and/or all the other things that put "consumer" into our consumer economy.

Let's change this, and give student loans the same tax benefits that apply to mortgages.

5. Forbearance = Tightening the Screws. Many people who are having trouble paying their student loans mistakenly assume that forbearance is just another word for free. Weiss says he works with students all the time who believe all they have to do is fill out a form, and their payments magically go away.

http://www.huffingtonpost.com/adam-levin/5-ways-student-loans-hurt_b_3328124.html?utm_hp_ref=daily-brief?utm_source=DailyBrief&utm_campaign=052413&ut m_medium=email&utm_content=BlogEntry&utm_term=Dail y%20Brief

[Rick Santorum]

Where is my handout, hypocritical liberals and war mongering neo-cons? Anyways, I had success with the IBR and got it applied to some of my loans which was nice and it's one of the few times I will give props to Obama.

I think you just answered your own question as to where your handouts are.

[boutons_deux]

Where is my handout, hypocritical liberals and war mongering neo-cons? Anyways, I had success with the IBR and got it applied to some of my loans which was nice and it's one of the few times I will give props to Obama.

Barry didn't make the loan, he didn't take it out, and he's not working for the loan servicers/collection agencies. GFY

[Ignignokt]

This is a stupid idea. This will worsen the tuition bubble, and we shouldn't give low interest rates to high risk people, that's stupid. There needs to be a market correction in the college market so that tuition can come down and we can see more reasonable lending practices.

[Ignignokt]

We should just eliminate interest rates and have the minimum wage at 25/hr. That will stick it to the rich!!!!

[rascal]

College is a joke and scam in America. The same could be said for American society and culture. Sometimes, I'd honestly rather go live in a less populated but developed peaceful country than live in America.

I'd rather live in Switzerland.

[boutons_deux]

This is a stupid idea. This will worsen the tuition bubble, and we shouldn't give low interest rates to high risk people, that's stupid. There needs to be a market correction in the college market so that tuition can come down and we can see more reasonable lending practices.

There's about $1T in student loans right now, they cannot be discharged in bankruptcy, not EVER (thanks to dubya's Repug Congress), very high unemployment in the post-college 21-30 segment. About 1/2 of young people with a degree who are working are in jobs that don't require a degree, aka, underemployed.

Tell us how your "correction" works.

[FuzzyLumpkins]

public education k-12 is free because of the societal benefit there is. a well educated workforce helps society as a whole including the retiring s that don't want to pay for anything.

[angrydude]

Student loan debt is bigger than the sub prime market was

You know what the correction will be? More wall street banks going down in flames. Not that that is a bad thing but it will up the economy in the short term if it would be allowed to happen. Which it won't. Instead the fed will just print some more money. Then interest rates will rise and the us won't be able to service its debt. Or they won't rise and the dollar will be worthless.

[boutons_deux]

Elizabeth Warren's QE for Students: Populist Demagoguery or Economic Breakthrough?

Warren and her co-sponsor John Tierney propose that students be allowed to borrow directly from the government at the same rate that banks get from the Federal Reserve — 0.75 percent. They argue:

Some people say that we can’t afford low interest rates for students. But the federal government offers far lower rates on loans every single day — they just don’t do it for everyone. Right now, a bank can get a loan through the Federal Reserve discount window at a rate of less than one percent. The same big banks that destroyed millions of jobs and broke our economy can borrow at about 0.75 percent, while our students will be paying nine times as much as of July 1.

This is not fair. And it’s not necessary, either. The federal government makes 36 cents on every dollar it lends to students. Just last week, the Congressional Budget Office announced that the government will make $51 billion on the student loans it issued this year — more than the annual profit of any Fortune 500 company, and about five times Google’s yearly earnings. We should not be profiting from students who are drowning in debt while we are giving great deals to big banks.

The Fed bought over $1 trillion in “toxic” mortgage-backed securities in QE 1, and reportedly turned a profit on them. It could just as easily buy $1 trillion in student debt and refinance it at 0.75%.


Which Is a Better Investment, Banks or Students?

Students are considered risky investments because they don’t own valuable assets against which the debt can be collected. But this argument overlooks the fact that these young trainees are assets themselves. They represent an investment in “human capital” that can pay for itself many times over, if properly supported and developed. This was demonstrated in the 1940s with the G.I. Bill, which provided free technical training and educational support for nearly 16 million returning servicemen, along with government-subsidized loans and unemployment benefits. The outlay not only paid for itself but returned a substantial profit to the government and significant stimulus to the economy. It made higher education accessible to all and created a nation of homeowners, new technology, new products, and new companies, with the Veterans Administration guaranteeing an estimated 53,000 business loans. Economists have determined that for every 1944 dollar invested, the country received approximately $7 in return, through increased economic productivity, consumer spending, and tax revenues.

Similarly in the 1930s and 1940s, the Reconstruction Finance Corporation funded the New Deal and World War II and wound up turning a profit, without drawing on taxpayer funds. It’s an initial capitalization was only $500 million; yet the RFC eventually lent out $50 billion – the equivalent of about $500 billion today. It raised money by issuing debentures, a form of bond. It got all of this money back, made a profit for the government, and left a legacy of roads, bridges, dams, post offices, universities, electrical power, mortgages, farms, and much more that the country did not have before.

http://truth-out.org/news/item/17019...c-breakthrough

[Winehole23]

Fifty-eight percent of likely Massachusetts voters said they don’t think Warren should run for president, according to a Suffolk University Political Research Center/Boston Globe poll.

https://www.bostonglobe.com/metro/20...9nK/story.html

[DMC]

https://www.bostonglobe.com/metro/20...9nK/story.html

you guys are like baby birds, always dependent upon another stomach to digest your dinner.

[Winehole23]

Warren positioning herself for a 2020 run for president is newsworthy, so is the unpopularity of such a move in her home state.

[spurraider21]

[boutons_deux]

"That is what we are going to change."

nope, not gonna change, even if Dems take Congress and the WH. Too much damage, for too many decades.

The oligarchy, not the people, is the supreme power now and for forseeable future.