Current and Former college students? Hang on! Interest is set to double.

Thank the politics and politicians for this one, yet again. College loans to finance higher education in this nation are about to jump from the manageable rates of near maintenance levels to downright profitable levels seen by credit card companies before the economy tanked and they skyrocketed.

"Let me be clear: Senate Democrats’ unwillingness to follow your lead is the only thing standing in the way of a long-term solution for students," Boehner wrote. "I urge you, as president and the leader of your party, to compel your Democratic colleagues to pass a market-based student loan bill before you leave the country next week."

In just 10 days, interest rates on federally-subsized loans for millions of students are set to double from 3.4 percent to 6.8 percent -- unless Congress acts. Obama's approach in his fiscal 2014 budget to link the rate to the 10-year Treasury yield is broadly backed by Republicans and opposed by Senate Democrats.

Source

As a College Student myself, this will hurt and hurt very badly. As many in this nation struggle under debt loads of 50,000-100,000 and more for University education above bachelor level? It's one more crushing weight to squeeze the life out of us.

Harry Reid can get off his tail just once and DO something that helps instead of hurts. If that truly is where the logjam lay for this and Obama/Boehner really agree on this one? Well, Harry can just WORK FOR A LIVING. It'll be a nice change for that man.

More proof that they dont want educated people, they want sheep.
They want slaves to keep lining their pockets.

reply to post by Wrabbit2000

In just 10 days, interest rates on federally-subsized loans for millions of students are set to double from 3.4 percent to 6.8 percent -- unless Congress acts.

Well, they could pitch in from their millions, but I doubt they will.

Get ready for some austere student protests if this goes through. Just like in the EU and recently, Brazil? Students are a good target because they are too busy studying to put up much of a fuss.

Trending robbery of the poor to feed the debtconomy.

I'm so glad I was able to finish college with the G.I. Bill. Every time I read about student loan debt and how its managed, I cringe cause I'm glad I dodged that bullet. I feel for you wrabbit, trying to change professions in this day is pretty tough, unfortunately its all but required if your old job was something that got outsourced to China. The student loan bubble is pretty terrifying and if what your op is talking about is allowed to happen, it may end up popping.

I can understand the gravity of the situation for students here but what I don't understand is why are they going to automatically double the interest rate?
What's up with tying students loans to "market rates" ?
That sounds as ominous as the other given the "free markets" reign of terror when it comes to interest rates.
While I believe student loans should be partially subsidized by taxpayers in the form of low interest rates it doesn't sound like much of a solution either way.

I believe the rates are only doubling on NEW loans and not existing loans. So those with student loans today are safe, for now.

reply to post by Asktheanimals


They have both sub and unsub fed loans, the thing is the sub ones only give you piddly for money....its all i giant banking scheme.

Do they not realize that there are no jobs and even if they graduate they will bein debt for life....certainly cant flip burgers live and pay your loans back.

Or is it part of a bigger more ominous plan, an UN kinda plan. a one world government kind of plan.

Its like they are instrumenting the collapse of the us and the uk to push a bigger agenda.

reply to post by Asktheanimals


Let me help by adding a bit more context. I had to look this up myself, as some details aren't part of the standard FAFSA pamphlet we get handed these days.

According to the following link, interest rates on Student Loans for the Fed side are set by Congress. Which explains how they could arbitrarily double. Someone programmed in a drop date for the subsidy level, would be my guess. This has come up before and more than once. So I'm thinking band-aids have been applied and this one is about worn out.

US Student Loan FAQ

As to what they want to tie it to? I'll take that for historic average as a means to set the rate over Congress deciding it by politics of who is in power at the moment and what benefit they see by squeezing or giving relief to college students.

Historic 10 Year Treasury Rate - By Year

Historic 10 Year Treasury Rate - Chart

A period in the 1980's would have hurt to scream for ...but then, who is to say Congress doesn't get a wild hair to go bananas at some point and do even worse? At least Uncle has personal benefit to keeping that particular market rate low. Just my thinking.

This is what happens when the government nationalizes student loans and takes them away from private lending institutions. All those 18-22 years olds in 2008 fell for the bs obama was shoveling and now its time to pay the fiddler. Oh and btw now that all student loans are government loans you can't erase them by filing for bankruptcy like you used to when they were private. They are forever like herpes. Your welcome.

Meanwhile, in those horrible socialist countries like Denmark, students are paid to study (about 1K a month) and the tuition is free.

Most students graduate with money in the bank and no debt. And they have not only a highly educated population but rate themselves happiest of all countries.

Or, you can stay in the 'We're #1, We're #1!!' lie-based United States and suck it.

I didn't know that's how easy it was in Europe.....that's how it ought to be.!!!
I grew up in Texas....had to live on 50 dollars a month....going to SWTSU.....in 1972....paid for stuff at the store with friggin a handful of pennies. and glad to have some.

reply to post by Wrabbit2000


Might as well issue a permanent cap on those rates for 1-2% OR eliminate interest altogether.

So what will the young people have to look forward to? A lifetime of debt, low credit scores from the time they graduate, won't be able to buy a car to get to that low paying job, won't be able to get insurance with a low credit score, won't be able to get a good job. Everything is based on your credit score as to how far you can climb any ladder. Background checks for everything. Just making things worse with nothing for anyone coming out of a higher education to look forward to.

They probably already know that people can't pay back their loans because they are working 2 or 3 low paying jobs just to get by. So hike the rates and hope some will be able to pay them back. The days of that good paying job are slipping away and now with retirement age increased or increasing the boomers have to stay on that much longer making the younger generation wait, if they ever replace those jobs with the same pay the the incumbents enjoyed.

I see dark days ahead, even the flippin' burger job demands a higher education to weed out those who lack one. Higher education has become big business for the colleges and universities and no sign of slowing or even trying to make affordable for the average family, tuition hikes just keep increasing. Gone are the days when you could make a living out of high school which is where these low paying jobs should be filling from.

Well considering student loan debt is now at 1 trillion and increasing welcome to the next bubble crashing.

Never understood the logic of spending 50k for a job that isn't gonna be there or one that pays less than half.

Simple fact that they got involved in the first place the result is a given anything Goverment does makes things worse.l

Originally posted by Nephalim
reply to post by Wrabbit2000

 

Might as well issue a permanent cap on those rates for 1-2% OR eliminate interest altogether.

edit on 20-6-2013 by Nephalim because: (no reason given)

There shouldn't be interest if you want kids to actually go to college for an education! That should be an interest free zone from profits in my eyes!!

reply to post by Chrisfishenstein


I agree entirely here. Interest would be a nice thing to just leave off the Federally supplied loans. Especially after, as one other noted, the Government has all but completely taken control of the College finance industry wholesale.

Kids go to college to learn about economics and finance, not to be ruined by it in the process.

On average this will result in a 25 cent a day increase to the average student loan debt holder.

No big deal.

reply to post by solidguy


How did you come up with that? On a $50,000 student loan on the initial average 10yr term, the difference between 3.4% ($9,050) and 6.8% ($19,048) is roughly $10,000 in interest paid over those 10 years. That breaks down to roughly $2.75 per day over the 3650 days the 10 years cover.

Discussion of Student Loan rates and average terms

Student Loan Calculcator

If you're looking for a basic Associates degree, it may not mean too much. If you're going for a professional level degree at Masters or above? It's enough to put a down payment on a small house or pay the better part of a decent car, in cash. I'd call it quite a big deal myself.

Well, its not just the interest on loans that is an issue. I would be all for eliminating interest on loans.
Anyway, college isnt exactly affordable even with grants.

If you go to a community college you may be looking at about 450-500 per course.
affordable costs goals to broke folks, (normally (young adults) and adults) who are trying to get an education would be easily met if those classes were capped at 150 dollars per class or so. If you want to begin to address the issue of loans, make college course prices lower. The less you have to borrow, the less you pay back, and if you include no interest, then how much debt do you actually have? What is easier to pay? A loan with a low principle and no interest or a loan with a high principle +interest due to high costs.

They could, if they chose and were able, just eliminate the interest entirely and forgive the standing accrued interest. Then work at lowering the cost per course.

So I think the issue can be tackled, but people need to get off the greed ride.

It's part of the agenda to destroy the best people, and raise up the worst. Crush the intelligentsia. College grads are much more likely to see through the whole scam eventually, while the seething rabble never will.

Idiots get free rides all the way through, and learn nothing. They remain cogs in the machine. Smart people from good backgrounds have to take on a crushing debt load to get an education, making sure all energy is squeezed out of them for life just trying to keep their heads above water, since they also have to pay taxes to support everyone else.