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View Diary: Obama focuses on actions to ease student loan debt in weekly address (38 comments)

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  •  Lower interest rates (3+ / 0-)
    Recommended by:
    Powered Grace, cocinero, stewarjt

    on loans? That's the big idea?

    •  Wealth Extraction Under a Different Guise (5+ / 0-)

      Yes, that's basically the big idea, to stretch out your repayment schedule to 60 years from 30.  An even better idea would be to make the debt inheritable by your children, so that they will be responsible for paying off the ridiculous amount you couldn't.  

      Between credit card debt, student loan debt, and the mortgage scams the bankers have pulled off the biggest theft in human history and they've salted the loot away in the Caymans.  There was an article in the LA Times a couple years ago that estimated they've stolen $32 trillion dollars.  How nice would it have been to have all that money re-invested in America doing stuff like building true broadband infrastructure, a smart grid, alternative energy, feeding the hungry, etc?

      Education, like health and roads, are a public good.  If we want a competitive workforce and strong country, our people must be educated without impoverishing them in the process.  We need fully publicly funded secondary education.  If you have the smarts and work ethic to achieve, the country ought to help you, not punish you.

    •  It's the college costs version of ACA. (1+ / 0-)
      Recommended by:
      Sparhawk

      Health care too high?
      Well -- we'll force you to buy insurance but, if you are below a certain income level, we'll take the sting out of it with subsidies.

      College cost too much?
      Hey -- we'll cut your interest rates and let you pay for-freakin'-ever on your loans.  Young people these days don't cars and houses, anyway. No big deal. Right?

      Still, for all of the possible snark, lower interest rates are something that is better than nothing.

      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

      by dinotrac on Sat Jun 07, 2014 at 07:30:49 AM PDT

      [ Parent ]

      •  Re (3+ / 0-)
        Recommended by:
        Justanothernyer, chuck utzman, jyssco
        Still, for all of the possible snark, lower interest rates are something that is better than nothing.
        Not necessarily. Colleges may just increase base tuition to "compensate".

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sat Jun 07, 2014 at 07:46:56 AM PDT

        [ Parent ]

        •  Colleges don't loan to students in general. (2+ / 0-)
          Recommended by:
          dinotrac, HM2Viking

          Sallie Mae and others get the interest payments.  SLM is about 20% of the market.

          http://en.wikipedia.org/...

          I haven't read up on this bill so I don't know how a SLM is effected.  

          "The way to see by faith is to shut the eye of reason." - Thomas Paine

          by shrike on Sat Jun 07, 2014 at 07:52:02 AM PDT

          [ Parent ]

          •  That's not what I mean (1+ / 0-)
            Recommended by:
            Justanothernyer

            Affordability or perceived affordability is what keeps college tuition in check.

            When students take out student loans, they get a piece of paper that says "your post-college payment for this loan will be $X/month". The perceived affordability of X is what keeps base college tuition (somewhat) under control.

            Lower interest options lower X, perhaps a lot. But colleges already know from previous experience that students are willing to sign a piece of paper for $X a month, so rational behavior for them is to increase their tuition until the payment is again $X.

            So students are now in an even worse situation because costs that used to be interest payments are now principal balance. Good for overpaid college administrators, very bad for students.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sat Jun 07, 2014 at 08:32:06 AM PDT

            [ Parent ]

            •  There is that potential. Sad state of affairs if (0+ / 0-)

              supposedly non-capitalist colleges are charging what the market will bear.

              LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

              by dinotrac on Sat Jun 07, 2014 at 04:32:58 PM PDT

              [ Parent ]

              •  Well remember (1+ / 0-)
                Recommended by:
                dinotrac

                They are "non-profit" but have spectacular facilities and lots of high-paid administrators and star professors. Takes a lot of money to run that kind of operation.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Sun Jun 08, 2014 at 06:41:28 AM PDT

                [ Parent ]

        •  If we can loan (0+ / 0-)

          Bankers money at 0% we can lower student loan interest rates to the core rate of inflation. 2% money is repayable....6.8% money isn't repayable when wages are held flat.

          •  Sure it is (3+ / 0-)
            Recommended by:
            Justanothernyer, AlexDrew, dinotrac

            You'd rather have a low principal loan at 6% than a high principal loan at 2%.

            The result of this action will simply be that colleges raise tuition to take advantage of the new loan affordability and students will be even worse now than before.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sat Jun 07, 2014 at 08:34:35 AM PDT

            [ Parent ]

            •  Agree completely. Lower principal gives you an (0+ / 0-)

              opportunity to relieve yourself of the burden by squeezing the belt, having a good year, etc.

              LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

              by dinotrac on Sat Jun 07, 2014 at 04:34:08 PM PDT

              [ Parent ]

            •  are you making a moral hazard argument? (0+ / 0-)

              Public university tuition rates are set by state boards.

              I am not sure you can really make a straight line argument that refinancing the existing student loan debt down to 2% will stimulate tuition increases.....

              These proposals are targeting existing debt....A 1.3 trillion debt burden is a tremendous drag on the economy....

              The future debt problem can be managed by disqualifying the private diploma mills for poor graduation rates and poor employee placement rates.

        •  your logical fallacy (0+ / 0-)

          is that student loan interest rates affect college revenues. there is no effect.

          The colleges collect the tuition out of the aid packages. The balance is netted to the students.

          Please demonstrate how colleges lose revenue by lowered federal loan interest rates.

          •  They don't "lose" revenue (0+ / 0-)

            But it is obvious that with lowered interest rates there is more revenue available for the taking. Economically rational institutions will take it.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sun Jun 08, 2014 at 06:44:13 AM PDT

            [ Parent ]

            •  I just don't see it..... (0+ / 0-)

              If the market truly worked student loan interest rates would have already fallen to <3.5%.  Easing interest rates for borrowers is a pretty direct economic stimulus.

              I would be happy to read real evidence.

    •  of course (2+ / 0-)
      Recommended by:
      Justanothernyer, Sparhawk

      The real problem is, obviously, the actual cost of college education and the necessity of debt, not the interest rate.  College tuition in the US is many times more than comparable tuition would be in any other rich country that even has college tuition, depending on which country and which US college you attend.  

      And in the US, colleges mindlessly try to "compete" against each other by building fancy dorms and gyms and useless buildings.  It has nothing to do with "market" competition; no-one voluntarily offers a lower price and they all force consumption of the same fancy crap that students don't need or ask for, driving up costs.  They throw begged and borrowed money around by the millions for useless crap, pay administrators millions, and claim it's justified to prevent students from attending other colleges, even though other colleges do exactly the same thing.

      The college system has largely become a vast monopoly shakedown.  You can't get a job without a degree, so we all agree to make that degree just as expensive as possible, without quite pushing it to the point that makes it economically irrational.  (In other words, college gives an income advantage, so they try to get much, but not all, of that income advantage from students in the form of upfront cost of acquiring it.)  College is like a New York City liquor license or cab medallion.  It will make you money but the guy who sells it charges so much that a lot of that extra money goes to the cost of getting it.  But he still sells it just cheaply enough to make it worthwhile.

      (Americans have collaborated in this by creating a social stigma against "public" colleges.  Get the same education less expensively and you may be discriminated against.)

      But right now, there are two viable political parties.  One has graduated from harsh right wing policies to realty denying insane opposition to anything not maximally evil.  Their policies imply a belief that college is not expensive enough, and too accessible.

      The other has a few progressive members but mainly offers solutions like this, for now, although it could possibly be influenced.

      Take your pick.

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