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

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  •  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.

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