Skip to main content

The good news is Congress has a deal to extend the student loan interest rate of 3.4 percent rather than letting it double to 6.8 percent this weekend, and that deal has passed the House and should pass the Senate today. The bad news is ... there's a lot of bad news. First off, while the interest rate won't double, students will still take a hit in two ways:
One would hit the same college students who are benefiting from the interest rate freeze. Though their rates will be only 3.4 percent, they will be responsible for paying that interest as soon as they throw their graduation caps in the air — a change that is expected to cost them more than $2 billion.

Meanwhile, students hoping to earn the advanced degrees that have become mandatory for many white-collar jobs will no longer be eligible for federally subsidized loans. That means graduate students are facing an $18 billion increase in interest rate payments over the next decade, about three times the amount at stake in the debate over undergrad interest rates.

Until now, the government has covered interest on loans for six months after graduation, giving students a grace period to find a job, pay the security deposit on an apartment, and generally get on their feet. No more. This at a time when unemployment among young college graduates has been averaging 9.4 percent over the past year or so.

Graduate students are taking an even worse loan hit, now becoming responsible for interest that accrues on their loans while they're still in school.

To be fair, both of these new problems come from earlier deals; the new one isn't creating them, it's just failing to fix them. That brings us to the deal that's paying for all of this inadequacy.

Currently, companies are generally required to contribute more into their pension plans because interest rates are at historic lows.

The bill would adjust the way interest rates are factored in, and allow companies to contribute less to pensions. However, that would also lead to increased tax revenues from these companies, and this change would raise an estimated $9.4 billion over the next decade.

Oh, good. Companies contributing less to pensions is a great idea. It's not like we ever hear stories about people working past retirement age because they can't afford to retire, or facing serious financial insecurity in retirement. On a somewhat better note, another provision in the deal would increase companies' Pension Benefit Guaranty Corporation premiums. So pensions might be inadequate, but the insurance on them will be in better shape.

Congress will get its "Congress reaches deal to keep student loans from doubling" headlines, but for a lot of students and working people, this isn't much of a win.

Originally posted to Daily Kos Labor on Fri Jun 29, 2012 at 08:26 AM PDT.

Also republished by Progressive Hippie and Daily Kos.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  So if I decide to get my Master's I would have (0+ / 0-)

    to pay higher rates anyway?

    "Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity." --M. L. King "You can't fix stupid" --Ron White -6.00, -5.18

    by zenbassoon on Fri Jun 29, 2012 at 08:37:18 AM PDT

  •  These dems suck at negotiation (3+ / 0-)
    Recommended by:
    jedennis, jfern, wsexson

    Proof that we have one party, two wings:
    the money party
    the batshit fucking crazy money party.

    "There's no ideology [t]here [on the right]. It's just about being a dick." Bill Maher, June 22, 2012.

    by caseynm on Sat Jun 30, 2012 at 08:12:15 PM PDT

  •  I feel so sorry for these kids. (6+ / 0-)

    I was from a lower middle class, upper lower class family. Dad dug ditches and then he farmed after he was injured.

    During my entire education, my parents gave me $100. That was all, but I was grateful for it. They would have given me more, but they didn't have it.

    But thanks to low, low tuition at the University of California, grants and low interest rate loans where repayment was delayed until I got on my feet after graduation, I made it through. And so I was blessed with the love of my parents and siblings and with an affordable, accessible, high quality education.  So blessed.

    And I have succeeded beyond my wildest, young imaginings.

    I know my story would be repeated if we made the conditions right. With more and better Democrats, we can and we must.

    And what in heaven's name do pension accounting rules have to do with the subject matter of this bill.

    We need a single subject rule in Congress.

  •  We HAVE to get Republicans out of congress. (5+ / 0-)

    They're killing the future of this country.  Between what the states are doing to cut financing for their public universities and congress is doing to raise the cost of both undergraduate and graduate degrees, our future is looking bleaker every time the politicians get together.

    "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

    by SueDe on Sat Jun 30, 2012 at 08:16:50 PM PDT

    •  True about Republicans, SueDe, but (2+ / 0-)
      Recommended by:
      SueDe, George Hier

      there's so much more to be discussed. For example, we taxpayers who subsidize every university both through direct appropriations to state schools as well as through tax exemptions for all schools need to assume a greater sense of ownership and responsibility for our universities and what's happening in them. After all, the problem of repaying  student loans does not hinge so much on interest rates as on the principal amount. Tuition prices have risen to untenable heights. Why? What are schools doing now that's so different from 20, 30, or 40 years ago? Everyone, not just students, should take an interest in these questions and their answers as we all stand to gain (or lose) the benefits of living in a well educated society.

      When I attended, in the 60s, what is now one of the most outrageously overpriced universities in the country, I could make enough money with a part-time, minimum-wage job to completely pay my tuition without borrowing a cent. Today, that would not be possible at the same university even for a student living with his/her parents as I did. Of course, living with my parents while going to school was not my dream, but it was no worse than moving back in with my parents after graduation would have been, and many young people are forced into doing that these days.

      Something, maybe more than one thing, has gone haywire. Does the high cost of tuition bother you as much as interest rates? What are your ideas on how colleges and universities could hold down costs?

      Eliminate tax breaks that stimulate the offshoring of jobs.

      by RJDixon74135 on Sat Jun 30, 2012 at 09:28:32 PM PDT

      [ Parent ]

      •  One of the main reasons university tuition (4+ / 0-)

        is so high now compared to 20, 30, 40 years ago is that the states have abandoned, little by little, every time their budgets are squeezed, their commitment to higher education.  Public universities' public support is on the chopping block immediately when state budgets approach trouble.

        Also, and this goes for private universities as well, many of these universities have gone from being temples of learning to virtual subsidiaries of corporations chasing research money, building fund support and department co-sponsorships.  Anytime a learning institution enters the race for corporate money is a time it's selling its soul in the search for profit making opportunities.  And I fear tuition has become just another profit making opportunity for universities that now consider themselves "big business."

        Many of these universities are turning into little more than training camps for corporate employment.  It's nauseating.

        "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

        by SueDe on Sat Jun 30, 2012 at 10:03:44 PM PDT

        [ Parent ]

        •  So true (1+ / 0-)
          Recommended by:

          A central issue in the UVA debacle is that state support has dropped to around $8500 per student, roughly 6% of the institution's budget (while the state still wants to exercise significant control). Flagship universities in neighboring states receive >$20k per student. With enrollment capped, the university has to take more out-of-state students at ridiculously higher tuition to make ends meet. This is bad for students who end up borrowing huge sums, and it fosters the impression that in-state students are benefitting less, making it more difficult to get additional funds from the legislature.

        •  Amen. Many universities ARE becoming training (1+ / 0-)
          Recommended by:

          camps for corporate employment, thanks to state defunding.
          On a related side note, there are people who aid and abet this negative development by browbeating those who studied/want to study the humanities.

          These same people also tend to be aggressively anti-loan forgiveness, shouting variations on the "I'm not paying for your art degree" theme. There isn't much daylight between such people and Republicans who wish the American taxation system was an a la carte affair by which they could avoid helping poor and minority people with their taxes while receiveing benefits themselves.

          Higher education should be almost completely funded, the way it used to be in my parents' youth, whether you want to be an engineer or a painter, a doctor or a writer, an entrepreneur or a musician. All are necessary for a healthy, enlightened society.

  •  The 1% and their Congressional Puppets (3+ / 0-)
    Recommended by:
    jedennis, George Hier, dilutedviking

    are NOT interested in diverting money for the 99 percenters--especially anything that will make them more educated and upprity.

    Yet we keep buying their products.  Oh, yes, that's right--they have monopolies on most goods and the anti-trust laws are no longer enforced.

    Next:  Debtors "for-profit" prisons?

    Where is Charles Dickens?

    Separation of Church and State AND Corporation

    by Einsteinia on Sat Jun 30, 2012 at 08:19:33 PM PDT

  •  It is so blatant that it should be obvious (2+ / 0-)
    Recommended by:
    Ignacio Magaloni, Mr Green Jeans

    I went to college under Reagan.  During his presidency, I lost most of my Pell grants and the student loan interest rates went from 3% to 7%.  

    But at least I still got the deferral!  And thanks to a quick of how I finished by degree, I actually has started working a few months before I got my diploma.  

    If it wasn't for the president, and future speaker Pelosi, much worse would be happening right now.  

    Certainly from our standpoint, this gives us a sense of momentum -- when the United States has accolades tossed its way, rather than shoes. - PJ Crowley

    by nsfbr on Sat Jun 30, 2012 at 08:33:58 PM PDT

    •  Reagan also raised taxes on college students (0+ / 0-)

      I too went to college under Reagan. My first year students were still exempt from income tax. Reagan "fixed" that in the wake of his assinine claim that college students were buying "cars and stereos" with the loans, not paying for school. That was the first blow.

      "Take it easy-- but take it!" --Woody Guthrie

      by Mr Green Jeans on Sun Jul 01, 2012 at 11:05:47 AM PDT

      [ Parent ]

  •  No matter what republicans do (2+ / 0-)
    Recommended by:
    Irixsh, fumie

    Somebody gets screwed.  They just can't help themselves......the country elected a Black President and must be punished for it.......assholes.

  •  Thank heavens I graduated in 2008. (2+ / 0-)
    Recommended by:
    RJDixon74135, George Hier

    I was in grad school a sum total of 12 years, carrying loans all that time, to get my Ph.D. in molecular virology.  12 years of compounded interest on a $50K loan would have completely ruined me before I even STARTED job hunting.

  •  What's sad is that this had to be paid for (2+ / 0-)
    Recommended by:
    fumie, George Hier

    We can lend banks and business from the fed (which granted is a seperate entity) and overnight fed rate of 25 BP's for years. But getting money into students hands at 340 BP's has to be subsidized and paid for?

  •  Does this apply to new loans, or to loans (1+ / 0-)
    Recommended by:
    Ignacio Magaloni

    already in place? I've got a kid who's got a bunch of student debt, but will be leaving school in a few months. Does that mean the payments on his old loans starts immediately, rather than delayed?

    Liberals: Taking crap for being right since before you were born. - Driftglass (and the amazing Professional Left Podcast at

    by briefer on Sat Jun 30, 2012 at 08:55:37 PM PDT

  •  I have $100,000 in loans (3+ / 0-)

    ... my wife has about $23,000.

    My family was fairly poor when I was growing up.  I got my first computer from my mom and grandparents saving money all year, and we went without other perks because of it.

    My first laptop was bought with inheritance from my great grandmothers death.

    I've put myself through a Bachelors and Masters degree, and have $100k in debt because of that.  

    I now make more than anybody in my family has ever dreamed of making, but I'm still saddled with that debt.  It's absolutely ridiculous that in order to get out of poverty, I have to incur debt that will follow me around for the next 30 years.

    I can't complain that much, because I've been fortunate enough to be in a financially stable position.  But most students aren't that lucky.  

    Higher education should be available to everyone, regardless of income, without the crushing debt that comes with it.

    GOD! Save me from your followers.

    by adversus on Sat Jun 30, 2012 at 10:14:19 PM PDT

    •  I agree wholeheartedly (0+ / 0-)

      My husband completed his bachelor's degree in December, and we are facing a mountain of debt. When I completed my bachelor's just before Reagan's election, I had a tiny amount of debt, and I got my degree from a private college. Even with a low income, working for nonprofit social change organizations, I was still able to pay off my student loan in less than five years. The cost of college has exploded. State colleges and universities have suffered so many cutbacks that the class sizes are enormous, students can't get into the classes they need, and so turn to private colleges where the tuition is higher. We need student loan debt forgiveness, and we need to reinvest in public colleges and universtitesnand bigger Pell grants. Higher education should be available to everyone, not just the wealthy elite.

  •  Is It The Dems Poor Negotiating Skills..... (0+ / 0-)

    or the Republicans well honed obstruction?  

    It is a stunner that Obama got some form of healthcare at all passed in this climate.  Presidents have been trying to do even that much for 60 years.

    Ditto for the repeal of DADT, Lilly Ledbetter, 9/ll Responders Bill, the START Treaty, the stim inadequate as it may have been, the troops out of Iraq, & froze the student loan rate.....again imperfect & inadequate tho it may be.  

    •  It's both. (2+ / 0-)
      Recommended by:
      snapples, softserve

      The ACA passed without Republican support, so the GOP has been in obstruction mode even before the tea party takeover of the house in 2010.  But the Democrats have been the worst negotiators I've seen since the group of lawyers who represented me in my third divorce.

      Lately the Democrats have begun to realize what they're really up against - this is not the Republican party that contained rational, reasonable partners in governing.  I'm hoping that they'll become more hard-nosed in negotiating legislation, but it won't make any difference what they've learned if they don't take back the House and keep control of the senate.

      "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

      by SueDe on Sat Jun 30, 2012 at 11:06:08 PM PDT

      [ Parent ]

  •  But Mitt's vision for America (1+ / 0-)
    Recommended by:

    Is that everyone can have the education they can afford!!!

    What a beautiful country!!! (sorry - your pre-paid Visa is empty)

    "Mediocrity cannot know excellence." -- Sherlock Holmes

    by La Gitane on Sun Jul 01, 2012 at 04:05:09 AM PDT

  •  PBGC only guarantees the janitors Pension (0+ / 0-)

    PBGC oly guarantees that the lowest rated employee will get their full pension.  That's what the premiums pay for, everything else is a liquidation of the pension plan.

    When Eastern was banrupted by Lorenzo, pilots on retirement went from 72K annual pension to 27K Annual retirement.  They got the gate agent retirement package plus the remnants.

    Lots of 60 year old pilots were suddenly in south america flying 727s to make coin.

  •  We'll do this again a year from now and lose more (1+ / 0-)
    Recommended by:

    I did a diary on this a few days ago and my thoughts are still mostly the same.

    I noted then that in a year we'll be doing this again, because this was only agreed to for a year. Which means what exactly? Likely that they won't double the interest rates again, but student loan borrowers will lose even MORE rights.

    Private student loans already have next to no rights for the borrower, all the power is there for the lender. We're nearing a point where the same will be true for federal loans -- where the banks have all of the power, yet they borrow all of the money from the government at 1% and act as pointless, ridiculously profitable middleman.

    This is what I said before, anyway:

    "To say everyone I know relied on that is a freaking understatement... And I graduated in 2005, back when everyone still had their heads in the sand entirely over school costs and other related issues that were just as real then.

    My wife went to graduate school. It's not cheap, but the idea that you can work a job that will easily let you pay that down seems almost laughable to me. She was buried in school work and essentially worked a second job just for her practicum. I practically had to convince her to quit her side job just so she could keep her sanity (not exaggerating there either).

    This is a really bad decision, particularly given that so much of this has exploded because people can't find jobs. Now we apparently need them to find them out of college instantaneously. These two rules were nice things for students, one of only a handful of rights borrowers still seemed to have in this system."

  •  They've also quietly privatized loan servicing! (0+ / 0-)

    I used federal Stafford loans to get through graduate school-- three graduate degrees in fact. Luckily I was able to borrow directly from the Department of Education through the Federal Direct Loan program during a trial period in the mid-90s when only about 20 schools were allowed to participate. Instead of Sallie Fucking Mae I owed the government directly, and my loans were serviced quite well by the DOE.

    This spring the DOE quietly got out of the loan servicing business. Now I send my checks to a private company called "EdFinancial." They have already screwed up payments, notifications, and record keeping multiple times. Why we had to go from a reliable government servicing office to a private, for-profit one has not been explained.

    But mark this: every time I've seen a program of any kind transfer from public to private hands service has declined and costs have gone up. I am angry that part of my payments will now go to profit EdFinancial, rather than going back into the Treasury to fund more student loans.

    "Take it easy-- but take it!" --Woody Guthrie

    by Mr Green Jeans on Sun Jul 01, 2012 at 11:09:48 AM PDT

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site