Congress working to price fix interest rates on student loans

[devil21]

Just came across this. Anybody know anything about this bill? Looks like Congress wants to legislate interest rates on student loans, including retroactively. Didn't know many were going to reset to double rate soon. Adjustable rate student loans?

http://www.wsoctv.com/news/news/local/college-students-waiting-congress-close-deal-keepi/nYXsj/

College students are anxiously waiting for Congress to hammer out a deal to keep student loan interest rates from doubling next week.

For now, it looks like a final agreement won’t come until after Congress returns from their Fourth of July recess.

If it does pass, it will likely apply retroactively and would tie the rates to the 10-year treasury note which means they would change each year.

“This really concerns me because I am a rising senior and I already have student loans that are really great right now,” said University of North Carolina Charlotte senior, Amber Turner.

UNC-Charlotte’s financial aid office sent emails to students in March about the possible increases to student loan rates.

For more on helpful student loan resources visit: http://studentloanhelp.org/

 

[Seraphim]

Congress acting in a boderline retarded way? Say it ain't so...

 

[Athan]

I worked my way through college. I never accrued more than 5,000 grand on my student loans.

 

[Seraphim]

Unpatriotic. How will bankers feed their families?

/sarc

I worked my way through college. I never accrued more than 5,000 grand on my student loans.

 

[VBRonPaulFan]

I worked my way through college. I never accrued more than 5,000 grand on my student loans.

i hope not, five million dollars would sound a little steep for higher education =P

 

[Zippyjuan]

The student loan rates are already government subsidised. As I understand this, it is rates on new loans taken out this year which will face higher interest rates than loans issued in the past. Current loans will not be having their rates raised.


http://www.csmonitor.com/Business/2013/0701/Student-loan-rate-doubles.-Government-could-pay-more-too

Student loan rate doubles. Government could pay more, too.


Between fiscal year 2013 and fiscal year 2020, the federal government could lose $100 billion through federal student loan programs, according to Barclays. The impasse in Congress over student loan programs, which led to rates doubling Monday, could further delay pulling the programs back onto a more financially sustainable path.


Millions of college students woke up Monday to a new reality: The interest rate on their new subsidized Stafford loans – the most popular federal student loan program – doubled overnight.

The 6.8 percent interest rate will not only add to the financial burden of the 7 million or so students expected to take out Stafford loans for the coming school year – it could cost the federal government, too.

While the Congressional Budget Office estimates that federal student loan programs will generate $160 billion in profit in the next eight years, the research arm of banking giant Barclays says the Stafford program could add more than $100 billion to the deficit during that period.

The costs would come in two ways – and offset any gain the government would see in increased interest payments. (The higher interest rate only affects new Stafford loans made after July 1; current loans are not affected.) First, under the rules of the loan program, the new interest payments would be so high that some low-income borrowers would have their loans discharged altogether after making a certain number of payments.

More at link.

The move to delay changing the student loan program may have broader ramifications, however.

Surpassing the $1 trillion mark and encompassing a record number of borrowers, outstanding student debt has been described as having "parallels to the housing crisis" by the Federal Advisory Council, which advises the Federal Reserve’s Board of Governors.

Barclays, however, believes that student debt poses the greatest danger to the government, not the economy as a whole.

For one, evidence suggests that college degrees generally remain a worthwhile investment, Mr. Howes says. Even though increasing student debt can hamper borrowers’ ability to make large purchases, “these effects are hard to isolate and will not necessarily prove to be a major macroeconomic headwind,” he added.

 

[Acala]

The entire student loan business is government-created. It never would have existed were it not for government backing.