View Poll Results: Should Student Loan Interest Rates Be Lowered Below 4%?

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  • Yes

    11 44.00%
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Thread: Should Student Loan Interest Rates Be Lowered Below 4%?

  1. #31
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by RabidAlpaca View Post
    If the fed creates more money than the proportional growth of GDP, inflation will occur. They intentionally overshoot this to cause a several % inflation a year. That means Bob's account is devalued by several % a year, hurting his savings potential. This money has to go somewhere, and it goes into providing sub market loans for banks.

    Why should they not have to get funding the way the rest of us do? By paying someone to borrow it. Why would they ever pay me 5% interest when they can loan from the government at .5%?

    You for some reason seem to think lining the pockets of banks with hundreds of billions of dollars of essentially risk-free money provided by Bob's loss is ok, but doing the same for struggling students would be just nonsense.
    You did not answer the question of what you meant by "bankers" which is important to what you mean by "banks". That is central to the part of the question that deals with the emotions involved. But it also is pertinent to the question of the reason lower rates seem to be systemically necessary at certain times.

    Yes of course theory and a large amount of empirical research say that in the long run more money will bring about higher prices. The operative term there is "the long run". It can be shown, that pushing the system monetarily or fiscally can activate the economy in the short term, however. That is where Bob lives and telling him that in the long run we probably will get inflation so that he cannot have a job now in the short run is tough.

    It is also difficult, as we do not know, whether subsequently reduced fiscal or monetary activity will eliminate the risk of inflation without recession. We think so, but I admit, I have not seen very robust research on that question.

    And yes. It is justified in my opinion to stop systemic collapse, while pursuing welfare optimization in education.

  2. #32
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by joG View Post
    Who takes the defaults?
    Same thing when what happens when you default now: Consequences of Default


  3. #33
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by TheDemSocialist View Post
    Most student loan interest rates are at 7% or above. There has been some legislation introduced in congress that calls for student interest rates be lowered to below 4%. Do you support these rates?
    given what the feds give to the banks now, absolutely!!
    Go Vols

  4. #34
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by TheDemSocialist View Post
    Same thing when what happens when you default now: Consequences of Default
    Not quite. If the loans were given at the the Fed Rate, that would mean they would have been given without credit margin to protect against the losses from default. Someone would have to take the hit, though. So who wrote the credit default swap? The government?

  5. #35
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by joG View Post
    Not quite. If the loans were given at the the Fed Rate, that would mean they would have been given without credit margin to protect against the losses from default. Someone would have to take the hit, though. So who wrote the credit default swap? The government?
    Havent read the exact piece of legislation but since its written by a progressive i dont suspect that it would use the same punishment without these proections.


  6. #36
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by Cephus View Post
    Many people think "default" means you stop paying and never start again. It's like declaring bankruptcy, where you settle your debts and are no longer required to pay on them. That's not the case with government college loans. You can never get out from under them, they can never be erased, even if you stop paying for a while, they just get worse and worse and there is no legal relief. It's not like a credit card where you can declare bankruptcy and the credit card company writes the debt off. These debts can never be written off. That's the point.
    If you have to mandate an artificially low rate, then they are high risk. Why is the government even in the student loan business if there's almost no risk?

  7. #37
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by FederalRepublic View Post
    If you have to mandate an artificially low rate, then they are high risk. Why is the government even in the student loan business if there's almost no risk?
    I don't think they should be, but there would be no similar private loan business because the government can mandate that you cannot get out of your loan no matter what you do, private companies don't get that, therefore the majority of students wouldn't be able to get loans at all because there would be too much risk. When the government can eliminate their own risk, there's no risk. Private companies can't do that.
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  8. #38
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by Cephus View Post
    I don't think they should be, but there would be no similar private loan business because the government can mandate that you cannot get out of your loan no matter what you do, private companies don't get that, therefore the majority of students wouldn't be able to get loans at all because there would be too much risk. When the government can eliminate their own risk, there's no risk. Private companies can't do that.
    There are still private student loans. I doubt they are at 4% interest though...Student Loans, Private Student Loans, cuStudentLoans | Credit Union Student Loans

  9. #39
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    Re: Should Student Loan Interest Rates Be Lowered Below 4%?

    Quote Originally Posted by FederalRepublic View Post
    There are still private student loans. I doubt they are at 4% interest though...Student Loans, Private Student Loans, cuStudentLoans | Credit Union Student Loans
    They're not guaranteed by the government though. There are private lenders that carry the same protections and I think they have to have the same rates but don't quote me because I haven't looked it up.
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