View Poll Results: Are student loan interest rates to high?

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Thread: Are student loan interest rates to high?

  1. #91
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by johndylan1 View Post
    No one forces one to take a student loan.
    What a stupid notion. That's ALMOST like saying no one forces someone to drink the water that they drink.

  2. #92
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by Gathomas88 View Post
    And the schools can pretty much always count on recooping their losses through Government subsidies as well, because no one wants to cut education funding.

    It's a "too big to fail" cronyist racket, plain and simple. Prospective students are sold on an over-hyped product, which completely fails to perform as promised, and then charged through the teeth for it. Colleges, meanwhile, simply sit pack and rack in the dough while making absolutely no effort to cut costs, and double-dipping on whatever funding the Federal Government happens to toss their way.

    Disgusting.
    Pretty good. It's a racket indeed. Why are our elected officials allowing citizens to be robbed in this way?

  3. #93
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by KevinKohler View Post
    Yep. And we continue to play the game because, these days, you need a degree just to be a retail dept manager.
    Indeed. That is the problem.

  4. #94
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by ocean515 View Post
    So let's see. A student, with little to no credit history, is provided loans into the $10's of thousands, based on no income, or at the very most, the hope of future income, and you consider 4.5% to 7.2% gouging?

    It's difficult to know where to go with that.
    How in the hell can you not consider it gouging? The government pays zero percent interest to borrow money for a month, and at most 2.5 percent to borrow money for 30 years. However it forces parents to pay as much as 8.5 percent for a loan. Over and above that, they interest rates are set by the government, by Congress. It's total bulls***. It's nothing but gouging, no matter how you look at it.

    Daily Treasury Yield Curve Rates

    https://studentaid.ed.gov/types/loans/interest-rates

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    Re: Are student loan interest rates to high?

    Quote Originally Posted by paddymcdougall View Post
    Warren has tried to reduce the interest rates on student loans. Hasn't gotten her bill through yet.
    Is that a fact? Who or what is holding it up?

    Quote Originally Posted by paddymcdougall View Post
    Remember, these days govt is mostly doing student loans, not banks; therefore the govt is getting the profits. So if they cut the rates, they need to find some more revenue elsewhere. Or cut spending.
    Oh, I get it. Is that why they call some of them direct loans? So it's the government that's gouging people. Well I'll be damn!

  6. #96
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by MildSteel View Post
    How in the hell can you not consider it gouging? The government pays zero percent interest to borrow money for a month, and at most 2.5 percent to borrow money for 30 years. However it forces parents to pay as much as 8.5 percent for a loan. Over and above that, they interest rates are set by the government, by Congress. It's total bulls***. It's nothing but gouging, no matter how you look at it.

    Daily Treasury Yield Curve Rates

    https://studentaid.ed.gov/types/loans/interest-rates
    Your "logic" assumes that the loans are repaid at or near 100% which is far from reality. The rates for unsecured loans (think credit cards) are set based on both the cost of funds (bank's best rate) and the default rate (rate of non-repayment). While it is true that those who do repay their student loans on time make the lender some "extra" money it is also true that a significant percentage do not repay those student loans at all costing the lender "extra" money. The lender must take into account the loan default rate and adjust the interest rate to cover that loss in addition to the cost of funds and a return on investment. That is why the interest rates vary based on the type of loan (e,g, home mortgage vs credit card) being made even though the cost of funds and return on investment remain the same - the loan default rates vary.

    As the following link shows, the default rate for student loans varies considerably by educational institution yet the interest rates charged are fixed - this means that the "good" students at the "good" schools (low risk loans) must yeild enough extra interest to cover the "bad" students at tthe "bad" schools (high risk loans) when only one rate can be charged.

    Background & Analysis
    Last edited by ttwtt78640; 03-23-15 at 10:36 AM.
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

  7. #97
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by ttwtt78640 View Post
    Your "logic" assumes that the loans are repaid at or near 100% which is far from reality. The rates for unsecured loans (think credit cards) are set based on both the cost of funds (bank's best rate) and the default rate (rate of non-repayment). While it is true that those who do repay their student loans on time make the lender some "extra" money it is also true that a significant percentage do not repay those student loans at all costing the lender "extra" money. The lender must take into account the loan default rate and adjust the interest rate to cover that loss in addition to the cost of funds and a return on investment. That is why the interest rates vary based on the type of loan (e,g, home mortgage vs credit card) being made even though the cost of funds and return on investment remain the same - the loan default rates vary.

    As the following link shows, the default rate for student loans varies considerably by educational institution yet the interest rates charged are fixed - this means that the "good" students at the "good" schools (low risk loans) must yeild enough extra interest to cover the "bad" students at tthe "bad" schools (high risk loans) when only one rate can be charged.

    Background & Analysis
    Fair enough. Not bad. I would buy that except I saw the type of thing that the government, through its empowered representative the Federal Reserve can do. The thing is this, the Fed has taken trillions of dollars in toxic debt from banks. It just sitting there on its books, and no one gives a damn about it. If they can do that for the banks, they don't have to gouge people who are taking out student loans.

    Pretty good response tho. However, it didn't quite make it.

  8. #98
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by MildSteel View Post
    Fair enough. Not bad. I would buy that except I saw the type of thing that the government, through its empowered representative the Federal Reserve can do. The thing is this, the Fed has taken trillions of dollars in toxic debt from banks. It just sitting there on its books, and no one gives a damn about it. If they can do that for the banks, they don't have to gouge people who are taking out student loans.

    Pretty good response tho. However, it didn't quite make it.
    Using that argument, the interest rates can be zero or even negative for any and all loans and we are still left with the problem of what, if anything, is a better investment than some other thing (budgeting). While an engineering degree from a major college may be a good risk (investment?) that is not to say that a cosmetology degree form some fly by night online diploma mill is an equally good risk (investment?).

    Even if you are firmly in the public debt does not really matter camp, it still makes sense to borrow and spend (invest?) wisely rather than to pretend that all government spending is equally beneficial. If everyone in the US was suddenly able to go to college would we really be better off or simply have better educated burger flippers, grass mowers, bed makers and bean pickers? If anyone could be a doctor, lawyer or Indian chief would those jobs still command an upper middle class salary?
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

  9. #99
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by MildSteel View Post
    How in the hell can you not consider it gouging? The government pays zero percent interest to borrow money for a month, and at most 2.5 percent to borrow money for 30 years. However it forces parents to pay as much as 8.5 percent for a loan. Over and above that, they interest rates are set by the government, by Congress. It's total bulls***. It's nothing but gouging, no matter how you look at it.

    Daily Treasury Yield Curve Rates

    https://studentaid.ed.gov/types/loans/interest-rates
    Because of the risk involved. Remember: "A student, with little to no credit history, is provided loans into the $10's of thousands, based on no income, or at the very most, the hope of future income, ..."

  10. #100
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by MildSteel View Post
    Is that a fact? Who or what is holding it up?



    Oh, I get it. Is that why they call some of them direct loans? So it's the government that's gouging people. Well I'll be damn!

    Re Warren's bill:
    Senator Warren Promotes Student Debt Reduction as Interest Rate Hike Nears | GoodSpeaks

    While the legislative defeats represent a fractured and rigid Congress, there remains potential for passage through the Bank on Students Loan Fairness Act. Currently sponsored and championed by Senator Elizabeth Warren, if this bill were to be signed into law, interest rates would fall even further to 0.75% annually. This bill is dramatically more progressive and daring than its defeated house counterpart, both in the size of the reduction and in the national conversation it has creates. Warren articulated the thought process behind her numbers as a reflection on our national priorities.

    “Right now, a big bank can get a loan through the Federal Reserve discount window at a rate of about 0.75%. But this summer a student who is trying to get a loan to go to college will pay almost 7%...That isn’t right. And that is why I’m introducing legislation today to give students the same deal that we give to the big banks.”

    She has also done one to get current loans refi'd at a lower rate
    GOP blocks Warren

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