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

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Thread: Are student loan interest rates to high?

  1. #191
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by imagep View Post
    That seems reasonable to me.
    I agree, but the problem will be that we will see another mass of failed loans, like we did starting 10 years ago or so when the simpletons who took adjustable rate loans all of a sudden couldn't make their payments anymore. They'll whine and complain and say they didn't understand the agreements that they signed, and then the current administration will step in with a "bailout" program, and call the lenders "predators".
    Horse sense is the thing a horse has which keeps it from betting on people. ~W.C. Fields

  2. #192
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by tres borrachos View Post
    I agree, but the problem will be that we will see another mass of failed loans, like we did starting 10 years ago or so when the simpletons who took adjustable rate loans all of a sudden couldn't make their payments anymore. They'll whine and complain and say they didn't understand the agreements that they signed, and then the current administration will step in with a "bailout" program, and call the lenders "predators".
    When inflation is high, it becomes easier to repay fixed rate loans because the principle get's deflated. What happens with fixed rate loans is that a little extra interest is added in to protect the lender from the possibility of the inflation rate increasing in the future, the adjustible rate loan doesn't have to have that extra interest built in, so rates can be lower at the time it is issued.

    Is it harder for a brand new college graduate getting his first entry level job to pay his student loans, or someone who has been in the workforce for year and who's income is near the top for their field, to meet their student loan obligations?

    We have to remember that when inflation increases, just about everything increases, including income. During the high inflation years of the late 70s and early 80s, my parents were getting 5-8% cost of living raises twice a year instead of 2-3% once a year. If this didn't happen, then we would all still be making 25¢ an hour.
    Quote Originally Posted by ocean515 View Post
    ...I'm not interested in debating someone who is trolling for an argument....
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    I see a big problem with the idea that whatever the majority wants is OK.

  3. #193
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by ocean515 View Post
    Why? How much does it cost for these loans to be made and serviced?
    Since you know something about accounting, what exactly do you think the loan fees that are attached to the loan are for? Are they there just for the hell of it?

  4. #194
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by imagep View Post
    When inflation is high, it becomes easier to repay fixed rate loans because the principle get's deflated. What happens with fixed rate loans is that a little extra interest is added in to protect the lender from the possibility of the inflation rate increasing in the future, the adjustible rate loan doesn't have to have that extra interest built in, so rates can be lower at the time it is issued.

    Is it harder for a brand new college graduate getting his first entry level job to pay his student loans, or someone who has been in the workforce for year and who's income is near the top for their field, to meet their student loan obligations?

    We have to remember that when inflation increases, just about everything increases, including income. During the high inflation years of the late 70s and early 80s, my parents were getting 5-8% cost of living raises twice a year instead of 2-3% once a year. If this didn't happen, then we would all still be making 25¢ an hour.
    I know a lot of people who started paying their student loans 9 months after graduating and starting their new jobs. Nobody said it was easier for new graduates to pay, but pay they did. In fact, most of them do pay, as agreed, and on time.

    As far as the inflation discussion, I wasn't talking about inflation in terms of the impact on the borrowers, but rather inflation as it impacts the lenders who would be holding on to loans at very low rates for too long.
    Horse sense is the thing a horse has which keeps it from betting on people. ~W.C. Fields

  5. #195
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by ocean515 View Post
    What percentage of student loans fall into this highest rate category? Seems to me it would be a small number relative to all the others. If that is the case wouldn't it be inaccurate to imply there is a 6% spread on student loans?
    No it is not inaccurate if the government is actually charging that rate. There is nothing inaccurate about it at all. Actually the 2.5 percent was the highest amount of interest that the government has to pay. But lets take the time to actually look at it in detail since you want to go into it.

    Let's assume that the average length of a loan is ten years. The government pays 1.93 percent to borrow money for that long. Here's how the spread looks

    1. Student loan interest 4.66 -> 2.73 percent spread
    2. Student loan interest 6.21 -> 4.28 percent spread
    3. Student loan interest 7.21 -> 5.21 percent spread
    4. Student loan interest 7.90 -> 5.97 percent spread
    5. Student loan interest 8.50 -> 6.57 percent spread

    The thing is this, the government should not be charging student loan customers any more interest on those loans than the interest that the government has to pay. They are already attaching fees to the loan that should cover servicing costs.

  6. #196
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by MildSteel View Post
    No it is not inaccurate if the government is actually charging that rate. There is nothing inaccurate about it at all. Actually the 2.5 percent was the highest amount of interest that the government has to pay. But lets take the time to actually look at it in detail since you want to go into it.

    Let's assume that the average length of a loan is ten years. The government pays 1.93 percent to borrow money for that long. Here's how the spread looks

    1. Student loan interest 4.66 -> 2.73 percent spread
    2. Student loan interest 6.21 -> 4.28 percent spread
    3. Student loan interest 7.21 -> 5.21 percent spread
    4. Student loan interest 7.90 -> 5.97 percent spread
    5. Student loan interest 8.50 -> 6.57 percent spread

    The thing is this, the government should not be charging student loan customers any more interest on those loans than the interest that the government has to pay. They are already attaching fees to the loan that should cover servicing costs.

    it is called a contract

    it is between two parties (student and government)

    neither is being forced into the situation

    sorry....but maybe the degree in basket weaving from podunk college wasnt the best way to spend 60k

    that isnt the feds problem.....that is the students

    two of my kids are paying off college loans, and having zero issue doing so

    but then again, they kept their balances low, and their stem degrees pay well on the outside

    first you all bitched because there was no program.....now you are bitching because you think it should be free

    grow up......
    “Most of the shadows of this life are caused by standing in one's own sunshine.”

    Ralph Waldo Emerson

  7. #197
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by gdgyva View Post
    it is called a contract
    So what? That does not mean that student loan customers should not be allowed to refinance their loans.

  8. #198
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by ocean515 View Post
    So how much does it cost the government to make these loans? To my knowledge, they are all administered by service providers, who obviously have to be paid.

    Have you seen any figures on what it costs to oversee these loans over their lifetime?
    I thought the govt was servicing the loans now - that they took them back from private banks. But I could be wrong.

  9. #199
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by MildSteel View Post
    Since you know something about accounting, what exactly do you think the loan fees that are attached to the loan are for? Are they there just for the hell of it?
    I would assume they are what they appear to be. Do you think the loan servicers are paid up front for 30 years of loan servicing, since loan fees are applied to the whole loan amount?

    And what about the 8.5% loan rate you have been referring to? That rate only applies to a small percentage of the student loans being generated. I think you lose some credibility to your argument when you try to suggest all student loans fall into that category, with 6% spreads.

  10. #200
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    Re: Are student loan interest rates to high?

    Quote Originally Posted by paddymcdougall View Post
    I thought the govt was servicing the loans now - that they took them back from private banks. But I could be wrong.
    This is what I learned, after looking into it as a result of this thread.

    https://studentloans.gov/myDirectLoa...rmation.action

    Are student loan interest rates to high?-loan-servicing-jpg

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