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Are student loan interest rates to high?

Are student loan interest rates to high?


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MildSteel

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Banks are borrowing money at almost zero percent interest rates. However student loan customers are being gouged at interests rates ranging from 4.7 to 7.2 percent. Why is it that are elected representatives in the government are allowing the people to be robbed in this way?
 
My student loans are locked in at almost 3%.



The way I understand the lending process to be, the riskier the loan, IE, if a bank feels that giving person A money is a higher risk than person B, then they increase the interest for person A.

With that in mind, student loans are the LEAST risky loans a bank can ever do, because there is no debt forgiveness on them. A student loan is with you FO LIFE, or until they are paid, period. Which means, low risk, which means...low interest...?
 
Banks are borrowing money at almost zero percent interest rates. However student loan customers are being gouged at interests rates ranging from 4.7 to 7.2 percent. Why is it that are elected representatives in the government are allowing the people to be robbed in this way?

No one forces one to take a student loan. If the rates are too high, would the number of loans taken be as high as they are?

On the other hand, the whole idea of government finance for the university system through individual students is horrible. Less loans would equal lower tuition and more educational innovation to attract students. The idea that there should be no scarcity of dollars or students in the university system has done immense harm. Tuition is high, students are borrowing money for living expenses, grants are being squandered, the work ethic is low and the sense of entitlement high.
 
My student loans are locked in at almost 3%.



The way I understand the lending process to be, the riskier the loan, IE, if a bank feels that giving person A money is a higher risk than person B, then they increase the interest for person A.

With that in mind, student loans are the LEAST risky loans a bank can ever do, because there is no debt forgiveness on them. A student loan is with you FO LIFE, or until they are paid, period. Which means, low risk, which means...low interest...?

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.
 
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No one forces one to take a student loan. If the rates are too high, would the number of loans taken be as high as they are?

On the other hand, the whole idea of government finance for the university system through individual students is horrible. Less loans would equal lower tuition and more educational innovation to attract students. The idea that there should be no scarcity of dollars or students in the university system has done immense harm. Tuition is high, students are borrowing money for living expenses, grants are being squandered, the work ethic is low and the sense of entitlement high.

If by "entitlement" you mean, a reasonable expectation of a return on investment, then, yeah, sure, "entitlement" is high.
 
And the schools can pretty much always count on recooping their losses through Government funding as well, because no one wants to cut education funding.

It's a cronyist racket, plain and simple. Prospective students are sold on an over-hyped product, and then charged through the teeth for it, while colleges simply sit pack and rack in the dough while double-dipping on whatever funding the Federal Government happens to toss their way.

Disgusting.

Yep. And we continue to play the game because, these days, you need a degree just to be a retail dept manager.
 
This is just another symptom that we are in for a painful transition to a laborless, or minimal labor society. Too many people overqualified for the jobs they do because there are just too few jobs and too many people. It's not going to get better, IMO.
 
Yep. And we continue to play the game because, these days, you need a degree just to be a retail dept manager.

And that's just insane and begs the question: How did we get here?
 
And that's just insane and begs the question: How did we get here?

Lot of factors. A desire for a sense of security has brought about a lot of required acredidation from uncle sam, which forces prospective career goals to include college or some other form of "higher learning" into the plans. Then there is the message that has been sent out since, what, the 50s, or prior? That going to college is a way to change your destiny, it is the gateway through which a person can change their economic class. And who doesn't want to climb that ladder to as high as they can go, what parent wants for their child no more than what they themselves had? So parents push their kids to go to college on the mistaken belief that it'll "change their stars". Add to that that, increasingly, there are more and more applicants for every single job out there, that employers can be increasingly picky.

Who you going to higher as a cashier, if all other things are equal...the college grad, or the non college grad?
 
Banks are borrowing money at almost zero percent interest rates. However student loan customers are being gouged at interests rates ranging from 4.7 to 7.2 percent. Why is it that are elected representatives in the government are allowing the people to be robbed in this way?

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.
 
Yep. And we continue to play the game because, these days, you need a degree just to be a retail dept manager.

And yet, ironically enough, a college degree worth $30,000+, taken by itself, is barely enough to get the average person a job pushing shopping carts and stocking shelves in today's economy.

I'm sorry, but something's got to give.
 
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Banks are borrowing money at almost zero percent interest rates. However student loan customers are being gouged at interests rates ranging from 4.7 to 7.2 percent. Why is it that are elected representatives in the government are allowing the people to be robbed in this way?

Warren has tried to reduce the interest rates on student loans. Hasn't gotten her bill through yet.

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.
 
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.

Is defaulting or filing bankrupt on a student loan possible?


Student loans are THE safest bet you can make. You got an 18 year kid with their entire life ahead of them. That's 80 years or more to recoup that loan, baring a premature death.
 
Who you going to higher as a cashier, if all other things are equal...the college grad, or the non college grad?

Since being a cashier doesn't require college graduate knowledge, I'd hire the one who could be most punctual and reliable as well as flexible to cover other positions when people inevitably call out.
 
Is defaulting or filing bankrupt on a student loan possible?


Student loans are THE safest bet you can make. You got an 18 year kid with their entire life ahead of them. That's 80 years or more to recoup that loan, baring a premature death.

That is not the point. Is the interest rate too high, considering the risk?

Have programs been introduced to forgive student loan debt?
 
Yep. And we continue to play the game because, these days, you need a degree just to be a retail dept manager.

That is because a HS diploma (or GED) does not mean that an applicant is trainable or or even possesses a basic grasp of math or English. Our own government does this as well - college education (usually in ANY field) is required to be a commissioned military officer or to advance to the upper GS civilian ranks. Nobody wants to do thousands of interviews or to face dopey EEO lawsuits - so the herd of applicants is first thinned by using college as an essential requirement.
 
That is because a HS diploma (or GED) does not mean that an applicant is trainable or or even possesses a basic grasp of math or English. Our own government does this as well - college education (usually in ANY field) is required to be a commissioned military officer or to advance to the upper GS civilian ranks. Nobody wants to do thousands of interviews or to face dopey EEO lawsuits - so the herd of applicants is first thinned by using college as an essential requirement.

How does one gain acceptance into College without a basic grasp of math and english?
 
That is not the point. Is the interest rate too high, considering the risk?

Have programs been introduced to forgive student loan debt?



The interest rate should be the lowest availble if it is a government supported loan...

but my question is when does it kick in?

By rights it should be two to five years after graduation
 
The interest rate should be the lowest availble if it is a government supported loan...

but my question is when does it kick in?

By rights it should be two to five years after graduation

I could be wrong but I think that's how it works - my nephew got a private loan for college about 7 years ago now and at one point it was 14% which is insane. He had to start paying on it 2 years after graduation - but my sister paid it off for him and he paid her back without the interest which was nice of her to do. I don't know if that applies to government loans since I think the a few years ago all loans had to go through the US government for college or some such thing.
 
Since being a cashier doesn't require college graduate knowledge, I'd hire the one who could be most punctual and reliable as well as flexible to cover other positions when people inevitably call out.

We're assuming all other things, like these criteria, are equal.

Someone with a degree has a proven record of reliability.
 
We're assuming all other things, like these criteria, are equal.
Someone with a degree has a proven record of reliability.

How is that proven? How does accumulating enough credits to graduate prove my reliability?
 
I could be wrong but I think that's how it works - my nephew got a private loan for college about 7 years ago now and at one point it was 14% which is insane. He had to start paying on it 2 years after graduation - but my sister paid it off for him and he paid her back without the interest which was nice of her to do. I don't know if that applies to government loans since I think the a few years ago all loans had to go through the US government for college or some such thing.



14%????

That's outrageous! Interest rates on consumer loans are a fraction of that...who's making the big profit?
 
How does one gain acceptance into College without a basic grasp of math and english?

I never stated that was the case, but I would assume that many higher education facilities accept anyone that can get a loan to attend. In Texas (at UT) they take the top 10% of every HS graduating class regardless of SAT scores, although they do limit which degree programs may be selected based on SAT scores.

My point was that employers tend to prefer to interview/hire only those applicants that actually got college degrees, not only those that have "some college".
 
14%????

That's outrageous! Interest rates on consumer loans are a fraction of that...who's making the big profit?

Yeah, he was just over yesterday and mentioned his student loan at one point was 14%. My jaw dropped. My Mom and Dad in the mid 1960's took out a mortgage on their new house at 12% as I still have the paperwork on it. Maybe he was wrong but that's what he told me yesterday. I have to ask him about it at Easter when I see him next - which bank he took out the loan and the particulars.
 
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