Why is the interest rate on subsidized Stafford loans expected to double?

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Q: Why is the interest rate on subsidized Stafford loans expected to double?

A: Acting on a Democratic campaign promise in 2006, Democrats in 2007 crafted the law to progressively lower the interest rate from 6.8 percent to the 3.4 percent rate — where it is this school year — and then return to the original 6.8 percent in 2012. Republican President George W. Bush signed the deal into law after it was approved by bipartisan but Democratic-heavy majorities in both chambers. Congress wrote the law this way for one simple reason, says Jason Delisle, director of the federal education budget project at the New America Foundation: cost. It would cost an additional $6 billion annually to keep the interest rate at 3.4 percent.
 

Don the Radio Guy

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I'm pretty sure that's the point he was making. Democrats wanted to manufacture campaign issues and Bush was in full "let's get along" mode by then. Romney is smart for going along with keeping the rate down, but I guarantee his position is going to be misrepresented by the usual suspects here and in the media.
 

MayrMeninoCrash

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I'm pretty sure that's the point he was making. Democrats wanted to manufacture campaign issues and Bush was in full "let's get along" mode by then. Romney is smart for going along with keeping the rate down, but I guarantee his position is going to be misrepresented by the usual suspects here and in the media.
So should I be outraged or not? What's FOX news' position on this?
 

Party Rooster

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#5
Romney is smart for going along with keeping the rate down, but I guarantee his position is going to be misrepresented by the usual suspects here and in the media.
So he didn't previously support gutting the Department of Education, slashing Pell Grants and not having taxpayer-subsidized loans? "whaa"

Mitt Rmoney said:
“The right course for America is for businesses and universities and colleges to compete, and for us to make sure that we provide loans to the extent we possibly can at an interest rate that doesn’t have the taxpayers having to subsidize people who want to go to school.”
 

MagicBob

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So should I be outraged or not? What's FOX news' position on this?
Obama did it, so it is HAS to be bad... duhh....:action-sm

it will add the the deficit, its socialist scheme to subsidize all higher education, it snobbish to want to send people to college, colleges are just leftist indoctrination factories.... on and on and on... :action-sm
 

Lord Zero

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#7
colleges are just leftist indoctrination factories
Most of them are when it comes to history courses and political science courses and the like as well as with things like speech codes and the overemphasis on diversity.
 

Party Rooster

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#10
Nothing like being proven right in the very next post.
Or proven wrong, again and again...

I guess that's great if you've got a rich daddy you can just borrow from instead of having to resort to getting student loans...

Romney urges young people to take economic risks


WESTERVILLE, Ohio -

Mitt Romney on Friday encouraged young Americans facing bleak job prospects to "take risks" - and even borrow money from their parents - to help improve their economic fortunes.

The presumptive Republican presidential nominee noted that the nation's economy is recovering but blamed President Barack Obama for presiding over the "most anemic and tepid" comeback since the Great Depression. Continuing his recent focus on younger voters, Romney said Obama's policies are making it harder for college graduates to be successful.

"This kind of decisiveness, this attack of success is very different than what we've seen in our country's history," Romney told students and supporters gathered at Otterbein University in central Ohio. "We've always encouraged young people - take a shot, go for it, take a risk and get the education, borrow money if you have to from your parents, start a business."

Romney then shared the story of sandwich magnate Jimmy John, who Romney said borrowed $20,000 from his parents to launch his first sandwich shop.

"This is kind of an American experience," he said of John's story.

Romney's call for "economic freedom" was a familiar theme for the former Massachusetts governor, who faced the public for the first time since declaring himself the Republican presidential nominee-in-waiting earlier in the week. But some Democrats said his suggestion that young people borrow thousands of dollars from their parents shows that he's out of touch with ordinary Americans.

Romney's comments came the same day the Commerce Department reported that the nation's recovery may be slowing, although he ignored the news while speaking at Otterbein University.

"The president is going to want to take credit for the economy getting better, and I am convinced it will get better. Every recession ends. Every recession ultimately becomes a recovery," he said.

Romney added: "This just happens to be the most anemic and tepid recovery we've seen since Hoover."

President Herbert Hoover was in office when the stock market crashed in October 1929 and, as the nation struggled amid an economic depression, lost re-election to Democrat Franklin D. Roosevelt in 1932.

The Commerce Department estimated that the economy grew at 2.2 percent over the first three months of the year. That's compared to 3 percent growth in the previous three months.

Romney offered a more measured tone than he had in the final weeks of the competitive phase of the GOP primary season. He did not mention Obama by name in a speech that spanned more than 40 minutes, although he condemned the president's policies that target the wealthy.

"I will try and unite the American people, not divide us," he said.

http://www.rawstory.com/rs/2012/04/...money-from-their-parents-to-go-into-business/
 

MagicBob

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no one has suggested you dont pay for school yourself. Someone doesnt get the idea behind a LOAN (here is hint, they have to be paid back).
 

VMS

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We've got two major problems, here:

1.) Collegiate education has become devalued. As a tool for getting a better job, so many people are getting into/going to college that it's become a prerequisite for jobs that don't require a college education to handle. Instead of paving the way for people who should go to college but can't afford to, the Stafford loan program has just made it easier for kids to spend 4-5 years partying on a college campus to get their American Studies degree that doesn't mean jack shit in the job market except that you've earned a piece of paper.

2.) Collegiate education is a business, now more than ever. Colleges are more about being diploma mills than they are about educating their students.

Universities were never meant to be trade schools, to teach their students how to do a particular job. They've morphed into that over the decades, but universities were meant to broaden their students' minds, to give them a broad-based education. Basically, to turn you into that douchebag at a dinner party who can compare and contrast Scipio Africanus with Norman Schwarzkopf, discuss string theory, and which Beatles album was the second best (Abbey Road was obviously the best).

At some point, a university education became a prerequisite for you to be a cubicle drone.

Seriously, why did Sam Roberts need to go to Syracuse University (tuition appx $35k/yr) to do what he does? Did they seriously teach him how to talk on air in a way that the broadcast school that Don went to (that even he thinks was overrated) couldn't? Roberts had somewhere around $200k in costs (counting room, board, books, etc.) to play songs from a playlist and babble on air for a couple of hours a day. He's reasonably good at it, but did any of that really require 4 years at Syracuse? And Syracuse has a GREAT communications program (which I assume is what Roberts was in) and Roberts actually got a job in his major!

Other than those who used it as a stepping stone to law school, do you know how many Virginia Tech Political Science majors (my major in college) I know who actually have a job related to polisci? One. A buddy of mine is a lobbyist for the ESA (Entertainment Software Association). Everyone else I graduated with or just took classes with had to get more expensive schooling or is doing something unrelated to polisci.

I'm not saying a university education is worthless. I wouldn't trade mine for anything. But it's something for me, not for my work or anything like that. College was 4 years of enriching educational experiences that were for me. I could be doing what I'm doing today if I dropped out of high school.

I think we're all agreed: college is a waste of time if you don't know what you want to do with your life. If you're hell-bent on becoming a doctor or a lawyer or an engineer or something that really requires a college degree to DO the job, great! Your family should move Heaven and Earth to make it work for you. But if you're going to go to college to take underwater basketweaving for four years, fuck off. And if you're going to require a federally guaranteed loan (which will cost the government a lot of money if you default, double fuck off.

The Stafford program looks good on paper. But when a college education reached the tipping point to where it became a babysitting service for 18-22 year olds, the government programs should have been adjusted to match that reality. They haven't. Now the loans, the Pell grants and all the rest of them are nothing more than middle class welfare that does a little good for those who have genuine ambition and desire that a college education serves.

Seriously, how many of you have gone to college in the last 30 years? Virtually everyone you knew there was on Pell grants, federally guaranteed loans, or a combination of the two. Now how many of your fellow college students were the people that those programs were set up for? How many were the poor, I-wouldn't-go-to-college-if-it-weren't-for-these-loans-and-I'm-damn-well-going-to-MAKE-something-of-myself! kids? And how much of that money is just going to expand the horizons of someone who's just going to be another cubicle drone? Why are we spending government money for no useful economic or sociological purpose?

As to the current "crisis", whatever. It's politics, played by both sides of the aisle. Fine. I can't get worked up about it. Playing politics with a broken system that has turned our system of higher learning into a young adult babysitting service doesn't get me worked up.
 

Don the Radio Guy

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I didn't go to a broadcast school. I went to a regular state school that didn't even have a radio program. In fact, radio is a good example of why college isn't even needed. Look at the main stars in the field. Howard and Opie are the only ones I can think of with broadcasting degrees. Rush? College dropout. Beck? College dropout. Levin? Lawyer. Savage? Doctorate in ethnic nutrition.

College is expensive because of subsidized grants and loans. That's the bottom line. Take them away and people would value education more. In my case, everything I learned, I learned by doing. In the real world.
 

VMS

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I didn't go to a broadcast school. I went to a regular state school that didn't even have a radio program.
I stand corrected.

In fact, radio is a good example of why college isn't even needed. Look at the main stars in the field. Howard and Opie are the only ones I can think of with broadcasting degrees. Rush? College dropout. Beck? College dropout. Levin? Lawyer. Savage? Doctorate in ethnic nutrition.

College is expensive because of subsidized grants and loans. That's the bottom line. Take them away and people would value education more. In my case, everything I learned, I learned by doing. In the real world.
Pretty much, yeah.
 

Don the Radio Guy

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Columbia School of Broadcasting is a scam, by the way. I did visit one before going to a real school. $15k for 12 weeks with an alumni base that does podcasts and buys time on the local brokered AM station.
 

Lord Zero

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#17
Just get rid of the Stafford loans all together. We need to stop using the federal government as a bank. All student loans should come from either an actual bank or credit union, the college itself, or maybe the state government.
 

Norm Stansfield

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#18
I'm pretty sure that's the point he was making. Democrats wanted to manufacture campaign issues and Bush was in full "let's get along" mode by then. Romney is smart for going along with keeping the rate down.
He's not smart, he's cynical. If he was smart, he would understand that that's wrong and act accordingly.
 

Norm Stansfield

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no one has suggested you dont pay for school yourself. Someone doesnt get the idea behind a LOAN (here is hint, they have to be paid back).
Someone doesn't get the idea behind what a loan is: a voluntary agreement between two persons. Not an arrangement supported by forced taxation.

Must be the fatty mcfatness.
 

Don the Radio Guy

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I guess this would be a good time to bring up the default rates on student loans? Or the growing movement from Barry's surrogates to forgive loans with tax money?
 

CousinDave

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#21
I think everyone should just default on these student loans, it the only way the system can be fixed
 

Lord Zero

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#23
http://www.cato.org/publications/commentary/obamas-higher-education-reforms-doomed-fail

Cato.org said:
Obama's Higher Education Reforms Doomed to Fail
by Neal McCluskey


This article appeared in Investor's Business Daily on February 1, 2012.

Usually low-tier, last week President Obama signaled in both the State of the Union and a University of Michigan speech that higher education will loom large in Campaign 2012.

With Americans outraged over skyrocketing prices and student debt, it makes sense. Unfortunately, Obama's proposed solutions aren't similarly sensible.

In his speeches, the president talked tough about reining in colleges that raise prices at breakneck speeds, casting much needed attention to a decades-old problem.

But decrying symptoms doesn't cure a disease. That requires attacking root causes, which is where Obama fails: Rather than assault ever-expanding student aid, which practically begs colleges to inflate prices, the president wants to increase aid while imposing weak price controls on schools and states.

Obama isn't totally off, of course, in reasoning that colleges largely set their own tuition, so one way to control prices is to pressure schools. And he's right that states tend to slow funding for public colleges during bad economic times.

But how is it colleges can raise their prices at incredible rates and still get people to pay?

Because students use lots of money belonging to other people, and Washington ensures that the funding meets ever-ballooning bills.

Indeed, in 2010 the federal government disbursed roughly $140 billion in financial aid to students, a staggering amount that has exploded from roughly $30 billion, adjusted for inflation, in 1985.

And those tightfisted states?

According to data from the State Higher Education Executive Officers, inflation-adjusted state and local allocations to public institutions actually rose from $69.2 billion in 2000 to $74.9 billion in 2010.

Gov't Spending Up

In that same time, however, inflation-adjusted tuition and fees at public four-year colleges increased from $4,586 to $7,889.

Schools hiked their prices despite state and local appropriations rising.

Corroborating that cheap states aren't the primary drivers of college costs are private institutions. They haven't lost big state and local subsidies because they've never gotten them, yet they increased real prices from $21,013 in 2000 to $28,254 in 2010.

Still, on a per-student basis state and local funding has been decreasing, because enrollment has significantly grown.

Such losses might be regrettable were students graduating and moving on to high-paying jobs. But they aren't.

According to the federal Digest of Education Statistics, the latest six-year graduation rate for public four-year programs is a dismal 55 percent. In addition, about one-third of bachelor's holders are in jobs that don't require degrees. Finally, real earnings for people whose top attainment is a bachelor's have dropped over the decade.

Simply put, there are too many people in college. Unfortunately, to deal with these realities the president is proposing to increase aid, to which he'd couple a few soft price controls.

Too Many Students?

He proposes, for instance, increasing spending on Perkins Loans, Work Study, and Supplemental Educational Opportunity Grants to $10 billion, but giving less money through those programs to colleges that, according to the White House, "show poor value, or... don't act responsibly in setting tuition."

The president would also create a $1 billion "Race to the Top" that would "incentivize" states to, among other things, "maintain adequate levels of funding for higher education."

The White House doesn't define "adequate," but the implication is clear: Spend more taxpayer money, get more taxpayer money.

Ultimately the plan is a stinker, with the disaster-exacerbating aid increase the most likely part to pass. Few in Washington can resist doling out "free" money.

And the price controls?

Such controls are almost always bad, distorting supply and demand. But given the government-fueled Ivory Tower excess, perhaps weak controls would be helpful, at least in the short term.

But the ones proposed would have little power. Even plussed-up to $10 billion, the programs the president would employ for leverage would be dwarfed by Pell Grants, Stafford Loans, and tax incentives, which tally in the hundreds of billions. Most colleges could more than make up for slight Perkins or Work Study losses with other aid.

And Race to the Top? If it's at all like its K-12 cousin, it'll be a dud. Lots of states made huge fusses to get the money, but since it's been awarded the winners have shown little urgency to implement their promised reforms.

It's good that the president is focusing on higher education. But his remedies would do nothing to cure the disease.