Anyone know the implications of the Feds "takeover" of loans

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AngelAuthor
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Anyone know the implications of the Feds "takeover" of loans

Postby AngelAuthor » Sun Apr 25, 2010 4:02 pm

It's been my understanding that until recently, the govt. gave anyone who wanted it up to $20,500 per year in loans for college irregardless of your credit standing. Anything above that need had to be met by scholarships or loans from private lenders that were "backed by the government" so they were slightly easier on your credit to get than say a home loan, but you still had to have SOME credit history and reputation.

Well, recently the Government passed legislation kicking the private lenders out of the game entirely and now all loans will come straight from Uncle Sam. Does this mean that credit will no longer be an issue in getting loans above $20,500? Does anyone know? I kinda have a horse in this race, having recently been accepted to my prime school of choice. They offered me no scholarship money, so I am applying all over the place for other scholarships. The $20,500 I can borrow from the govt is enough to cover the yearly tuition...period. I still need to come up with living funds for myself and my family for the 1L. The banks have already given us the big "You need a cosigner to get a loan from us" bit and that's not an option for me.

Renzo
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Renzo » Sun Apr 25, 2010 4:19 pm

Nothing at all will change, except the banks won't be making money for nothing by originating the loans.

Under the old system, a private lender originated the loan then sold it to the government for a fee. Now the government will originate the loan and not pay a fee to anyone. It saves tax money, that's all it does.

The credit standards before for for Gradplus loans were originally set by the government, and they will continue to be. As far as I know, no one has proposed changing them.
Last edited by Renzo on Sun Apr 25, 2010 4:20 pm, edited 1 time in total.

TheOpossum
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby TheOpossum » Sun Apr 25, 2010 4:19 pm

I'd hate to be 'that' guy, but "irregardless" ain't a word.

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kenson
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby kenson » Wed Apr 28, 2010 5:52 am

yeah, companies like sallie mae had a huge chunk of their business cut out with the new leg. I normally don't like gov takeovers, but the loans are gov. backed anyways so it makes economical sense to cut out the middleman

Brinson
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Brinson » Wed Apr 28, 2010 11:39 am

I believe your assertion that "some" credit was ever required for stafford loans is incorrect. I don't believe they ever really even ran credit checks. The stafford loan is guaranteed based on your fafsa by the government, and has been for at least the last few years.

Edit: Misread, sorry. Yeah, it stays the same. They still check your credit for the Plus loans. I just applied for them, though, and as a 20 year old student with no credit, they offered me something crazy like $20,000 over tuition cost for undergrad. They're pretty lenient with them it seems.

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Onion
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Onion » Wed Apr 28, 2010 11:46 am

Can the loads still be consolidated for a lower rate after law school is over, should the lending rate fall?

Renzo
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Renzo » Wed Apr 28, 2010 12:01 pm

Onion wrote:Can the loads still be consolidated for a lower rate after law school is over, should the lending rate fall?

Yup. The only thing that changes is no free money for private loan originators.

Anonymous Loser
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Anonymous Loser » Wed Apr 28, 2010 12:09 pm

Onion wrote:Can the loads still be consolidated for a lower rate after law school is over, should the lending rate fall?


A federal consolidation loan will use a weighted average of the rates on the existing loans to arrive at the rate for the new loan, as was the case before the elimination of the FFELP program. You would not have been able to consolidate at a lower rate before the recent changes took place, nor will you be able to do so now.

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Onion
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Onion » Wed Apr 28, 2010 12:13 pm

Anonymous Loser wrote:
Onion wrote:Can the loads still be consolidated for a lower rate after law school is over, should the lending rate fall?


A federal consolidation loan will use a weighted average of the rates on the existing loans to arrive at the rate for the new loan, as was the case before the elimination of the FFELP program. You would not have been able to consolidate at a lower rate before the recent changes took place, nor will you be able to do so now.


I am pretty sure this is not the case as a few attorneys in my office (recent grads) have been able to consolidate their loans and lock in a lower rate.

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BriaTharen
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby BriaTharen » Wed Apr 28, 2010 12:14 pm

TheOpossum wrote:I'd hate to be 'that' guy, but "irregardless" ain't a word.


Really? Did this just happen? ROFL

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Thomas Jefferson
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Thomas Jefferson » Wed Apr 28, 2010 12:19 pm

AngelAuthor wrote:It's been my understanding that until recently, the govt. gave anyone who wanted it up to $20,500 per year in loans for college irregardless of your credit standing. Anything above that need had to be met by scholarships or loans from private lenders that were "backed by the government" so they were slightly easier on your credit to get than say a home loan, but you still had to have SOME credit history and reputation.

Well, recently the Government passed legislation kicking the private lenders out of the game entirely and now all loans will come straight from Uncle Sam. Does this mean that credit will no longer be an issue in getting loans above $20,500? Does anyone know? I kinda have a horse in this race, having recently been accepted to my prime school of choice. They offered me no scholarship money, so I am applying all over the place for other scholarships. The $20,500 I can borrow from the govt is enough to cover the yearly tuition...period. I still need to come up with living funds for myself and my family for the 1L. The banks have already given us the big "You need a cosigner to get a loan from us" bit and that's not an option for me.


That is not a word.

imchuckbass58
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby imchuckbass58 » Wed Apr 28, 2010 12:20 pm

Renzo wrote:Nothing at all will change, except the banks won't be making money for nothing by originating the loans.

Under the old system, a private lender originated the loan then sold it to the government for a fee. Now the government will originate the loan and not pay a fee to anyone. It saves tax money, that's all it does.

Renzo wrote:
Onion wrote:Can the loads still be consolidated for a lower rate after law school is over, should the lending rate fall?

Yup. The only thing that changes is no free money for private loan originators.


So, I personally agree with this, but I'd point out that it isn't the only perspective.

There's a school of thought that says the government is a much more inefficient administrator/originator of loans, and as a monopoly provider will have a much higher administrative cost base than several private lenders who are competing with each other to offer the lowest rates.

Basically, it comes down to what you believe is bigger - the profit margins loan companies are currently taking out, or the increased cost of inefficient administration by a government monopoly. As I said, I believe the former is a bigger effect, but there's an argument to be made that loan costs will actually go up.

Anonymous Loser
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Anonymous Loser » Wed Apr 28, 2010 12:25 pm

Onion wrote:
Anonymous Loser wrote:
Onion wrote:Can the loads still be consolidated for a lower rate after law school is over, should the lending rate fall?


A federal consolidation loan will use a weighted average of the rates on the existing loans to arrive at the rate for the new loan, as was the case before the elimination of the FFELP program. You would not have been able to consolidate at a lower rate before the recent changes took place, nor will you be able to do so now.


I am pretty sure this is not the case as a few attorneys in my office (recent grads) have been able to consolidate their loans and lock in a lower rate.


20 U.S.C. § 1078-3 (2006) wrote:(C) A consolidation loan made after on or July 1, 1994, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded upward to the nearest whole percent.

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TheVoynichManuscript
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby TheVoynichManuscript » Wed Apr 28, 2010 12:29 pm

Thomas Jefferson wrote:
AngelAuthor wrote:It's been my understanding that until recently, the govt. gave anyone who wanted it up to $20,500 per year in loans for college irregardless of your credit standing. Anything above that need had to be met by scholarships or loans from private lenders that were "backed by the government" so they were slightly easier on your credit to get than say a home loan, but you still had to have SOME credit history and reputation.

Well, recently the Government passed legislation kicking the private lenders out of the game entirely and now all loans will come straight from Uncle Sam. Does this mean that credit will no longer be an issue in getting loans above $20,500? Does anyone know? I kinda have a horse in this race, having recently been accepted to my prime school of choice. They offered me no scholarship money, so I am applying all over the place for other scholarships. The $20,500 I can borrow from the govt is enough to cover the yearly tuition...period. I still need to come up with living funds for myself and my family for the 1L. The banks have already given us the big "You need a cosigner to get a loan from us" bit and that's not an option for me.


That is not a word.


Merriam-Webster disagrees with you.

http://www.merriam-webster.com/dictionary/irregardless

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Onion
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Onion » Wed Apr 28, 2010 12:29 pm

Anonymous Loser wrote:
Onion wrote:
Anonymous Loser wrote:
Onion wrote:Can the loads still be consolidated for a lower rate after law school is over, should the lending rate fall?


A federal consolidation loan will use a weighted average of the rates on the existing loans to arrive at the rate for the new loan, as was the case before the elimination of the FFELP program. You would not have been able to consolidate at a lower rate before the recent changes took place, nor will you be able to do so now.


I am pretty sure this is not the case as a few attorneys in my office (recent grads) have been able to consolidate their loans and lock in a lower rate.


20 U.S.C. § 1078-3 (2006) wrote:(C) A consolidation loan made after on or July 1, 1994, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded upward to the nearest whole percent.


Please explain this --LinkRemoved--

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Thomas Jefferson
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Thomas Jefferson » Wed Apr 28, 2010 12:39 pm

TheVoynichManuscript wrote:
Thomas Jefferson wrote:
AngelAuthor wrote:It's been my understanding that until recently, the govt. gave anyone who wanted it up to $20,500 per year in loans for college irregardless of your credit standing. Anything above that need had to be met by scholarships or loans from private lenders that were "backed by the government" so they were slightly easier on your credit to get than say a home loan, but you still had to have SOME credit history and reputation.

Well, recently the Government passed legislation kicking the private lenders out of the game entirely and now all loans will come straight from Uncle Sam. Does this mean that credit will no longer be an issue in getting loans above $20,500? Does anyone know? I kinda have a horse in this race, having recently been accepted to my prime school of choice. They offered me no scholarship money, so I am applying all over the place for other scholarships. The $20,500 I can borrow from the govt is enough to cover the yearly tuition...period. I still need to come up with living funds for myself and my family for the 1L. The banks have already given us the big "You need a cosigner to get a loan from us" bit and that's not an option for me.


That is not a word.


Merriam-Webster disagrees with you.

http://www.merriam-webster.com/dictionary/irregardless


I quote, from that link, "Its reputation has not risen over the years, and it is still a long way from general acceptance. Use regardless instead."

Anonymous Loser
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Anonymous Loser » Wed Apr 28, 2010 12:47 pm

Onion wrote:
Please explain this --LinkRemoved--


Seriously?

studentloandconsolidator wrote:If you still have Federal loans at a variable interest rate now is the time to consolidate. When you consolidate Federal loans the interest rate is the weighted average of all your loans rounded up to the nearest 1/8 percent.

cheesus
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby cheesus » Wed Apr 28, 2010 12:50 pm

Anonymous Loser wrote:
Onion wrote:
Please explain this --LinkRemoved--


Seriously?

studentloandconsolidator wrote:If you still have Federal loans at a variable interest rate now is the time to consolidate. When you consolidate Federal loans the interest rate is the weighted average of all your loans rounded up to the nearest 1/8 percent.

:)

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Onion
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Onion » Wed Apr 28, 2010 12:59 pm

Anonymous Loser wrote:
Onion wrote:
Please explain this --LinkRemoved--


Seriously?

studentloandconsolidator wrote:If you still have Federal loans at a variable interest rate now is the time to consolidate. When you consolidate Federal loans the interest rate is the weighted average of all your loans rounded up to the nearest 1/8 percent.


So what is this number for?

Stafford Loan (in repayment): 2.50%

Is that for someone who has an average loan interest rate of 2.5%? Not trying to be dumb (although it looks like I am coming off that way), I just don't understand the process of consolidating I guess. An attorney in my office said he took out loans at like 6.0% and now only pays like 3% after he consolidated his loans.

Anonymous Loser
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Anonymous Loser » Wed Apr 28, 2010 1:08 pm

His loans were likely disbursed prior to 2006, when most federal educational loans had a variable rate. That rate has since dropped. By consolidating, he has transformed his variable rate loan to a fixed rate loan. Loans disbursed after 2006 have a fixed rate. The rate will not change over the life of the loan. At is is now 2010, which is after 2006, you will not be able to obtain a variable rate federal student loan. Consequently, your loan rates will be fixed, eliminating any opportunity to consolidate at a lower rate. The dismantling of the FFELP program, as noted above, does not alter this fact.

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TheVoynichManuscript
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby TheVoynichManuscript » Wed Apr 28, 2010 1:55 pm

Thomas Jefferson wrote:
TheVoynichManuscript wrote:
Thomas Jefferson wrote:
AngelAuthor wrote:It's been my understanding that until recently, the govt. gave anyone who wanted it up to $20,500 per year in loans for college irregardless of your credit standing. Anything above that need had to be met by scholarships or loans from private lenders that were "backed by the government" so they were slightly easier on your credit to get than say a home loan, but you still had to have SOME credit history and reputation.

Well, recently the Government passed legislation kicking the private lenders out of the game entirely and now all loans will come straight from Uncle Sam. Does this mean that credit will no longer be an issue in getting loans above $20,500? Does anyone know? I kinda have a horse in this race, having recently been accepted to my prime school of choice. They offered me no scholarship money, so I am applying all over the place for other scholarships. The $20,500 I can borrow from the govt is enough to cover the yearly tuition...period. I still need to come up with living funds for myself and my family for the 1L. The banks have already given us the big "You need a cosigner to get a loan from us" bit and that's not an option for me.


That is not a word.


Merriam-Webster disagrees with you.

http://www.merriam-webster.com/dictionary/irregardless


I quote, from that link, "Its reputation has not risen over the years, and it is still a long way from general acceptance. Use regardless instead."


The salient point of that link was this sentence: "The most frequently repeated remark about it is that 'there is no such word.' There is such a word, however."

Obviously, regardless is the accepted usage. It's just kind of annoying when people insist on being grammar nazis without having their facts straight :D .

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Mr. Smith
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby Mr. Smith » Wed Apr 28, 2010 2:05 pm

TheVoynichManuscript wrote:The salient point of that link was this sentence: "The most frequently repeated remark about it is that 'there is no such word.' There is such a word, however."

Obviously, regardless is the accepted usage. It's just kind of annoying when people insist on being grammar nazis without having their facts straight :D .


Salient is not a word.















Just kidding. :D

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ahk!
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby ahk! » Tue May 04, 2010 3:49 pm

TheOpossum wrote:I'd hate to be 'that' guy, but "irregardless" ain't a word.


But it sounds great sometimes, like if you've ever heard a Bostonian say, "ih-ree-GAHHHHD-luhs"

cavebat2000
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby cavebat2000 » Tue May 04, 2010 3:50 pm

yeah the pinko commies have gay sex with your tax dollars

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herberthoover
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Re: Anyone know the implications of the Feds "takeover" of loans

Postby herberthoover » Mon May 10, 2010 11:23 pm

Brinson wrote:I believe your assertion that "some" credit was ever required for stafford loans is incorrect. I don't believe they ever really even ran credit checks. The stafford loan is guaranteed based on your fafsa by the government, and has been for at least the last few years.

Edit: Misread, sorry. Yeah, it stays the same. They still check your credit for the Plus loans. I just applied for them, though, and as a 20 year old student with no credit, they offered me something crazy like $20,000 over tuition cost for undergrad. They're pretty lenient with them it seems.


Another bubble waiting to burst?




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