thought this might be of your interest...

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.

PRgradBYU
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Re: thought this might be of your interest...

Postby PRgradBYU » Wed May 08, 2013 7:53 pm

"Federal loan rates are scheduled under federal law to double on July 1, from 3.4 percent to 6.8 percent. Warren’s bill would let students borrow instead at the rate big banks pay to the federal reserve, which she said is currently about .75 percent, between July 1, 2013 and July 1, 2014."

That would be pretty bangin'.

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RedGiant
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Re: thought this might be of your interest...

Postby RedGiant » Wed May 08, 2013 8:10 pm

Elizabeth Warren's fighting the fight for the little guys--US! Federal Student Loan rates to be reduced? This would save us thousands! Huzzah! The $100 I donated to her campaign was not wasted!

http://www.latimes.com/business/money/l ... 4620.story

arklaw13
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Re: thought this might be of your interest...

Postby arklaw13 » Thu May 09, 2013 3:53 pm

Sounds nice, but there are already way too many people in postgraduate programs who probably shouldn't be. Best no incentivize more people to leave decent paying jobs to take on $100k in debt and then end up without any better prospects because the economy sucks so bad.

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slawww
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Re: thought this might be of your interest...

Postby slawww » Thu May 09, 2013 7:04 pm

I doubt the interest rate is what's keeping people from taking 100k out in loans. It's probably the 100k. Elizabeth Warren is awesome.

PM2353
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Re: thought this might be of your interest...

Postby PM2353 » Thu May 09, 2013 7:16 pm

.75% ? Geez that would be epic. No way they make it that cheap.

qwertyboard
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Re: thought this might be of your interest...

Postby qwertyboard » Thu May 09, 2013 7:33 pm

Please someone that knows more than I do correct me. I think its crazy that the fed, a non-govermental unit independent central bank, is printing money and giving it away for free (or almost for free since they make a lot more money off it) since the repayment of the debt doesn't catch up with every year inflation.

I'm not specifically against banks having .75% interest rate, but why not extended to the people that bail their asses? Like someone also commented, I also think college tuition growth needs to be stopped; it's getting ridiculous.

PM2353
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Re: thought this might be of your interest...

Postby PM2353 » Thu May 09, 2013 7:58 pm

Some recent news on Obamas budget and what congress is doing about interest rates. http://news.yahoo.com/republicans-back- ... 28030.html

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minnbills
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Re: thought this might be of your interest...

Postby minnbills » Thu May 09, 2013 8:00 pm

Dylanlj13 wrote:Sounds nice, but there are already way too many people in postgraduate programs who probably shouldn't be. Best no incentivize more people to leave decent paying jobs to take on $100k in debt and then end up without any better prospects because the economy sucks so bad.


Fuck that. I want lower interest rates. I'm sick of getting hosed on everything.

20141023
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Re: thought this might be of your interest...

Postby 20141023 » Thu May 09, 2013 9:20 pm

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Last edited by 20141023 on Mon Feb 16, 2015 12:13 am, edited 1 time in total.

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minnbills
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Re: thought this might be of your interest...

Postby minnbills » Thu May 09, 2013 9:40 pm

kappycaft1 wrote:Whoah... so like, this means that if you borrow loans for 1L at that rate, they stay at the 0.75% rate for the life of the loans right? The rate on the already-borrowed-portion of the loan won't rise even if the loans for 2L jump back up to the 7.9%, right?

Does anyone know when we're supposed to find out whether this is actually going to happen? :|


It's not going to happen

20141023
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Re: thought this might be of your interest...

Postby 20141023 » Thu May 09, 2013 9:42 pm

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Last edited by 20141023 on Mon Feb 16, 2015 12:13 am, edited 1 time in total.

PM2353
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Re: thought this might be of your interest...

Postby PM2353 » Thu May 09, 2013 9:45 pm

I think July 1st the rates on stafford is set to double. So I'm assuming they try to do something before then. The article I posted states that other proposed plans will be voted on later this month.

Cellar-door
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Re: thought this might be of your interest...

Postby Cellar-door » Fri May 10, 2013 2:35 pm

The market rate plans are not good for most borrowers, short term the rates will be lower than the auto-hike, but within a few years they will likely jump as high or higher.

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jbagelboy
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Re: thought this might be of your interest...

Postby jbagelboy » Fri May 10, 2013 5:35 pm

http://www.huffingtonpost.com/2013/05/0 ... 40407.html

I was just going to post this story. This could be huge for ALL OF US. It's unlikely the reactionaries in the house will let it pass, but it would save any of us borrowers tens of thousands of dollars over the next 3-5 years.

Contact your local representative and get involved in the legwork for this bill. I'm calling my local OC rep this afternoon.

Cellar-door
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Re: thought this might be of your interest...

Postby Cellar-door » Fri May 10, 2013 6:51 pm

0.75% is ridiculously low, it would just lead to runaway tuition inflation and far more defaults. If the interest rate is set that low there should be credit requirements and hard caps on the amount that could be borrowed in a year.
While 0.75% would be great for me personally, it would be bad for the economy on the whole, that money needs to come from somewhere and with no interest coming in the defaults have to be paid off with either cuts elsewhere or tax increases.

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slawww
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Re: thought this might be of your interest...

Postby slawww » Fri May 10, 2013 7:35 pm

Cellar-door wrote:0.75% is ridiculously low, it would just lead to runaway tuition inflation and far more defaults. If the interest rate is set that low there should be credit requirements and hard caps on the amount that could be borrowed in a year.
While 0.75% would be great for me personally, it would be bad for the economy on the whole, that money needs to come from somewhere and with no interest coming in the defaults have to be paid off with either cuts elsewhere or tax increases.


I don't know about that, man. I think it may be an incentive for some additional people to take out loans, but I can't see that being a huge deciding factor. If you don't think it's a good idea to take out 100k in student loans to begin with, I can't imagine a lower interest rate suddenly changing your mind. 100k is a lot of money either way.

Cellar-door
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Re: thought this might be of your interest...

Postby Cellar-door » Fri May 10, 2013 7:58 pm

slawww wrote:
Cellar-door wrote:0.75% is ridiculously low, it would just lead to runaway tuition inflation and far more defaults. If the interest rate is set that low there should be credit requirements and hard caps on the amount that could be borrowed in a year.
While 0.75% would be great for me personally, it would be bad for the economy on the whole, that money needs to come from somewhere and with no interest coming in the defaults have to be paid off with either cuts elsewhere or tax increases.


I don't know about that, man. I think it may be an incentive for some additional people to take out loans, but I can't see that being a huge deciding factor. If you don't think it's a good idea to take out 100k in student loans to begin with, I can't imagine a lower interest rate suddenly changing your mind. 100k is a lot of money either way.


It's a huge difference repaid over 10 years it would be $35,000 over 20 it is $75,000 on $100,000 in debt.
Monthly the difference is about $300, that makes loans a lot more attractive. People who can't get jobs will default anyway, but now there is no income from the loans coming in to offset it. If ever paid off $100,000 loan brings in $38,000 that offsets the 11% of debt holders who are 90+ days delinquent. (basically for every $100,000 debt that isn't going to come close to being repaid the paid off debts should bring in $300,000 which offsets the loss and expenses associated with running the loan program) At 0.75% the paid off loans bring in $3,800 (under the same simplification that would bring in $34,000 for every $100,000 debt unlikely to be paid off, a net loss of $66,000 for every ten borrowers plus the costs of running the program)

arklaw13
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Re: thought this might be of your interest...

Postby arklaw13 » Sat May 11, 2013 6:25 pm

minnbills wrote:
Dylanlj13 wrote:Sounds nice, but there are already way too many people in postgraduate programs who probably shouldn't be. Best no incentivize more people to leave decent paying jobs to take on $100k in debt and then end up without any better prospects because the economy sucks so bad.


Fuck that. I want lower interest rates. I'm sick of getting hosed on everything.


Then why charge interest at all? The amount the fedgov would lose on charging no interest is negligible compared to the total budget and the amount we spend doing other idiotic things. The reason for interest is to dissuade people who shouldn't be going anyway. Someone who is willing to put some skin in the game by paying interest is a lot more likely to 1) pay back their loan, and 2) to actually have thought through their future likelihood of benefiting from the degree.

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Clearly
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Re: thought this might be of your interest...

Postby Clearly » Sat May 11, 2013 6:43 pm

This is a novel idea, but I'm not sure I support it myself. The defaults would no longer be offset by interest, and it could get ugly. Not to mention as a taxpayer the idea that the government is loaning people people to pursue a doctorate in art appreciation at any interest rate is bothersome. I know I'm going to get called a socialist, but I really think the government should have some body to preform due diligence on a case by case basis. Someone somewhere should be able to say "We're not going to give you 100k to pursue basket weaving sorry". Interest rates could be flexible based on a chosen programs likelihood of leading to employment capable of paying the debt off...Maybe they do give loans to those art appreciation students, at 7%, but loan to Harvard Law grads at 2%... Basically, we are living in the educational equivalent of the sub-prime mortgage era. Here's a house, can't pay for it, we don't care! Lending to everyone and anyone for any program is going to have the same effect.

Cellar-door
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Re: thought this might be of your interest...

Postby Cellar-door » Mon May 13, 2013 6:22 pm

SO I found the CBO report, the return on each dollar of loan given is $1.36.
Not sure 0.75% is a great idea, but a decent drop in the interest rates is possible without the program becoming a money loser.

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jbagelboy
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Re: thought this might be of your interest...

Postby jbagelboy » Wed May 15, 2013 2:52 am

oh by the way, fuck us right?

http://www.huffingtonpost.com/2013/05/1 ... 76428.html

student loan profit equal to the profit of the 4 LARGEST BANKS last year. They aren't going to vote to shut this cash cow down.

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buddyt
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Re: thought this might be of your interest...

Postby buddyt » Wed May 15, 2013 7:46 pm

Clearlynotstefan wrote:Someone somewhere should be able to say "We're not going to give you 100k to pursue basket weaving sorry". Interest rates could be flexible based on a chosen programs likelihood of leading to employment capable of paying the debt off...Maybe they do give loans to those art appreciation students, at 7%, but loan to Harvard Law grads at 2%...

This is exactly what banks do. The marketplace already has a system of weighing risk and controlling loan amounts and interest rates based on that risk. Why reinvent the wheel?

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Clearly
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Re: thought this might be of your interest...

Postby Clearly » Thu May 16, 2013 1:09 am

buddytyler wrote:
Clearlynotstefan wrote:Someone somewhere should be able to say "We're not going to give you 100k to pursue basket weaving sorry". Interest rates could be flexible based on a chosen programs likelihood of leading to employment capable of paying the debt off...Maybe they do give loans to those art appreciation students, at 7%, but loan to Harvard Law grads at 2%...

This is exactly what banks do. The marketplace already has a system of weighing risk and controlling loan amounts and interest rates based on that risk. Why reinvent the wheel?

And that's why the private sector is more efficient then government. I'm not saying they should invent this, just that they should do it! Or at least some way of not giving people money to most objectively shitty plans.

Cellar-door
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Re: thought this might be of your interest...

Postby Cellar-door » Thu May 16, 2013 2:14 pm

--LinkRemoved--

House bill in a lovely move not only doesn't decrease the interest rate (well it does for a year or two) but will actually cost borrowers significantly more over the course of their loans.




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