The Antidote – Vol. 2 Issue 18

In 2007, Democrats in Congress pushed through the College Cost Reduction and Access Act that lowered subsidized Stafford student loan rates from 6.8 percent to 3.4 percent over a four year period. According to the non-partisan U.S. PIRG, that measure saved the estimated 30,000 South Dakota undergraduate students and an estimated interest rates at the current 3.4 percent.

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8 comments ↓

#1 Helga on 05.07.12 at 1:57 am

Noem gives the key address and gets her degree. No doubt she waxed poetic about getting a college degree after 20 years. But yet she doesn’t feel the need to vote for Pell Grants or keep interest rates from doubling. She got her degree on our time and money too bad for the rest of you…..get a job. She only subsidizes oil companies, farmers, banks and rich corporations.

#2 Craig on 05.07.12 at 3:22 pm

You know what is really interesting? How both parties seem to be ignoring how little of an impact this interest rate reduction would really have. Don’t kid yourself, this isn’t about trying to save students some cash… this is nothing more than election year posturing. When you look at the facts, this is a very, very small issue.

Case in point – guess how much a student will save on their monthly payment if this bill gets passed?

Think it might be $100 a month? Nope.

How about $75 a month? Nope… still too high.

Maybe $50 a month? Not quite. Try again.

Surely it must be at least $25 a month right? Sorry – you’r still too high.

$9. That is the amount a student will save per month assuming they borrow the maximum amount of $5500.

Seriously…. $9 a month. This is what is making headlines. We are being told this is such a huge issue and they act as if some students would suffer such massive harm if the interest rates went back up – but the truth is they are pandering politically over what works out to be the average price of one movie ticket, or two horrible meals at Taco Bell.

Read more here – it opens some eyes: http://edmoney.newamerica.net/blogposts/2012/the_small_numbers_on_student_loan_interest_rate_hike-66795

#3 l3wis on 05.07.12 at 3:34 pm

What if their student loans are $250,000? I had a friend who went to medical school and that is what her debt was when she graduated.

#4 Craig on 05.07.12 at 4:49 pm

But those are primarily private student loans l3wis, which aren’t impacted by this bill. In fact not even all government loans are impacted – it only applies to a very few select Stafford loans issued during one specific year (the 2011-12 school year) and it only applies to undergrad loans.

The most a freshman or sophomore can take out in a Stafford loan is $3,500. The max for a junior or senior is $5,500. Add in the fact that law requires loan payments on these loans to be no less than $50 a month and the proposed interest rate reduction will have no effect on freshman and sophomores because they still need to make the $50 payment and the rates are already low enough that they don’t need to make a payment larger than $50.

So the only people who will win here are juniors or seniors who borrowed the maximum $5,500 for the 2011-12 school year. As I said before, they will save themselves a whopping $9 a month.

The sad part is the media has people so confused they think this is a huge injustice. They think this will prevent students from going to school or that they will face some massive pile of debt when they graduate. The reality is this is such a small issue that it will have no real impact to our economy or to the students, and both parties should be ashamed of themselves for devoting so much time and energy to it.

If it were no an election year, I doubt you would even hear about it.

#5 l3wis on 05.08.12 at 1:07 am

What is wrong with someone saving $9 a month? Most democratic nations have been able to figure out mass transit, socialized medicine and giving their citizens either a free or discounted secondary education, but for some reason in America, we think you should have to scrape and slave for this kind of education. Ignorant.

I will tell you this Craig, one of the main reasons I started this blog was to educate people about the ‘other side’ of politics, the side the media rarely covers. I totally believe in volunteerism and helping your fellow man. I think a secondary education should be FREE in our country (with certain stipulations) but that is an argument for another day.

#6 Craig on 05.08.12 at 9:27 am

Nothing is “wrong” with saving $9 a month, but the reality is the savings comes at the expense of some other government program. In effect, that $9 a month times the number of students impacted results in a hefty sum which in effect adds to the national debt.

It is clear neither the Democratic proposal nor the Republican proposal is going to get passed, so what is the solution? If Congress works out a compromise, you can almost promise this will result in more spending on behalf of the government, which means more debt that we can’t afford.

And for what? So some students could potentially save $9 a month? Keep in mind that is the max they will save – most won’t save a penny aside from having a few less payments five or seven years down the road.

It just shows how polticians focus on non-issues during an election year. If the cost of an education was really their concern, they should be investigating private schools and how they collect a disproportionate amount of government financial aid which is then paid to shareholders and executives. They could focus on why schools have continued to raise tuition rates far in excess of inflation with no justification for doing so other than the fact government loans continue to be readily available.

But they don’t – because that won’t earn them points in an election year. The whole thing just sort of disgusts me.

As to your comment about secondary education being free – I can see your argument, but I see both sides of that one too. I don’t think everyone should go to college… in fact I think many people who do go would be more well suited going to a trade school or technical school.

Also, college is not a right – and I’m not sure it should be. Maybe there is an argument to be made that it would result in a huge boost to our economy and our nation if more people were educated – if that is the case I’d be all for it, but like you said it is an argument for another day because obviously it is a very complex subject.

For the time being, I think government needs to focus more upon providing loans based upon merit as well as need instead of just giving a check to anyone who asks. A lot of students head to college because they don’t know what else to do, and a year or two later they are dropped out with thousands upon thousands in student loan debt. How does that help anyone?

#7 l3wis on 05.08.12 at 4:58 pm

I told you the solution, a FREE secondary education.

#8 NPO on 05.09.12 at 2:26 pm

$250K in student loan debt for med school? What will socialized medicine pay this doctor? She’ll live with that debt forever, probably take 3 lifetimes to pay off. Most doctors don’t take medicare because of the poor pay it provides, socialized medicine will do the same.

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