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Tag: interest rates

  • Elizabeth Warren Seeks to Lessen Student Loan Burden

    On Monday, President Obama signed an executive order which would extend the ability to cap one’s student loan repayment amount at 10 percent of one’s income, finally allowing those who borrowed money before 2007 to take advantage of an opportunity many have already capitalized on. Following his own executive order, Obama continued to push student-loan legislation, however, as he endorsed Senator Elizabeth Warren’s new bill which seeks to lessen the burden on student loan borrowers across the country.

    The bill, titled Bank on Students Emergency Loan Refinancing Act, is co-sponsored by two other Democratic Senators – Al Franken of Minnesota and Dick Durbin of Illinois. Simply put, the bill’s mission is to help student loan borrowers reduce the interest rates on their student loan repayments. Currently, federal student loan interest rates are at 3.86 following the passage of a law which tied undergraduate student loan interest rates to the rates on Treasury bonds.

    If passed, Senator Warren’s bill would allow those who are currently paying the old federal student loan interest rate of 6.8 percent to refinance their loans to include the lower rate of 3.86 percent. The American Federation of Teachers estimates that this shift in interest rates would save students a total of $14 billion.

    Senator Warren’s bill comes on the heels of the release of her new book, A Fighting Chance, in which Warren discusses her poor upbringings and how the United States can help the middle classes and lower to achieve the American Dream once again: “I’m here … to give each one of our kids a fighting chance to build a future full of promise and discovery,” Warren states in her book.

    While the bill will have much popular support from the millions of people suffering from student loan debt in the United States (the second largest debt next to mortgages), it is going to face much opposition from the Republicans in Washington, many of whom see the bill as a disingenuous political push: “This bill doesn’t make college more affordable, reduce the amount of money students will have to borrow, or do anything about the lack of jobs grads face in the Obama economy,” complained Senate Minority Leader Mitch McConnell.

    House Speaker John Boehner echoed the sentiments of McConnell, stating, “Today’s much-hyped loophole closure does nothing to reduce the cost of pursuing a higher education or improve access to federal student loans — nor will it help millions of recent graduates struggling to find jobs in the Obama economy.”

    With 55 Democrats in the Senate and 60 votes needed to pass the bill, Senator Warren will have to be rhetorically savvy in the next two days in order to help push her bill through during the vote on Wednesday.

    Image via Wikimedia Commons

  • Student Loans: Dealing with the Interest Rate Jump

    Unless fortunate enough to already have the funds to pay for college, most college students will have to take out a student loan at some point within their college career. In fact, there are currently 37 million borrowers in the U.S alone. The average graduate who has obtained a Bachelor’s degree, loan debt has reached an average of $26,600. That is a lot of money!

    If you are a college student, you have probably heard the news that the interest rates on government-subsidized loans has doubled from 3.4% to 6.8% after the government failed to come to an agreement by the deadline of July 1, 2013. The Senate planned a meeting to argue for a year extension on the 3.4% interest rate today so that they can review all of the proposals from the Senate, House, and President Obama. However, during the meeting, the bill requesting an extension failed to pass with a vote of 51 in favor and 49 opposed, keeping the interest rate at the increased level of 6.8%. They needed a vote of 60 in favor for the bill to pass. Many of the Senators have verbalized their frustration and disappointment of the extension failing to pass.

    Today our nation’s students once again wait in vain for relief. They expected more of us and I share their disappointment.
    -Senator Tom Udall, D-N.M.

    Students are already struggling to pay back the loans that they have, and with the added interest rates it could cause more students to fall delinquent with their loans. According to American Student Assistance, two out of five student loan borrowers – or 41%- are delinquent at some point in the first five years after entering repayment. This increase will have an impact on 7 million college students who will be taking out a loan this school year. It is estimated that these students can look at paying an extra $17 to $24 more a month than they would if the interest rate had remained the same.

    Lawmakers are planning to leave the current interest rate at the 6.8%, but have stated that there will be future negotiations to come to an agreement that will benefit our college students.

    Senator Jack Reed, D-R.I., who voted for the extension, stated that he “will continue to work hard to reverse this senseless rate hike. Ultimately, we’ll need a bipartisan solution, but first Congress will have to do its homework. Republicans will have to come to the table and agree to address the bigger picture of college affordability in a meaningful and comprehensive way.”

  • Student Loan Interest Rates Will Double, Unless …

    Come July 1, student loan interest rates will double from 3.4% to 6.8%. That rate jump will only affect all new federally-subsidized student loans, not existing loans.

    Lots of folks are looking for ways to remedy the high-interest situation. BusinessWeek reports that Ohio Senator Sherrod Brown has one plan that might do the trick.

    One of the more common tactics to help some student loan borrowers is to get older private loans refinanced so that those borrowers can have better payment options. About 15% of student loan debt out there today falls into that private loan category. These loans typically have higher interest on them already, and have fewer options for payment adjustments that others have.

    Senator Brown’s bill, called the Refinancing Education Funding to Invest (REFI) for the Future Act of 2013. It outlines a similar structure for refinancing student loans to that used during the recent financial crisis for certain markets. Essentially, it would create a credit facility that would encourage other private lenders to refinance student loans at lower interest rates. The bill suggests that funding for such a program could come from the Federal Financing Bank, the Federal Reserve Banks, or the Federal Home Loan Banks.

    The bill is designed to expire in five years, and does specify that any credit facility created not cost the federal government anything. Like most things that have come before Congress for a while now, no progress has been made on any other plan to help he interest doubling on July 1. Options considered have included a plan that resets student loan interest rates each year, tying them to the rates at which the federal government is able to borrow money. So far that plan has not passed. The hope is that Brown’s plan will be seen as not costing anything, and thus has a prayer of actually getting passed.

  • Student Loans About To Get More Expensive, Twitter Reacts

    I’m a recent college graduate and I payed for my education with student loans. It sucks that I have to pay back that much money, but I’m not as bad off as current or future students if current financial aid laws concerning student loans aren’t changed.

    CBS News is reporting that the Subsidized Stafford Loan interest rate is about to go up to 6.8 percent from its current 3.4 percent rate. This change is due to go into effect on July 1. The change would put the Subsidized Stafford loan on par with the interest rate of the unsubsidized Stafford Loan which is currently at 6.8 percent.

    There have been some movements to extend the 3.4 percent interest rate, but the current political climate in Washington coupled with it being an election year makes it hard for much of anything to get done.

    Some have taken to twitter to discuss the rate hike:

    (image)@ThoughtsOfFlex
    Flex Luger    #FYI The interest rates on the subsidized Stafford Loan is scheduled to double July 1 from 3.4 to 6.8(image) 21 minutes ago via Echofon ·  Reply ·  Retweet ·  Favorite · powered by @socialditto

    (image)@cordellsimmons
    Cordell Simmons     The interest rate on the subsidized Stafford Loan is about to double! I’m graduating right on time.(image) 1 hour ago via Twitter for iPhone ·  Reply ·  Retweet ·  Favorite · powered by @socialditto

    (image)@FuckIncumbents
    Fuck Incumbents    #Congress DOUBLES the interest rate on student loans. http://t.co/CLCsXNH4 #Gov getting desperate if kids are the solution to the #deficit.(image) 3 hours ago via web ·  Reply ·  Retweet ·  Favorite · powered by @socialditto

    (image)@Joegrano
    Joseph Grano    If you had a Stafford student loan (Sally Mae etc) they are doubling your interest rate to 8.3% in a matter of months and not telling you.(image) 18 hours ago via Twitter for Android ·  Reply ·  Retweet ·  Favorite · powered by @socialditto

    Politics definitely play into the current situation, but Daniel Maxey rightly points out the problems with the apathetic culture in college. Trust me, you’re going to care once you graduate and have to start paying it off.

    (image)@danmaxey
    Daniel Maxey    ENGAGEMENT GAP?! 20m+ students in #HigherEd, yet only 130,000 letters for no increase in #finaid interest? http://t.co/mctQ4JAN(image) 18 hours ago via web ·  Reply ·  Retweet ·  Favorite · powered by @socialditto

    If you don’t like this, contact your representative. Sitting around hoping the government takes care of this problem itself isn’t going to fix it. Take a cue from the ACTA protests in January. If you make a big enough stink, people in Washington listen.