Surely you Wonketteers have heard the librul media and members of Congress crowing about the new student loan bill, which is apparently not only a great deal for students but is also significant because it demonstrates that Congress is capable of passing something on a bipartisan basis.
Everybody wins: Congress looks good! The new bill doesn't add to the deficit! And students' rates will fluctuate with the market so now students have EVEN MORE skin in the game! USA USA!
Here, let us take a closer look at the crappy deal that everyone is so excited about.
Under the old federal student loan program, borrowers were offered a fixed rate. Under the new rate structure, which still drew opposition from nearly one-third of Senate Democrats when it passed last week, loans to undergraduates and graduate students, along with parents in the PLUS program, would be subject to a fixed rate plus the yield on the 10-year Treasury note.
Oh, how wonderful. It is like they have given the students some nice, premium lube before making them bend over -- and on a bipartisan basis!
As Sherrod Brown noted before stating his refusal to vote for the bill, why are the rates this high in the first place? Why weren't rates frozen at, say, 3.4 percent?
Good question, Sherrod Brown, please let us know when you get the answer. And while you're at it, we have a few other questions than maybe you can get answered for all of us.
For example, why do rates even need to be as high as 3.4%, given that these loans can never be discharged in bankruptcy, can never be refinanced, and given that the Department of Education can garnish your Social Security checks and disability payments (and if that fails, send a SWAT team to your house . Seriously).
As these are risk-free loans to the lending institution, why not have students pay a flat servicing fee to borrow the money at whatever the federal funds rate (which is currently hovering at around zero) is?
Why indeed. We will be over here holding our breath until someone gets back to us with answers on these questions.
Rates for loans taken out after July 1 of this year would be 3.9 percent for undergraduates, 5.4 percent for graduate students and 6.4 percent for those receiving PLUS loans. The rates are fixed over the life of the loan but would change for new borrowers each year.
Why is there a 2.5 point margin for undergrads and a 4 point margin for grads -- is it more expensive to loan money to grads, or do we just want to discourage people from getting an advanced degree for some reason? And why is it more expensive (6.4%) for parents to borrow the money -- does it magically cost more to lend to parents?
Perhaps someone from the librul media can find out the answer to these questions when they are done licking Congress' butthole and praising their bipartisanship.
Representative Cathy McMorris Rodgers of Washington, the chairwoman of the House Republican Conference, said that while she was “disappointed it took as long as it did for us to get to this place on student loans,” she hoped that the legislation was a harbinger.
“I hope this is setting the stage for more bipartisanship and success on other issues,” she said.
We hope so too -- it's nice when BOTH sides of Congress can get together and pat themselves on the back, isn't it?
[ NY Times ]
Student Loan Bill Lubes Up At Least Before Screwing Students
I note that Howard Slusher was mentioned in the article, does he fund the athletes in any way?
Meanwhile, how many other campus buildings are in need of repair?
"Why is there a 2.5 point margin for undergrads and a 4 point margin for grads — is it more expensive to loan money to grads, or do we just want to discourage people from getting an advanced degree for some reason? And why is it more expensive (6.4%) for parents to borrow the money — does it magically cost more to lend to parents?"
Because they are selling loans to different market segments, and pricing them according to how successful and well-compensated each group will be expected to be over the life of the loan. This is clearly a BS tactic, but I strongly suspect that this was the thinking behind this rate structure.
And yes, this is utter horse feces when you can walk into any dealership and get financing for a new car purchase at rates that are much lower than these.