Senate reaches a deal on student loans, and there was much rejoicing

posted at 4:41 pm on July 18, 2013 by Erika Johnsen

Last summer, President Obama managed to make quite the niche campaign issue out of the scheduled rise of interest rates on new federal student loans from 3.4 to 6.8 percent as a part of his appeal for the youth vote, and Congress agreed to extend the artificially low rates for another year. That provision expired on July 1st, and the Senate has since been quibbling about about disallowing the jump in interest rates once more — with Republicans insisting that rates need to be allowed to more accurately reflect the market value, while Democrats maintained that rates shouldn’t be allowed to climb too high (“too high,” of course, meaning whatever arbitrary number that they oh so augustly deem “fair”).

And there it is, just what the Senate has been so actively hankering for — compromise! Republicans succeeded in allowing the free market to play at least more of a role in determining rates, while Democrats got their caps on the maximum to which interest rates will be allowed to rise. In the meantime, they’re preventing the immediate jump to 6.8 percent and extending the 3.4 percent rate through the 2015 academic year. Via CNN:

Under the compromise measure, undergraduate students would pay a rate of 3.85% next year on subsidized and unsubsidized Stafford loans. The plan would cap rates on loans to undergrads at 8.25%, for graduate students at 9.5% and parents at 10.5%.

“While this is not the agreement that any of us would have written, and many of us would like to have seen something quite different, I believe we have come a very long way on reaching common ground,” Sen. Dick Durbin of Illinois, the Democratic whip in the Senate, said at a press conference Thursday.

Sen. Tom Harkin, the Democratic chairman of the committee that oversees federal education programs, also was present in announcing the deal. …

Speaking after Thursday’s news conference, Harkin said lawmakers may revisit the student loans issue when his committee wades into altering the Higher Education Act in the next several months. …

“Can we change it? Sure we can change it,” Harkin told reporters. “This is not the Ten Commandments written in stone for God’s sake.”

Er… I don’t know how well that plays out for instilling the certainty off of which potential students can devise possible life plans, but there it is. It’s a small improvement, but in the meantime, the federal government is maintaining plenty of the interference in the free market that directly helps to inflate tuition prices by flooding the market with cheap aid, and students are still graduating into a stagnating economy that is hardly flush with available jobs or even showing any real signs of becoming so — which kind of cuts into their ability to even pay back their loans. Priorities.

When the last reports came out showing that youth unemployment had reached 16.2 % in the United States, alarm bells began to be heard in some quarters.  This is more than double the rate of unemployment of the adult population.  The rate is fast approaching the average youth unemployment rate in Europe which stands at approximately 24%. …

So far only 5 European countries (Austria, Denmark, Germany, the Netherlands and Norway) have lower youth unemployment than does the U.S.  Samuel Gregg, of the Acton Institute, who recently wrote Becoming Europe, warns that the U.S. is drifting towards the same policies that generally lead to higher rates of joblessnes among the young.  The U.S. economy still scores better than most European countries in economic freedoms, but the trends are frightening.


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Maybe Congress can go to work next on getting us the best interest rates possible for our loans from China – or better yet a refi.

Drained Brain on July 18, 2013 at 4:51 PM

Saved again from their own legislation.

Burn baby burn…

trs on July 18, 2013 at 4:52 PM

Hopefully the House will reject this crap sandwich.

David in ATL on July 18, 2013 at 4:53 PM

Republicans succeeded in allowing the free market to play at least more of a role in determining rates

The Republican priniciple in deed, if not campaign speech, is: bailout.

kunegetikos on July 18, 2013 at 4:54 PM

“Can we change it? Sure we can change it,” Harkin told reporters. “This is not the Ten Commandments written in stone for God’s sake.”

That is the problem in a nutshell. The Dems agree to something today and are already looking at changing it tomorrow when no one is looking. Oh and just ignore the idiotic attempt to make a joke at Christian’s expense.

Johnnyreb on July 18, 2013 at 4:55 PM

Ladened with pork, no doubt.

Gunlock Bill on July 18, 2013 at 4:56 PM

Oh look…a squirrel!

Gothguy on July 18, 2013 at 4:58 PM

Ahhh yes, A pic of DUNG HEAP.

Get off the F*king stage, pant load.

ToddPA on July 18, 2013 at 5:00 PM

“quantitative easing” That’s your “free market.”

kunegetikos on July 18, 2013 at 5:01 PM

This was huge mistake when the government deemed ‘college loans’ How many young people are indebted to the government when they graduate. Rising costs at state universities will never change or feel the need to lower tuition or salaries coupled with outrageous retirement benefits.

Redford on July 18, 2013 at 5:10 PM

Screwed again and still no kiss.

BetseyRoss on July 18, 2013 at 5:11 PM

Isn’t central planning grand?

EddieC on July 18, 2013 at 5:16 PM

OT: No thread on Detroit Broke City?

can_con on July 18, 2013 at 5:17 PM

Sad, most student “loans” are based on fraud.

Fraud in that each student “promises” to repay the loan according to an agreed upon timeline and rate.

Fraud in that the lending institutions are raking in cash at little expense for the institution doing the lending.

Fraud in that each college accepting the loan money for tuition, board, and other expenses was allegedly to provide a product…an education, training, a trade, a skill, something of value that will enhance that student’s ability to compete in the marketplace. Degrees in Mongolian Transgender Studies, anyone? [Yes, facetious...but not far from the truth.]

Fraud in that for the past few decades going to college has gone from something to be earned to some sort of civil right.

Every President, every elected official, every proponent of the notion that “all American kids deserve to go to college” has done what, exactly?

Turned places of learning of science, math, the arts, of exploration and knowledge into factories designed to take more and more money for less and less product provided,that’s what.

The fraud that all American kids deserve to go to college has stilted a large segment of the economy.

Plumbers and masons earning more than a Ph.D? Bachelors degrees becoming as worthless as a high school diploma in the overall job market…yet obtaining a Masters makes no economic sense in our six year of recession…since there are fewer and fewer jobs available and less and less capital to expand to absorb these expensive yet somewhat limited use skills.

The one good thing in all of this is the rise and acceptance of community colleges and other two-year job oriented schools.

And for most of these, there is little need for loans.

So exactly who is this legislation designed to assist?

The potential students?

Current students?

Graduated students?

Parents?

How about the universities? The money-laundering facilities disguised as institutions of higher learning?

Yep.

Pretty much it. No steady and reliable flow of cash…no school.

And the students? Hooked into a system, prodded by parents, family, friends, counselors, politicians and whomever to spend good money for what amounts to for a growing number of students a degree that isn’t worth the paper upon which it is printed.

This entire college loan scheme and the need for a bailout, which in practice is what this is, was entirely a government generated manufactured crisis.

Meanwhile…even kids who don’t read no cursive are being offered college educations…

coldwarrior on July 18, 2013 at 5:19 PM

Way to kick that can down the road, GOP, right smack into the sweet spot for the Dems to make it a campaign issue in 2014!

The Stupid Party strikes again.

Gator Country on July 18, 2013 at 5:19 PM

The Republican priniciple in deed, if not campaign speech, is: bailout.

kunegetikos on July 18, 2013 at 4:54 PM

It’s coming. Like amnesty.
Freebies for everybody for just the opportunity to get elected again.
No one is interested in cleaning $hit up.
Band aids do not help (more Bills).
The Federal govt has no right nor power to meddle in making sure people go to college.
Just like they don’t have the power to give people health care, provide retirement benefits, etc.
But yet, the states let them.
Bcs people think the Fed ought to be taking care of them & poor people & unfortunate people.
That’s what charities are for. And local govts. Not the Fed.
State sovereignty must be taken back.

Badger40 on July 18, 2013 at 5:21 PM

And the students? Hooked into a system, prodded by parents, family, friends, counselors, politicians and whomever to spend good money for what amounts to for a growing number of students a degree that isn’t worth the paper upon which it is printed.

This entire college loan scheme and the need for a bailout, which in practice is what this is, was entirely a government generated manufactured crisis.

Meanwhile…even kids who don’t read no cursive are being offered college educations…

coldwarrior on July 18, 2013 at 5:19 PM

I have taken some flack from my fellow teachers for encouraging students to think twice about going to college.
I have assignments about careers, education needed, opportunities, etc.
Bcs our fracking counselor isn’t doing this.
I, the SCIENCE teacher, have to take time out of my instruction to tell kids they don’t have to go to college to survive in this world.
The community I live in every damned parent is hell bent on forcing their kids to go to college.
It is ridiculous. In ND, you can’t believe how many people have degrees! And so many of them are WORTHLESS!
If you are a housewife, you do not need a bunch of student loans for a degree in University Studies!
In fact, unless you’re rich & wasted your own $$, this degree is worthless as hell.

Badger40 on July 18, 2013 at 5:25 PM

Badger40 on July 18, 2013 at 5:25 PM

Keep trying.

I taught in an inner city school for a while…and was frustrated by a number of things, paramount was having students in their Senior year totally unprepared for the next step…going to college was it…had to be it. Had parents get all p.o.’d when I suggested that their little kid should use his talents and interests and get into a good trade school, take his interest in cars and motorcycles and turn it into an honorable profession as a skilled and well-paid mechanic…but…no…the parents wanted the kid to get a college degree, any degree and then go to law school at one of the Big Ten schools nearby and be a lawyer because that is where the money was at.

The kid could barely read.

Senior in high school.

And there were a lot of others, as well.

That and the unions pretty much compelled me to drop that teaching stuff as a second career a lot faster than I had imagined.

coldwarrior on July 18, 2013 at 5:33 PM

Maybe colleges can start a class in “Riot & Looting 101″. That way the “unemployed” will have something to do.

GarandFan on July 18, 2013 at 5:52 PM

and here I sit with a 17 and 14 year old…I’m seriously saying, hey, if you don’t want to go to college, you don’t have to…it’s just not worth it. Costs too much, the likely hood of getting a good paying job because of it is extremely diminished by “progressivism” as well.

Hope and Change, indeed.

kirkill on July 18, 2013 at 6:01 PM

Senate reaches a deal on student loans, and there was much rejoicing

Erika Johnsen

.
Then they ate Sir Robin’s minstrel . . . . . . . . . . . . . . .

listens2glenn on July 18, 2013 at 6:08 PM

That and the unions pretty much compelled me to drop that teaching stuff as a second career a lot faster than I had imagined.

coldwarrior on July 18, 2013 at 5:33 PM

The sad thing is I teach in a very rural all white area.
PArents are involved, most of them ride their kids’ butts to do their work.
But in the end, they do it for all the wrong reasons.
Most of these parents are not concerned with the kids learning something.
They are concerned the kid needs an A at any cost.
The piece of paper. That’s all they care about.
I have been given $hit (not too bad) for having high expectations.
Many expect me to lower & raise the bar according to students.
They don’t understand the bar, like a football goalpost, does not move with ability. It is fixed.
You want an A? Rise to get it.
If not, you do all your work, try somewhat & show up, you’ll at least get a D-.

Badger40 on July 18, 2013 at 6:51 PM

and here I sit with a 17 and 14 year old…I’m seriously saying, hey, if you don’t want to go to college, you don’t have to…it’s just not worth it. Costs too much, the likely hood of getting a good paying job because of it is extremely diminished by “progressivism” as well.

Hope and Change, indeed.

kirkill on July 18, 2013 at 6:01 PM

That’s really good advice. I’m sitting here saying to myself “you don’t have to have children.” As is most of my generation. People need to start being realistic about what they can and can’t afford despite what society tells them they should do with their futures.

RDE2010 on July 19, 2013 at 9:25 AM

Much of this is a Government accounting gimmick meant to benefit the Government.

It is, however, a HUGE deal for kids from middle-income families. As in, my family. The “unsubsized” loans have remained at 6.8% throughout. Only the poorest families qualify for “subsidized” loans and they were the loans that increased from 3.4% to 6.8%.

But in fact, “subsidized” means the Government is paying the interest while in school. So in fact, the accounting gimmick is that the Government will not pay 6.8% to loan the money (money printed from thin air, mind you).

It has been ridiculous that some, AFTER graduating, have had to pay ‘from new money’ at a rate of 6.8% (based on the parents ‘old money’ income) while other college graduates had a rate of 3.4% when in fact they also pay off the loan ‘from new money’.

Carnac on July 19, 2013 at 10:25 AM