Congress gets an 'incomplete' on student loans

  • Article by: Editorial Board , Star Tribune
  • Updated: July 26, 2013 - 11:27 PM

Senate bill is an improvement, but Congress isn’t done.

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kilofoxJul. 26, 13 9:52 PM

They probably have to have a higher interest rate than a car loan because student loans have one of the highest default rates. Many colleges have over a 30% default rate among undergraduates. Many have more loan defaults than actual graduates.

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tmrichardsonJul. 27, 13 4:40 AM

Kilofox the bottom line is how much profit or loss any entity offering loans makes. At a minimum, any government loan program should be set at an interest rate that helps avoid any loss. But strong profit? Because this program is an investment in our country's future--and much higher interest rates are self-defeating (for savvy students and parents will be sent to much CHEAPER private loans instead of accepting the government loan), higher rates are fiscally irresponsible. Republicans behinds this push for much higher than normal interest rates and high profit in the government loan business must want to insure NO college aid kid or parent will vote for them again!

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sturdlyJul. 27, 13 6:58 AM

Government Profits....?....factor in the high default rate...and the time element imposed by various limits on how much borrower has to pay-back, and there will be loses, not profits.....Then there is that $17 TRILLION +++ that those same students will be on the hook for.... Imagine what JUST the interest on that US debt will be once the 10-year rate climbs (needs to double just be reach a mean)...

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alansonJul. 27, 13 8:10 AM

Apparently we are intent on adding yet another entitlement to our rapidly expanding panoply of means-tested spending programs. As in health care, Federal subsidization of college tuition has resulted in a rapid escalation of costs that is making higher education unaffordable. There's nothing on a faster rising cost curve than health care - except for college and university education.

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elmore1Jul. 27, 13 8:13 AM

Interesting assessment by the editorial board but the real issue is out of control college spending. We need massive reform and govt regulation of colleges like the credit card industry. Regardless of interest rates or minority scholarships it is far too expensive to go to college and the level of student debt and low employment rates are unsustainable. "College education" should not be a sacred cow used for political purposes they should focus on their core mission of quality and affordable education for our kids resulting in career employment. They are failing miserably at this today..

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elle2008Jul. 27, 13 9:02 AM

Can someone tell me how someone manages to not pay their student loans when they are not even dischargable in Bankrupcy??

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cheltyJul. 27, 13 4:12 PM

elle2008, good question! My huge student loan balance was just transferred from the Dept of Ed to MOHELA...if I am one day late they call twice a day and email until I make that payment. It's almost as if they know harassing me will just annoy me until I make the payment. Of course, I'd like to set up automatic weekly payments to coincide with my paycheck, but have to call during the same business hours that I work. An email just gets a pathetic stock reply about something totally unrelated. They don't make repayment easy!

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furguson11Jul. 27, 13 4:48 PM

Ignore any hand wringing on college interest rates this summer. The real issue is the high cost of education.

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theagonybhoJul. 27, 13 4:55 PM

This isnt a congress issue, the Government shouldnt be in the loan business or the healthcare business, you want a loan go the bank.

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sturdlyJul. 27, 13 5:53 PM

Not pay their student loans, you ask: ... a loan defaults when the borrower quits paying.....The fact that the debt is not 'discharged' does not stop some from defaulting....For instance, in the real world: " federal student loans within two years of their first payment jumped to 9.1% in fiscal year 2010, up from 8.8% the previous year, according to U.S. Department of Education data released Friday.".... In 2011: 9.1% defaulting in first two years and 13.4% in first three years.........It is an increasing dynamic, and rates are rising and so are the default rates (before the rates have even gone up, defaulting continues to grow) ...This is because almost ANYBODY can get the loan...the lender NOT focused on ABILITY TO PAY, they are focused on the need to consume....We can continue to toss this red ink onto the $17 TRILLION ++++ National Debt, where it will continue to haunt the defaulting borrowers indefinitely...seems to be the new American Way.

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