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Student Loan Interest Rankles College Grads
theodp writes "Like many recent college grads, Steven Lee finds himself unemployed in one of the roughest job markets in decades and saddled with a big pile of debt — he owes about $84,000 in student loans for undergrad and grad school. But what's really got Lee angry are the high interest rates on his government-backed student loans. 'The rate for a 30-year mortgage is around 5%,' Lee said. 'Why should anyone have to pay 8.5%? The government has bailed out homeowners. It's bailed out big businesses. Why can't it also help students?' Not only that, federal student loans are the only loans in the nation that are largely non-dischargeable in bankruptcy, have no statutes of limitations, and can't be refinanced after consolidation, so Lee can forget about pulling a move out of the GM playbook. And unlike mortgages on million-dollar vacation homes, student loans have very limited tax deductability. A spokeswoman for the Department of Education blamed Congress for the rates which she conceded 'may seem high today,' but suggested that students are a credit-unworthy lot who should thank their lucky stars that rates aren't 12% or higher. Makes one long for the good-old-days of 3% student loans, doesn't it?"
Direct loans were cheap, and the consolidation brought them down to ~5% afair. I know the new loans are not as cheap, but thats because some idiot decided having non-direct loans and promising a profit to everyone who serviced them. Doh!
-- dieman - Scott Dier
My Direct Loans are still around 3%. I wonder why he's paying 8.5%.
I'm in a situation similar to the person featured in the article - interest accrues on my student loans at a rate of several thousand dollars per year, even WHILE I'M IN GRAD SCHOOL and have no reasonable means to pay down the principal. My tuition, even at a public undergraduate institution, was $30k + per year. I personally know many, many other grad students in my position. It's outrageous that the people the government and banks should be supporting - those who spend nearly a decade earning an advanced education - are being fleeced left and right.
The problem isn't finding a new fangled way for college student to be able to pay the enormous costs of college, it is to find ways to educate them more cheaply tha nwe do now. Online learning, competition, utilisation of open source textbooks... Be creative.
Sigs are too short to say anything truly profound so read the above post instead.
The problem is one of treating education as a business like any other. The country obtains a benefit from having an educated citizenry, and allowing education of this type to be treated as just another profit-center is at best short-sighted, at worst actively hostile to the country's best interests. From this basic problem, everything else flows.
:)
I'm from the UK, and just recently I've been reflecting on the things that I took for granted in the UK that are pay-for over here in the USA. Don't get me wrong, I love living here, I've just married an USAsian who's simply wonderful, but there are things I miss...
Primarily of course, is universal healthcare. The NHS is so far and away better than the situation we have here in the US that it's just not funny. Leaving that argument aside, the other major thing is education. My new wife and I were thinking about where any future offspring might be educated...
If the USA stays the same course as it's currently on, I think my children (as UK citizens by birthright) may be going to the UK for their education. It's a lot cheaper, it'll broaden their minds by travelling, and the quality is generally very high.
Oh how things have changed. I no longer think of the USA as being the gold-standard of higher education. Now I think of it as being just a way of transferring money from rich people to educated people.
As it happens, my wife paid off her student loans (for a JD/MBA) this evening (well, they'll settle on Tuesday). For the cost she just paid, we could buy a small house in the UK. The only debt higher is our mortgage, and living in a nice house in a nice part of the Bay area, that's expected.
I didn't pay for my education (although these days if you don't go to Scotland you pay something in the UK - it's a *lot* less than over here in the US though). I gave the UK about 10 years of higher taxes as a result - probably less than they were expecting - but moved to the USA for the nicer weather
Simon.
Physicists get Hadrons!
In Australia, if you're a citizen or permanent resident, the government will subsidise a large portion of your undergraduate tuition fee. The remainder is paid by the student, but the student can pay for the remaining amount with a government loan (a HELP fee).
Interest is not charged on the loan, and you essentially have an indefinite repayment schedule. You begin paying 6% of your salary towards that debt once it passes some threshold ($37,000 AU if I recall correctly). The only thing they do is apply indexation each year so that inflation doesn't devalue repayments.
Post-graduate students are required to pay their tuition up front each semester in full, though again, if you're a citizen or a permanent resident, you get a big subsidy in cost.
I can't understand why the US government would saddle undergraduates with that much debt before they've even had a chance to start making a living. If there's one thing a large chunk of government money SHOULD be spent subsidising, it's education.
I'm sorry, but you guys are really screwed up in some ways.
So what you're saying is that even though the system is broken it is your own damn fault for having put up with it to get a college education? That's not solving anything.
Sigs are too short to say anything truly profound so read the above post instead.
The government has bailed out homeowners. It's bailed out big businesses. Why can't it also help students?'
To me this is a tragedy. Young people starting off almost $100K in the hole. I had student loans, so did my wife. Together they didn't add up to $40K and she went to grad school.
On a higher level this kills entrepreneurial opportunities at the time in life you have the most desire, creativity and energy to launch a new business. Many of you are stuck in low-paying, dead end jobs because of student loans...one of the reasons some companies like to hire right out of college. Student loans and health insurance. Wouldn't it be better to turn all that creativity loose developing new businesses and jobs? But how can you saddled with all that debt and no health care coverage?
We have to do something, not just for people in college now but those recently graduating into 9.5% unemployment. Whatever that is, it has to include cost controls on education. The cost of education is running way ahead of inflation and textbook companies are worse than the mafia (at least the mob runs prostitutes). This is crazy.
But what to do about it? If the government tried some kind of forgiveness program, Republicans would scream about budget deficits. Student loans are also a giant bank pork program and you can see what kind clout they have in Washington. So, it's got to be paid for somehow, deficit neutral, combined with cost controls on education and everyone on both sides of the political pork barrel have to STFU long enough to get it done.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Last time I checked, student loan interest is deductible... I don't know what more of a handout this guy needs.
YOU SIGNED THE PAPERWORK, YOU HAVE NO ONE ELSE TO BLAME, YOU COULD HAVE GONE TO A CHEAPER SCHOOL.
All your highfalutin ideas about education being the point of education is just fine as long as you don't have to worry that much about shelter and food. At the rate tuition is increasing though, a higher education will become the sole domain of the wealthy which means that countries with a system like that in Australia (mentioned above) are going to kick our plumbing asses one of these days.
In a sane sustainable society, education is seen to be valuable in and of itself, but is also affordable so that many minds can benefit (and return the benefit back to society). Such a society is structured so that graduates can eat, live, and be productive members. An insane, unsustainable society fails to value education and in so doing, saddles anyone who attempts it with crushing debt load.
What changed under Obama? Nothing Good
tuition prices are so high because kids keep getting approved for loans.
No, they're high because so many kids are trying to get into schools. Supply and demand.
Student loans are enabling/helping it, but it isn't the root cause.
Please help metamoderate.
You can make good on the loan by paying it off with the proceeds from another loan. In the housing world, anyone who doesn't refinance when interest rates fall sufficiently below the rate being paid on the original loan is absolutely batshit insane. It's standard advice to get a lower rate. Why can't student loans go through the same process? And why would that be unfair? The original lender gets their money back. The new lender gets a rate it is happy with offering? Where are the cheaters or losers?
What changed under Obama? Nothing Good
I'd really like to know when someone is suppose to be old enough to take responsibilty for his choices, 18?, 21? 25? It seems that anyone under the age of 45 is trying to find out a way to blame someone else for decisions they made or didn't make.
There are a lot of good college educations that do not require getting $80K in loans.
It always amazed me why some one would go to some place like Harvard, spend $140K to major in Art with absolutely no path being able to recover the cost.
If some one is considered an adult, and signs a loan, they should be thinking through the implicitations of what they are signing... or is the implication is that college students are not bright enough to understand a loan..which will then beg the questions.. should they be in college, allowed to wander the streets without adult supervision or even vote.
I mean, how many societies have plumbers as heroes?
Well, we (America) did - at least during the 2008 election.
How are sites slashdotted when nobody reads TFAs?
My Universities Law School will forgive your law school loans(probably end up around 6 figures) if you work for 4 years in various public service law jobs.
... but there are many many different places in the world, some of which are outside the USA. Most of these places have different laws, customs, and living standards. The UK is not Czechoslovakia...
If I didn't care about the state of play in the USA, I'd just up and leave, taking my family and my considerable yearly tax burden with me. I choose to stay and try to influence people as I can...
FWIW, my uncle was recently diagnosed with a heart problem back in the UK, he was in hospital the same day, operated on within 2 days and back home 2 days later. The only real down-side was that he couldn't attend the wedding because of the US insurance costs.
And two weeks before the wedding, my mother was diagnosed with breast cancer. She opted to put off the operation-date offered (1 week after diagnosis) and wait until after the wedding. Since then she's been back and had her operation.
My family is not rich. My father worked on the docks, my mother had a variety of part-time jobs through her life. Excellent, timely medical care is something she (and I, until I moved to the USA) take for granted, without any "recission", or "previously established medical condition" nonsense. If you're sick, see a doctor. Get better with as much or as little help as necessary. No co-payments. No payments (at the point of treatment) at all, and if you need heart surgery or extensive (5 years chemotherapy is being talked about for my mother) treatment, there's no questions asked...
There's no way my family could have afforded the medical insurance that would be equivalent to the care that my mother and uncle have just received. They of course don't consider this to be anything special, it's only when you don't have something any more, that you miss it. Similarly, I don't think americans miss it because frankly they've never experienced it. They just keep on telling themselves they have "the best healthcare system in the world", which (IMHO) is only true for the minority of rich americans that don't really need the insurance companies anyway...
Simon
Physicists get Hadrons!
Perhaps universities are being phased out as the gatekeepers of knowledge; however, that doesn't mean that they're no longer useful.
Commodore64_love: I don't comprehend people who're so frightened of death that they'll bankrupt themselves to stay alive
I think he meant you pay taxes once you get a job... But obviously if you are defaulting on a student loan, you are probably not paying much taxes either...
Universities moreover are excellent at price discrimination: charging you exactly as much as you're willing to pay, and maximizing their profit. Most students will even fill out forms to help the university price-discriminate against them better. It's called "financial aid". And yes, if there is more money available to the typical student for attending college, the typical college is able to charge more, plain and simple.
I lucked out with a big fat faculty-dependent tuition concession and graduated with zero debt, and a thousand dollars' advance from a programming job in California.
The World Wide Web is dying. Soon, we shall have only the Internet.
Yeah. People with poor parents don't deserve good educations.
...and the next thing you know these uppity women folk'll be-a' wantin' ta vote.
Knowledge is needed at most jobs, education in all honesty is not. I think its time for society to realize this.
I think you have that the wrong way 'round. Knowledge isn't needed - like you said, it's available at the click of a 'google search'. Education is what you need to be able to do something useful with the knowledge you've just found.
I can't remember the characteristic funtion of the normal distribution, but I can look it up on wikipedia and use the education I have to do something useful with it.
But maybe we're just expressing the same thought with different words.
Insanity: voting in the same two parties over and over again and expecting different results
If the system is broken (which it is) then you can't just sweep the problem under the rug just by declaring it the result of a character flaw and refuse to address the system its self.
IF.
My view is that the system is broken precisely because it lends money to people who should not be borrowers due to their inexperience, and yes, character flaws.
THANK YOU, Sir!
FINALLY there's some fresh proof that education is the world's biggest Dutch Tulip enterprise. Yes there's scholars at the front of the room, but did'ya know, he's teaching the same courses every year. So I agree the Labs have scary fees for equipment, but the lectures ... are just words! And with or without backing instruments, we all know how cheap WORDS are...
Part of the Uni deal is holistic discipline, 'cause otherwise the kid might cram pretty hard for 6 months then fry out and quit his studies. But thank you for the proof I have searched for a long time now.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
5% vrs 8.5%?? why???
its called: C O L L A T E R A L
simple, really....
At what rate do you even imagine having to pay
for a home which is not held by the bank as collateral?
30%?? 40????
"There are 11 kinds of people: those who know binary, those who don't, and those who could not care less!"
Physics and maths are just theory, they have no economic value at face value and anyone who thinks otherwise is a moronic anti-intellectual who has no idea what either of those is or does. Also, someone who doesn't understand the meaning of economic value.
Hah! I guess you were going for giggles with that one. An abstract theory per se has little economic value, but the application of physical theory (which is all but inevitable) can create wealth. Since the development of theory is expected to be followed by practical uses, economists do assign value to such theory (as usual, they have difficulty estimating the value, except in hindsight). However, your statement made me recall an old saying which I heard as a freshman about 35 years ago:
"A physicist is a theoretician of engineering. An engineer is a practitioner of physics. Mathematics is their common language."
Those who can make you believe absurdities can make you commit atrocities. - Voltaire
As a student with 10+ years of education, 3 years of actively accepting student loads (which have been accruing interest for the last 8 years), and a wife with 5+ years of loans already in repayment I feel justified in saying "BOO FRIKIN' HOOO"
A college education was never meant to be a guarantee of future financial stability, especially in the short term. We need to get away from this pervasive mentality of "Things didn't go exactly according to the PLAN. The Government needs to save me!!!! WAAAAAAAA".
Of course it sucks trying to find a job in the current market, and I sympathise as I'm currently looking for my next job as I'm going to graduate soon. However, that doesn't mean that the federal government, who already bent over backward in order to help me get the loans I needed in order to persue my education, should be expected to further subsidize me into my 30's. Grow a friggin' pair, and if necessary get a job working at McD's and rent the shittiest appartment you can find to make ends meet. This sense of entitlement to an easy life, simpy because you are college educated is assinine and juvenile. The education is supposed to give you more skills, based on the idea that more skills make you more valuable. However, if you pursue a degree in which those skills are next to useless (I'm looking at you art history majors), or one in which the market is oversatturated, well then you were an idiot and deserve to suffer a little for your stupidity. That doesn't mean that you should be able to get your education for free, just because it took you a little while to find a job.
We need to stop supporting those that have made stupid decisions or else they'll never learn that there are consequences for their actions. I learned that in middle school, my older brother took until after high school, and apparently some have failed to learn the lesson despite being 22 (Bachelors), 24-28 (Graduate Degree), or even older 50-60 (Corporate CEO's that ran their companies into the ground). Maybe I'm just an insensitive clod, but not everyone can be happy all of the time. A little hardship can build character, just as our grandparents.
There are nowhere near as many people suffering as there were in the great depression, all the "Worst recession since the depression" hyperbole aside. If the current hardships mean that it takes you an extra 10 years to buy a house, or that you have to settle for something less than a McMansion I'm not going to be losing any sleep over it. I will probably lose more than a little over my own financial problems, but they are MY PROBLEMS and not the governments. A little more personal accountability on behalf of most Americans would go a long way to improving our collective condition.
Bureaucracy expands to meet the needs of the expanding bureaucracy.-Oscar Wilde
You are just fucking stupid if you think they are spending a trillion dollars a year on Iraq, Afghanistan, etc. How you got modded "Insightful" is beyond me because you dont' know what you are talking about. The total cost of the wars to date is less than 1 trillion in total.
You can't be "the smart, hardworking, disappearing upper middle class" because smart people actually research there points BEFORE spouting off and proving that they are ignorant.
But, you want to know what will cost a trillion dollars per year? The healthcare bills being put together in Congress.
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
What I think is criminal is how we can only deduct $2500 of our interest payments.
You start from the false premise the education is meant to prepare you for a job. It's not. Academia rightfully doesn't give a sh** about weather it's preparing you to shuffle work around or not. That's not it's goal, and I don't think it should be. It's goal is for you to learn things, and perhaps eventually further the field for the few that choose to continue. Learning for learning's sake is their goal and an admirable one.