Student Loan Interest Rates Loom as Political Battle

[alp227]

Source: NYT

President Obama begins an all-out push on Friday to get Congress to extend the low interest rate on federal student loans, White House officials said, an effort that is likely to become a heated battle along party lines. If Congress fails to act, the interest rate on the loans, which are taken out by nearly eight million students each year, will double on July 1, to 6.8 percent.

White House officials said the president was planning a sustained effort through the spring: On Friday, Education Secretary Arne Duncan will discuss the issue at a White House briefing, and on Saturday in his weekly address, the president will call on Congress to pass legislation preventing the rate hike.

Next week, Mr. Obama will again hammer the issue — during visits on Tuesday to the University of North Carolina at Chapel Hill and the University of Colorado at Boulder, and on Wednesday at the University of Iowa. The White House also plans a social media campaign through Facebook, Google+ and Twitter, using the hashtag #DontDoubleMyRate.

At a time when Americans owe more on student loans than on credit cards — student debt is topping $1 trillion for the first time — and the Occupy movement has highlighted the rising furor over spiraling student debt, the issue has moved higher on the political agenda. But the question of what to do about the looming interest rate increase has landed deep in the chasm separating Democrats from Republicans, who accuse the president of using the issue in a fiscally irresponsible way, in an attempt to buy the youth vote.

Read more: http://www.nytimes.com/2012/04/20/education/student-loan-interest-rates-loom-as-political-battle.html

[exboyfil]

1. One thing an upward rate like that will do is

get a bunch of people to pay the loans off earlier. That will be effectively 2-3 points higher than many mortgages, and with mortgages they can't pursue you all the way to the grave for collection.

Of course it does create a drag on the economy (kind of like a min-Fed move).

The whole system is unsustainable and more judgement needs to be applied before loaning the money. The first place to start is to stop loaning money to for profits and questionable non-profits who have a poor track record of student's paying the money back.

[JDPriestly]

2. Raising those rates would amount to a declaration of financial war on millions

of young people and returning students in the US. This is a stupid move on the part of the Republicans. Unbelievable.

Middle-class kids are not the only people harmed by this. Middle-class parents are too.

Let's see. The Republicans want to decrease access to birth control and abortion plus discourage kids from going to college by making it more expensive and harder to pay back student loans.

Where will that lead?

[glinda]

3. Will lead to more chaos. They are just imploding everything they can to

weaken the system in order to take over. And not just a menial takeover by any means but one with such devastating consequences to every living thing.