2016 Postmortem
Related: About this forumShould interest rates for students loans be higher than for home and car loans?
Bernie Sanders says no.
It makes no sense that students and their parents pay higher interest rates for college than they pay for car loans or housing mortgages.
3:31 PM - 15 Oct 2015
It makes no sense that you can get an auto loan with an interest rate of 2.5% but millions of college graduates are forced to pay 7% or more
9:35 AM - 25 Oct 2015
You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?
8:39 AM - 26 Dec 2015
ALLOW AMERICANS TO REFINANCE STUDENT LOANS AT TODAY’S LOW INTEREST RATES.
It makes no sense that you can get an auto loan today with an interest rate of 2.5%, but millions of college graduates are forced to pay interest rates of 5-7% or more for decades. Under the Sanders plan, Americans would be able to refinance their student loans at today’s low interest rates.
I have my own opinion about this, but I'm curious what everyone else thinks.
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napi21
(45,806 posts)How are they set anyway? I don't think I've ever heard.
BlueCheese
(2,522 posts)... to refinance at interest rates for current student loans.
My question is whether there should be a difference between the interest rates for loans for houses and cars and that of student loans.
Matariki
(18,775 posts)there were government programs with really low interest rates - 1 - 1.5% if I recall. And tuition was about $2500 a semester for a state University.
So, to answer your question - yes, I think college loans should be very low interest and college tuition should also be very low. It's the way we, as a nation, invest in the future.
napi21
(45,806 posts)An of course he's the Pubs icon!
Matariki
(18,775 posts)I try to explain this to people younger than me - or people with very poor memories. That asshole did us a lot of damage.
One of the first things he did when he got into office was to cut grants and financial aid for college students. I watched a lot of people have to drop out due to the quick shifts in policy. Makes you wonder - why would he do that?
napi21
(45,806 posts)Did away with free public college edu. And to think that AH used to be a Democrat!
yeoman6987
(14,449 posts)But I really wish that we had changed some of this stuff when he left. I mean he's been out of office 35 years. Soon we need to ask why nobody did anything to change them.
hill2016
(1,772 posts)BlueCheese
(2,522 posts)
Recursion
(56,582 posts)I don't see how people are having problems understanding that.
hill2016
(1,772 posts)But not necessarily as a matter of public policy
Recursion
(56,582 posts)then homeowners are subsidizing college students, which doesn't make much sense to me, personally.
Ultimately it's the same issue I have with healthcare: we keep looking at the financing model when the problem is the provider costs. Why does my alma mater have four gymnasia and a lazy river?
hill2016
(1,772 posts)How much one group gets over another is a matter of public policy.
I wish Sanders had used this argument instead of comparing one against the other.
hill2016
(1,772 posts)The government might view home ownership as a matter of good public policy and might even subsidize the cost of the loan, as we see with the mortgage interest deduction.
My problem with free college for all and cancel student loans proposals is that it doesn't make sense from a societal standpoint as not everyone should go to college. I would much rather see very targeted merit based approaches or college in return for working in public service.
TheBlackAdder
(29,981 posts).
But seriously, this falls into the Ayn Randian, F.A. Hayek, William F. Buckley, etc. vision of America.
Keeping a serf class around--suppressing liberal enlightenment for 'some' to cause a division that benefits 'others'.
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Travis_0004
(5,417 posts)There are lots of people who dont want to go to schools, and lots of good jobs that dont require a college degree.
We will always need jobs for electricans, plumbers, welders, etc.
TheBlackAdder
(29,981 posts).
Oh, and being a tradesperson is not the serf class, as someone with trades is a skilled professional.
The trades people were the ones who started the move to the cities that created the bourgeoisie of England and created the middle and eventually the upper-class of capitalism.
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tritsofme
(19,900 posts)It's good honest work, that typically can't be outsourced or automated.
Four year universities aren't for everyone, there shouldn't be a stigma for smart young men or women choosing to make a living by learning a trade.
TheBlackAdder
(29,981 posts).
Why do some people think that if you are a trade person, excludes college?
But, the bigger question is why do some think that skilled professional tradespeople are the serf class, when they are the ones who build the rigid foundation of the middle-class?
Learning should be open to anyone, at any time. Whether you are 20 or in your 50's, like me.
===
What bothers me are the people who abandon their desire to expand their knowledge permanently.
While college might not be for you now or in the near future, you might like to take courses later to keep sharp.
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"...it doesn't make sense from a societal standpoint as not everyone should go to college."
I don't think anyone is saying everyone should to go to college.
And keep in mind many skilled-trade programs are offered through institutions of higher learning. We have at my local community college a CNC machinist program, certified nursing programs, and diesel repair courses that qualify for federal student loans.
TheBlackAdder
(29,981 posts)Recursion
(56,582 posts)It's odd -- there's no provision for forgiveness or discharge, but there's a mandated income-based payment plan that can amount to the same thing.
TheBlackAdder
(29,981 posts).
And, if you are a deadbeat, that will pose problems when buying a home or car.
It's the Sword of Damocles hanging over one's head in perpetuity.
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Orrex
(67,111 posts)Because if you manage--in spite of Sallie Mae's best efforts--to claw your way back to some level of financial stability, they'll immediately come after you for payment. And they'll happily take your entire tax refund in the meantime.
In other words, it's exactly the opposite of forgiveness or discharge of the loan.
Orrex
(67,111 posts)Well, strictly speaking you can, but then they'll simply tack on thousands of dollars in fees and penalties, and they'll take your paycheck, your social security, and your tax refund. Unless you're lucky enough to die or become permanently and totally disabled, they'll get their money.
Unsecured. Right.
Recursion
(56,582 posts)I think we should go ahead and make it in name.
Orrex
(67,111 posts)I can think of about six ways to parse that. What did you mean exactly?
Recursion
(56,582 posts)Rather than taking on debt.
Orrex
(67,111 posts)And how would that not render college a permanent impossibility for anyone of low income who rents their home?
Recursion
(56,582 posts)Last edited Mon Dec 28, 2015, 01:00 PM - Edit history (1)
Countrywide pays for my college in exchange for 0.02% (or whatever) of my future income. Utah IIRC is doing a pilot program of this.
Orrex
(67,111 posts)What would incline a lender--excuse me, an investor--to front thousands upon thousands against god-knows-what kind of uncertainty? How else might the student discharge this agreement? Could it be offset by bankruptcy, or maybe by a lump sum payoff?
What happens then Countrywide fronts $80,000 for my four-year degree, but I then opt to work for part time minimum wage at a coffee shop? Will Countrywide be satisfied with the $6 per week that I'll be paying them? Heck, after a mere 257 years they'll have recouped their investment and then some!
If it's set up as a percentage-of-income with a minimum weekly/monthly/annual payment amount, then what happens when the eager graduate can't find adequate work despite a good-faith effort to do so?
The system that you and Utah(?) are proposing is simply another spin on the existing broken system, designed to wring profit out of students rather than fostering the value that they bring to the economy as a whole. Further, if the equity-drain system can't be discharged, then it boils down to indentured servitude, just like the current system.
elleng
(141,926 posts)'Just as the GI Bill allowed his father, a WWII bombardier, to go to law school debt-free and pursue his dreams, the next generation of Americans should have the same opportunity to attend college debt-free.
Yet today, the cost of obtaining a college degree is skyrocketing. American families are being crushed by $1.3 trillion in outstanding student loans. And in our increasingly competitive economy, attaining a college degree is more important than ever before.
This is a crisis: Unless we act now, more and more students will not be able to afford higher education at all, putting the American Dream even further out of reach.
PROPOSAL: Set, as a national goal, that all students have access to a high-quality, debt-free college education within 5 years, attainable at any in-state public college or university.
Provide Immediate Relief to Student Borrowers
Nearly 70 percent of U.S. students are now graduating with student debt, averaging more than $28,000 in loans. Unlike homeowners or businesses, student borrowers and their families can’t refinance their loans to take advantage of lower interest rates.
Refinance Student Loans. All Americans with student debt – including both students and their parents – should be able to refinance their loans at lower rates.
Tie Minimum Payments to Incomes. All student borrowers should be automatically enrolled in income-based repayment plans, with loan forgiveness options. Borrowers who do not wish to use repayment plans would be able to opt out of them while those with private loans should be able to refinance into federal programs.
Stop Skyrocketing Tuition Rates
States have slashed higher education investments by an average of 20 percent per student since 2008. Colleges have used tuition increases to make up for 80 percent of lost funding.
Freeze Public Tuition Rates. Governor O’Malley is calling on states to immediately freeze tuition rates.
Restore State Higher Education Funding. He is also calling on states to restore investments in higher education. As president, he would partner with states, leveraging federal dollars through matching grants to encourage states to increase funding for public colleges and universities.
student-debt-static
Reduce Tuition Costs
Almost all states have seen double or even triple digit percentage increases in tuition over the past 10 years. As a result, tuition rates at public four-year institutions are now more than 20 percent of state median income in 10 states.
Tie Tuition Rates to Median Incomes. Governor O’Malley would set a national goal of reducing the cost of tuition – to no more than 10 percent of state median income at four-year public universities, and to no more than 5 percent of median income at two-year public colleges. While institutions would be challenged to maintain quality and innovate in education and teaching to cut down on costs, states would be required to maintain their own funding efforts which, along with the increased funding from the matching grant program, would ensure universities do not suffer any decrease in educational quality while meeting these goals.
Help Low- and Middle-Income Students Cover Non-Tuition Costs
Debt-free college must apply to all college costs, not just tuition. But room and board is roughly double the cost of tuition on average. This brings the total cost of attendance up to nearly $19,000 a year for in-state students at four-year public universities. And federal support has not kept pace: while Pell Grants once covered nearly 70% of the cost of college for low-income students, they now cover only a third.
Increase Pell Grants. Pell Grants and state grants should be increased to cover the bulk of non-tuition costs for students who otherwise couldn’t afford them.
Expand and Modernize Work-Study. The need-based federal work-study program should be tripled so that at least two million students can participate. The program would be redesigned to make placements career-focused, and to better support low- and middle-income, part-time, and mid-career students. It will be essential to ensure the program hours are equitable and do not create additional economic hardship or detract from a quality education.
PROPOSAL: Set a national goal of increasing college completion rates by 25 percentage points within 10 years, and eliminating discrepancies in graduation rates based on race and income.
Partner With States and Schools to Improve Completion Rates
Fewer than 40 percent of students of all ages graduate from four-year institutions within four years. Low-income students are the least likely to graduate, with only nine percent of students from the lowest income bracket earning a bachelor’s degree by the time they turned 24.
Give Colleges Incentives to Lead. Matching federal grant programs and additional aid dollars should be used to encourage colleges to increase on-time graduation rates, improve education quality, and direct aid toward students who need it most.
Decouple Profits from Longer Completion Times. Federal and state governments should develop new incentives to encourage colleges and universities to help ensure students graduate on time.
Support Part-Time and Mid-Career Students
Roughly six million students attend college part-time, with five million students also supporting families while pursuing their degree. Unsurprisingly, part-time students are three times more likely to drop out than full-time students.
Make Childcare Affordable on Campus. A first priority for supporting this group of strivers is providing safe, high quality childcare on campus. Federal and state government should share the costs of increasing access to childcare for student parents.
Create Multiple Pathways to Graduation
Four years of classes are not always required for students to master the skills needed to enter a discipline, and many students learn better outside of the classroom. All measures should ensure access to an equal and quality education for all students at a given school, regardless of income.
Reduce Time to Graduation. The federal government should encourage schools to employ competency-based education strategies, which allow students to learn at their own pace, saving both money and time.
Encourage Expanded Online and Blended Learning, Project-Based Learning, and Course Redesign.
Increase College Preparedness
Although high school graduation rates are at a record-high 80 percent, one-third of high school students are unprepared for entry-level college courses.
Expand Access to Early College Credit. The federal government should support innovative efforts to better prepare high schoolers for college, like expanded accelerated learning and dual-enrollment programs.
Expand Access to Quality College Counseling. Better access to counseling is critical to helping lower-income and first-generation students apply for, navigate, and graduate from college, increasing college enrollment and graduation rates overall.
Hold For-Profit Colleges Accountable
Less than a quarter of students enrolled in for-profit institutions graduate, while the 11 percent of students who attend them represent almost half of all student loan defaults.
Set Strict Accountability Targets. President Obama’s aggressive efforts to prevent abuse, including the new gainful employment rule, should be expanded, to require colleges to meet accountability targets in recruitment, completion, and risk-sharing.'
https://martinomalley.com/policy/make-college-debt-free/
BlueCheese
(2,522 posts)I think all three candidates propose allowing current borrowers to refinance past student loans at the current rate for student loans.
But my question was a different one: Should there be any difference between the interest rates on student loans and that of home and car loans?
elleng
(141,926 posts)I don't know what Governor O'Malley's position on this is, but I think sound public policy might hold that student loans should be at the lowest possible rates, hence as low as or lower than rates for home and car loans.
Hoyt
(54,770 posts)by auto companies. I'm not sure how we help kids right this second, but longer term we need solutions including making sure kids aren't taking out exorbitant loans without a viable way to pay them off, including government service, teaching in rural areas, darn near "free" local colleges, etc.
Live and Learn
(12,769 posts)
LWolf
(46,179 posts)there should be no student loans. Education should be universal, and universally free, funded by taxes, pre-school through trade school or university.
dmosh42
(2,217 posts)
99Forever
(14,524 posts)All forms of PUBLIC education should be open to all qualified students and financed thru General Funds.
Private schools should not receive one penny of public funding.
jwirr
(39,215 posts)HereSince1628
(36,063 posts)No.