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(Politico)   Elizabeth Warren introduces legislation to make student loans have the same rock bottom interest rates as government loans to banks   (politico.com) divider line 213
    More: Hero, government-backed loan, interest rates, student loans, legislation, central banks, ripple effect, loans, CFPB  
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2662 clicks; posted to Politics » on 09 May 2013 at 1:17 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-05-08 11:52:59 PM
No, let people default on them and then let the tuition correction begin.

/Elizabeth Warren rocks
 
2013-05-08 11:53:00 PM
Damned socialists. What life lesson are these kids going to learn if we give the, the easy way?
 
2013-05-08 11:57:40 PM
Either we make college affordable for everyone or we admit this "all dogs go to college" model is both unnecessary and unsustainable

/bring back high school vo-tech
 
2013-05-09 12:04:45 AM
Sounds reasonable.

Probably won't pass Congress.
 
2013-05-09 12:06:36 AM

raerae1980: Sounds reasonable.

Probably won't pass Congress.


It will be interesting hearing the reasons excuses the "no" voters give.
 
2013-05-09 12:07:20 AM
Nice idea but will probably never go anywhere. The government likes to make money on this kind of stuff. I found out the hard way that IRS fees and penalties make loan sharks look reasonable. I think after that and my student loans they should boat named after me or something...
 
2013-05-09 12:07:48 AM
So? This doesn't fix the underlying problems that they still have $100K of debt that they can't discharge in bankruptcy, and they can't get jobs to pay off the loans.
 
2013-05-09 12:09:13 AM

Tellingthem: Nice idea but will probably never go anywhere. The government likes to make money on this kind of stuff. I found out the hard way that IRS fees and penalties make loan sharks look reasonable. I think after that and my student loans they should boat named after me or something...


??? that came out interesting...let's try that again.

I think after that and my student loans they should name a boat after me or something...
 
2013-05-09 12:13:57 AM

Lionel Mandrake: raerae1980: Sounds reasonable.

Probably won't pass Congress.

It will be interesting hearing the reasons excuses the "no" voters give.


Government imposing artificial restrictions on the free market. That's not interesting at all, it's the same song that's always played.
 
2013-05-09 12:26:32 AM
Elizabeth Warren, please have my babby!
 
2013-05-09 12:27:46 AM
The Teabagger House will have none of this, and "Ted" Cruz and is merry band of loonies will mostly likely invoke cloture if it comes through the Senate.
 
2013-05-09 12:31:07 AM
I like this idea, but it will never happen. There's too much money to be made.
 
2013-05-09 12:47:47 AM

Lionel Mandrake: raerae1980: Sounds reasonable.

Probably won't pass Congress.

It will be interesting hearing the reasons excuses the "no" voters give.


Only bootstrappy bankers who have proven they're job creators may receive loans at rock-bottom rates from the government.
 
2013-05-09 12:51:49 AM

SilentStrider: I like this idea, but it will never happen. There's too much money to be made.


Doesnt matter - she's at least bringing it up. The current model is about to collapse under its own weight. Already grad students cant get student loans. Think about what that means  - all those unfunded grad programs going away. This reduces the number of TAs which reduces the number of undergrad classes which reduces the number of undergrads. Its a downward spiral.

Yes the parasitic education loan industry has just about killed its academic institution hosts. We really ought to just scrap the whole thing and start over. It would be easier.
 
2013-05-09 12:53:44 AM
I went to college and my economics professors taught me prices were solely determined by what the market will bear. Intervention in the marketplace by the government, creating  much higher availability of capital in the market through guaranteed loans simply drives up prices. Since the banks are completely backstopped, they have no limit to lending and the colleges have very little push-back on prices because customers can't claim they don't have the money - it's available to them.

But the presidents of the universities all disingenuously blame the skyrocketing price of tuition on higher costs.

Interest rates are not the problem - price is the problem and government backstopping of loans is what caused it.
 
2013-05-09 01:06:46 AM
If the purpose of free, compulsory education is to foster an employable citizenry, then education should now be free and compulsory through at least a Bachelor's degree.
 
2013-05-09 01:20:08 AM
It will be rejected by the house because of "socializim" or some stupid bullshiat argument.
 
2013-05-09 01:25:20 AM

dj_bigbird: So? This doesn't fix the underlying problems that they still have $100K of debt that they can't discharge in bankruptcy, and they can't get jobs to pay off the loans.


Exactly.
 
2013-05-09 01:30:35 AM

Triumph: I went to college and my economics professors taught me prices were solely determined by what the market will bear. Intervention in the marketplace by the government, creating  much higher availability of capital in the market through guaranteed loans simply drives up prices. Since the banks are completely backstopped, they have no limit to lending and the colleges have very little push-back on prices because customers can't claim they don't have the money - it's available to them.

But the presidents of the universities all disingenuously blame the skyrocketing price of tuition on higher costs.

Interest rates are not the problem - price is the problem and government backstopping of loans is what caused it.


lolwut.jpg
 
2013-05-09 01:31:50 AM
Better yet, let's figure out why the increase in tuition is skyrocketing (even at public schools) and fix that so students don't have to borrow so much money to go to school in the first place.
 
2013-05-09 01:32:39 AM
No brainer
 
2013-05-09 01:34:30 AM
This is a crazy idea, but why not pay for college education and vocational training from current account (taxes) rather than financing education through loans that saddle each succeeding generation.
 
2013-05-09 01:38:17 AM

b2theory: No, let people default on them and then let the tuition correction begin.

/Elizabeth Warren rocks


A year or so ago, I was in my car listening to the local NPR affiliate and the presidents of three of Washington state's six private universities were being interviewed. They said that measured in constant dollars, the cost of educating a student had not increased in fifteen years or so - it was still about $15K/student/academic year. In fact, the cost was lower (albeit insignificantly so) than it was fifteen years ago, despite the fact that a larger proportion of students were taking engineering degrees (which are relatively expensive for the school, even after accounting for lab fees and such) relative to those taking humanities degrees (which are dirt cheap for the school).

The reason tuition had increased so dramatically in those fifteen years - the only reason - was the precipitous drop in state funding to higher education.

Now, one may argue that the people who actually take the degrees ought to be paying for them, and that makes some sense especially when you consider the increased earning power that those people are likely to enjoy. On the other hand, Americans have traditionally recognized the value to the entire community of making sure that citizens have an opportunity to reach their full productive potential. That's why George Washington worked so hard for the establishment of a national university in Washington, D.C. (he considered it his greatest failure that the university never came to pass). Whether or not one approves of the national trend toward reduced state funding of public higher education, one must concede that it represents a policy choice pretty much unprecedented in post-World War II America.
 
2013-05-09 01:38:22 AM

quickdraw: SilentStrider: I like this idea, but it will never happen. There's too much money to be made.

Doesnt matter - she's at least bringing it up. The current model is about to collapse under its own weight. Already grad students cant get student loans. Think about what that means  - all those unfunded grad programs going away. This reduces the number of TAs which reduces the number of undergrad classes which reduces the number of undergrads. Its a downward spiral.

Yes the parasitic education loan industry has just about killed its academic institution hosts. We really ought to just scrap the whole thing and start over. It would be easier.


Sounds socialist. Lets just increase h1b visas instead and scrap higher education altogether.

The world needs ditchdiggers too- a phrase i agree with except that we don't let ditchdiggers earn living wages, have stable incomes that support a family, or supplement their misery with a little pot.
 
2013-05-09 01:41:01 AM

SilentStrider: I like this idea, but it will never happen. There's too much money to be made.


Only until people start defaulting on the order of flies dropping, and then we'll see the same type of shiat we did when the mortgage crisis hit.

/and then Sen. Warren gets to sit back and go, "I told you so."
 
2013-05-09 01:41:30 AM

Lionel Mandrake: raerae1980: Sounds reasonable.

Probably won't pass Congress.

It will be interesting hearing the reasons excuses the "no" voters give.


Family values?
 
2013-05-09 01:43:15 AM

b2theory: No, let people default on them and then let the tuition correction begin.


This.

Because that is the only thing that will work.Student loans are the next big bailout whether we like it or not.
 
2013-05-09 01:46:08 AM
That kind of audacity will see her drummed out of politics before too long.
 
2013-05-09 01:47:16 AM

BMulligan: I was in my car listening to the local NPR affiliate and the presidents of three of Washington state's six private  public universities were being interviewed.


Brain fart.
 
2013-05-09 01:47:26 AM

Bonanza Jellybean: That kind of audacity will see her drummed out of politics before too long.


As long as she stays out of small planes, she has a fighting chance.
 
2013-05-09 01:50:02 AM
Well this flies right in the face of the basic Republican\ Libertarian principle that only the privileged should have access to higher learning.
 
2013-05-09 01:52:50 AM

vygramul: Lionel Mandrake: raerae1980: Sounds reasonable.

Probably won't pass Congress.

It will be interesting hearing the reasons excuses the "no" voters give.

Only bootstrappy bankers who have proven they're job creators may receive loans at rock-bottom rates from the government.


This will not pass because it  helps the poor and middle classes. We don't like to talk about it, and you only imply it here, but our government, federal and state, is not "We the People", but "We the Rich People". And they, in their apparently endless lust for money and power, are doing everything they can to take All The Things.

So no, this will never pass. It is an indirect threat to the rich.
 
2013-05-09 01:54:39 AM

Smackledorfer: Sounds socialist. Lets just increase h1b visas instead and scrap higher education altogether


good news, we're doing that! and we're pretending its all to help the poor bastards who are picking strawberries for pennies
 
2013-05-09 02:01:21 AM

ItchyMcDoogle: Well this flies right in the face of the basic Republican\ Libertarian principle that only the privileged should have access to higher learning.


i1243.photobucket.com
 
2013-05-09 02:04:24 AM

BMulligan: The reason tuition had increased so dramatically in those fifteen years - the only reason - was the precipitous drop in state funding to higher education


That is a self-serving statement on their part. It is true that to some degree state funding has been cut but the cuts in state funding alone cannot make up for the increases in tuition. The problem is complex and has many different parts but in essence the truth is that colleges and universities for the most part have over-invested in leadership positions (president, provost) and in buildings. The fact is that most state universities have spent their money on the "prestige" factor. For example, my local university has kept tuition low, the lowest in the state, Even with their recent tuition increase tuition will be less than $4000 per year, which is 1/2 the national average. But that is because they have not built any fancy buildings and the dorms remain for the 1970s (not kidding) and none of the staff have seen raises in ten years. Some of the kids biatch about it but I tell them are you here to live like a king or are you here to improve your mind?

So yes, state funding has been cut but it isn't the only reason tuition has jumped so sharply.
 
2013-05-09 02:07:07 AM
If only there was a way to get skilled workers with good educations into the work force cheaply so they can get more money so they pay taxes so we can do it again. If only there was a way....
 
2013-05-09 02:11:27 AM

worlddan: BMulligan: The reason tuition had increased so dramatically in those fifteen years - the only reason - was the precipitous drop in state funding to higher education

That is a self-serving statement on their part. It is true that to some degree state funding has been cut but the cuts in state funding alone cannot make up for the increases in tuition. The problem is complex and has many different parts but in essence the truth is that colleges and universities for the most part have over-invested in leadership positions (president, provost) and in buildings. The fact is that most state universities have spent their money on the "prestige" factor. For example, my local university has kept tuition low, the lowest in the state, Even with their recent tuition increase tuition will be less than $4000 per year, which is 1/2 the national average. But that is because they have not built any fancy buildings and the dorms remain for the 1970s (not kidding) and none of the staff have seen raises in ten years. Some of the kids biatch about it but I tell them are you here to live like a king or are you here to improve your mind?

So yes, state funding has been cut but it isn't the only reason tuition has jumped so sharply.


No, you missed the point. The point is that the universities have been doing everything that can be expected to contain costs. The cost of educating a student has remained the same, for fifteen years. You can't ask for more than that, can you?
 
2013-05-09 02:18:44 AM

dj_bigbird: So? This doesn't fix the underlying problems that they still have $100K of debt that they can't discharge in bankruptcy, and they can't get jobs to pay off the loans.


The average debt is around 20k

But Many students also have no debt.
 
2013-05-09 02:21:05 AM
The political value/purpose of this bill is to propose something entirely reasonable and progressive in order to nail those who oppose it in their next election. If it actually passes (not likely) so much the better. Good one, Senator Warren.
 
2013-05-09 02:24:49 AM

b2theory: No, let people default on them and then let the tuition correction begin.

/Elizabeth Warren rocks


Who will pay for the default?
 
2013-05-09 02:25:40 AM
Meh.  Everyone just needs to go into IBR repayment, and then declare bankruptcy after the 25 year taxbomb goes off.
 
2013-05-09 02:32:28 AM
BMulligan:

No, you missed the point. The point is that the universities have been doing everything that can be expected to contain costs.

No, that is wrong. Universities have not been doing everything to maintain costs. Some universities have been doing a lot and others not at all.

The cost of educating a student has remained the same, for fifteen years

Again, that is wrong. There is no universally accepted statistic called "cost of educating a student."  The cost of educating a student depends on a wide variety of factors but buildings, salaries, and maintenance are three big ones. For some big universities athletics are a huge cost sink (for others they actually make money off of athletics). How universities manage their costs structures varies widely between states and even within states. So making a statement that the cost of educating a student has remained the same for 15 year is meaningless. It may even be true in the specific cases noted in the NPR interview but it remains a meaningless statement in general.
 
2013-05-09 02:33:27 AM
There are three major problems.

Two are addressed by providing broad access to merit based scholarships. University/colleges that receive federal funds would be required to accept a fixed level of support for any qualifying student as "fully paid". This would have to include "fees".  I'd suggest it should handle between 15 to 25% of the 18 - 22 population.

This provides a disincentive to drive up the real cost of education. It also forces students to compete to maintain qualification. Not for any intrinsic merits to competition but it would drive up standards and they have been dropping.

The last problem is if the economy has need for lots of well educated graduates. Call me an optimist but perhaps a supply of well educated graduates could provide a sustainable economic stimulus. I'm not actually sure it would work but I'd like to give it the old college try.
 
2013-05-09 02:33:28 AM
I have $60K in student loans I've not been able to pay one cent on because I have not been able to find a job since I graduated. And it's not like I'm being picky - for a month now I've been applying for dishwasher positions, but I've been told I'm "overqualified".
 
2013-05-09 02:37:49 AM

BMulligan: worlddan: BMulligan: The reason tuition had increased so dramatically in those fifteen years - the only reason - was the precipitous drop in state funding to higher education

That is a self-serving statement on their part. It is true that to some degree state funding has been cut but the cuts in state funding alone cannot make up for the increases in tuition. The problem is complex and has many different parts but in essence the truth is that colleges and universities for the most part have over-invested in leadership positions (president, provost) and in buildings. The fact is that most state universities have spent their money on the "prestige" factor. For example, my local university has kept tuition low, the lowest in the state, Even with their recent tuition increase tuition will be less than $4000 per year, which is 1/2 the national average. But that is because they have not built any fancy buildings and the dorms remain for the 1970s (not kidding) and none of the staff have seen raises in ten years. Some of the kids biatch about it but I tell them are you here to live like a king or are you here to improve your mind?

So yes, state funding has been cut but it isn't the only reason tuition has jumped so sharply.

No, you missed the point. The point is that the universities have been doing everything that can be expected to contain costs. The cost of educating a student has remained the same, for fifteen years. You can't ask for more than that, can you?


The problem is not all costs are contained in educating. A BIG chunk of expansion projects are focused to attract new students - especially high value out of state or foreign kids who pay maximum money and usually cause the least amount of problems ("Honors" dorms). New dorms, new recreational centers, new dining halls with bistro-style eating, and well placed libraries/computer labs (the last two are part of the learning experience and can aid in education, so I'll give spending on those a pass). The idea is to make your campus as shiny as possible for all the hospitality days so the students pick schools based on logistics rather than education. More students = more money = more nice things = more students with more money.

That and a growth in administration positions rather than direct faculty growth (a story on Fark not to long ago talked about just that topic and another mentioned the decline in tenured positions). The system is turning into a 4 year babysitting venture with a money train backstopped by the security of the US dollar.
 
2013-05-09 02:41:01 AM

Lackofname: I have $60K in student loans I've not been able to pay one cent on because I have not been able to find a job since I graduated. And it's not like I'm being picky - for a month now I've been applying for dishwasher positions, but I've been told I'm "overqualified".


Seriously, good luck. I was class of 2010 (double major in Finance/Econ, so math classes PLUS mindless dicking around), and just now got a big boy job. I know the economy is significantly better when I got my handshake and piece of paper, but good luck to you. It's slit throats or stay home on every job interview.
 
2013-05-09 02:50:24 AM

Lackofname: I have $60K in student loans I've not been able to pay one cent on because I have not been able to find a job since I graduated. And it's not like I'm being picky - for a month now I've been applying for dishwasher positions, but I've been told I'm "overqualified".


You can understand their position on this. They know you will continue to look until you get a job and then you will leave.
 
2013-05-09 03:01:05 AM

Snarcoleptic_Hoosier: The system is turning into a 4 year babysitting venture with a money train backstopped by the security of the US dollar.


Yes, I agree with you. Here is the issue in a nutshell. The initial idea way back in 1976 was that students should bear some responsibility for their education because students loans should not be a form of welfare but rather a form of investment. The problem was that over time what it essentially did was transfer budget problems from the states to the federal government with students as an intermediary. States kept cutting budgets to higher education because there was essentially no downside to them doing so; the federal government simply picked up the cuts in the form of increases student loan debt. College administrators got smart and figured out that they could do the same thing (within limits).

The result was that no one became responsible for higher education except the students themselves. What we have learned is that students and their parents are not sophisticated purchasers of higher education services.  So the result is a cluster fark. States do not have any incentive to spend more on higher education when the federal government will pick up the tab. Students are unsophisticated and do not understand how to shop for educational services, and the federal government is caught between lobbies who want to promote access to higher education and those who do not want to see education turn into welfare.  So the system is a mess. The one truth, however, is that something has to give.
 
2013-05-09 03:06:47 AM

vygramul: Lackofname: I have $60K in student loans I've not been able to pay one cent on because I have not been able to find a job since I graduated. And it's not like I'm being picky - for a month now I've been applying for dishwasher positions, but I've been told I'm "overqualified".

You can understand their position on this. They know you will continue to look until you get a job and then you will leave.


Yeah well right now I have enough money to get me through to July, and then I run out, so I'm a little desperate. It's nice of them to be cautious, but in the interim I won't be able to pay bills.
 
2013-05-09 03:07:02 AM
random rant while we're at it.. why can't the government fulfill the need for electronic currency and manage the credit card networks publicly? THAT would be something that would save the citizenry SO much money... and represent a need most easily satisfied by a public investment, that there's no way "fiscally responsible" people would back it.

/fiscally responsible: definition: whatever makes the private citizen the most income in the short term. there, doesn't that make more sense?
 
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