Student loan interest rates

Updated: Saturday, August 3, 2013
Student loan interest rates story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - The numbers are staggering--of the 7 million or so students going to college in this country, 66 percent of them are on campus thanks to borrowed money.

With the failure of Congress on Wednesday to face down a problem that it knew was coming for a long time, the interest on new student loans has doubled.

Tonight in Tom's Corner, Tom Van Howe says our government not only doesn't see the little picture, it can't even imagine the bigger one.

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I understand that the men and women who make the decisions in our congress have a lot of work to do. I get it.

But it's gotten to a point where if something is truly important—it just doesn't get done.

It's embarrassing that the Senate knew for a year—a full year—that if it didn't do something, the cost of student loans would, on July 1st, go up.

So what did it do? It went home on vacation.

And guess what; interest rates went up from 3.4 percent to 6.8 percent.

Hello?!

Then yesterday, the votes weren't there to come up with a temporary fix. No surprise. There were Senators looking for a permanent fix. They knew that going in.

Nonetheless, there was a lot of breathless posturing; a charade, if you will, to convey just how hard they were all working.

I don't think the rate will stay that high for very long. For one thing, it's bad politics. It could mean votes!

But what's missing is real conversation about the bigger picture.

I think we can all agree that the need for higher education has never been greater than now. The high-school-to-factory  syndrome is long gone.

Even those jobs now require more than high school can provide.

Continuing education is crucial to the future of our country. Its no longer a matter of "it would be nice," it's a matter of "we have to."

Trouble is, the cost of college and specialized training schools is cold-bloodedly expensive—up about 500 percent over the past 25 years. The cost of text books has tripled over the past ten years.

More and more moms and dads find it impossible to pay as they go, so two-thirds of all students now borrow to attend class.

Students can no longer pay their way with a part time job.

And the average student graduates with a debt of $28,000. But there are tens of thousands of students who graduate with  debt of up to $200,000 dollars.

Right now, Americans owe more than a trillion dollars on student loans. The second highest kind of consumer debt out there behind the mortgages.

And now for the hammer.

Lest you think students loans cost us money—last year, according to the government accounting office, the U.S. government collected $51 billion in interest payments. Fifty-one billion dollars!

Why in the world is the U.S. government making that kind of money off students who have yet to land a job?

A few months ago, freshman Senator Elizabeth Warren, of Massachusetts, suggested it might be wise to lower student loan interest rates to below one percent—the same rate that banks pay the federal reserve for short-term loans.

So simple, so reasonable, so doable.

But then—we're talking about Congress.

Making college degrees and technical certificates more affordable should be a national priority.

We need young graduates to be strong, competitive, and dynamic, just as the United States needs to be strong, competitive and dynamic.

The accumulating student debt is a drag on our economy—just think about how far those billions in interest payments could go in a world of starter houses, cars, and small business loans.

We've got lots of problems with higher education in this country. But setting a truly low, fixed interest rate, to encourage ambitious young people, instead of adding to their burdens, is a part of the answer.

Think about it.

In this corner...I'm Tom Van Howe.

Business News

Last Update on January 27, 2015 18:22 GMT

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NEW YORK (AP) -- Several big-name companies have turned in disappointing earnings or weaker outlooks today.

Caterpillar's stock has fallen 7 percent after restructuring costs took a bite out of earnings. The heavy equipment maker also issued a weaker outlook, citing the tumbling price of commodities.

Procter & Gamble is down 3 percent as the strong U.S. dollar cut into second-quarter earnings. The company says exchange rates will remain a challenge well into fiscal 2015.

American Airlines is bucking the negative trend with its results, though not with its share price. The airline is getting a huge lift from cheaper fuel -- with savings that could top $5 billion this year -- and strong travel demand. It logged record profits of $597 million in the fourth quarter, reversing a $2 billion loss a year earlier. However, American's shares have fallen 3 percent after the company said first quarter revenue for each seat flown would be 2 to 4 percent lower than a year ago.

3M's shares are down despite 7 percent increase in profits. DuPont is also down despite rising profits.

Pfizer shares are flat, but it is the one member of the Dow 30 that's at least seen its stock price flirt with a gain. Despite a drop in fourth-quarter profits, the drugmaker beat Wall Street expectations.

CONSUMER CONFIDENCE

WASHINGTON (AP) -- U.S. consumer confidence shot up in January to the highest level since August 2007.

The Conference Board reports that its consumer confidence index climbed to 102.9 this month from a revised 93.1 in December.

Americans are feeling better about current economic conditions, including the job market. They are also more optimistic about business conditions over the next six months.

Consumer confidence has been rising as the economy improves. Employers added nearly 3 million jobs last year, most since 1999. The unemployment rate last month tumbled to a 6-year low of 5.6 percent.

The economy grew from July through September at a 5 percent annual rate, fastest in 11 years.

Adding to improving spirits: Gas prices have plunged to $2.04 a gallon Tuesday from $2.32 a gallon a month ago, according to AAA.

DURABLE GOODS

WASHINGTON (AP) -- Orders for long-lasting manufactured goods dropped sharply in December, dragged lower by a big decline in demand for commercial aircraft.

The Commerce Department says orders for durable goods fell 3.4 percent in December following a 2.1 percent decline in November. The weakness was led by a 55.5 percent plunge in the volatile category of commercial aircraft.

There was also weakness in a number of areas, and a key category that serves as a proxy for business investment plans edged down 0.6 percent in December after a similar decline in November and a 1.8 percent fall in October.

NEW HOME SALES

WASHINGTON (AP) -- Sales of new U.S. homes accelerated strongly in December, a sign that home-buying may improve this year after a lackluster 2014.

The Commerce Department says new home sales climbed 11.6 percent last month to a seasonally adjusted annual rate of 481,000. The gains were not enough to offset essentially flat home-buying over the course of 2014. Just 435,000 new homes were bought last year, a modest 1.2 percent improvement from 2013.

The growth in December pointed to rising sales in 2015, buoyed by the combination of strong hiring in recent months and drastically lower mortgage rates. Home values are also rising at a slower pace, improving affordability for would-be buyers.

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WASHINGTON (AP) -- U.S. home prices rose at a modest pace in November, held back by weaker sales and a limited number of available houses.

The Standard & Poor's/Case-Shiller 20-city home price index increased 4.3 percent in November from 12 months earlier. That's down slightly from a 4.5 percent pace in October. Sharp price increases early last year and tight credit held back home sales in 2014. Sales of existing homes fell 3.1 percent to 4.93 million. Yet housing may rebound this year thanks to smaller price gains, lower mortgage rates, and healthy hiring.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The November figures are the latest available.

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WASHINGTON (AP) -- Unemployment rates fell in 42 U.S. states last month, the latest sign that strong hiring is boosting job opportunities nationwide.

The Labor Department said Tuesday that rates rose in just four states last month and were unchanged in four others.

Job gains remained healthy in states with large oil and gas industries, suggesting that plunging oil prices have yet to cause significant layoffs. Texas gained 45,700 jobs in December, the most in the nation. Overall, 41 states gained jobs, while nine said they had lost jobs.

Nationwide, nearly 3 million more Americans are earning paychecks now compared with 12 months ago. That should help boost consumer spending and accelerate the economy's growth. Analysts forecast that growth should top 3 percent this year for the first time in a decade.

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In each of the accidents examined by the board, the gas companies failed to conduct inspections or tests that might have revealed pipeline weaknesses.

The U.S. is crisscrossed by nearly 300,000 miles of gas transmission pipelines, more than half of which were installed before 1970.

OBAMA-OFFSHORE DRILLING

WASHINGTON (AP) -- The Obama administration is floating a plan that for the first time would open up areas off the Atlantic Coast to drilling

The proposal envisions auctioning areas located more than 50 miles off Virginia, North and South Carolina, and Georgia to oil companies come 2021. For decades, oil companies have been barred from drilling in the Atlantic Ocean, where a moratorium was in place up until 2008.

Meanwhile, the plan also would restrict drilling in environmentally-sensitive areas off Alaska. It would make parts of the Beaufort and Chukchi seas off limits, citing their importance to Alaska natives and the sensitive environmental resources.

The plan is already drawing criticism on Capitol Hill. Alaska Republican Sen. Lisa Murkowski calls it a war on her home state. Northeastern Democrats are expected to outline their objections later today to drilling in the Atlantic Ocean.

CONGRESS-TRADE

WASHINGTON (AP) -- The Obama administration's top trade official says Congress must return enhanced negotiating powers to the White House in order to cut important trade deals with Pacific-rim nations and others.

U.S. Trade Representative Michael Froman told Congress on Tuesday that President Barack Obama needs "trade promotion authority." That power, sometimes called "fast-track" authority, allows presidents to send proposed trade agreements to Congress for yes or no votes, with no amendments.

Congress has sometimes granted such powers before.

Utah Republican and Senate Finance Committee Chairman Orrin Hatch agreed that Obama needs the enhanced authority to complete a long-discussed trade deal with Japan and several other Pacific nations.

Many Democrats, liberals and labor groups oppose such deals, which they say hurt American jobs. Several anti-trade protesters interrupted Froman's committee testimony.

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