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 October 22, 2014 17:29 GMT

CONSUMER PRICES

WASHINGTON (AP) -- U.S. consumer prices edged up slightly in September, with the overall increase held back by a third straight monthly decline in gasoline prices. The tiny gain was the latest evidence that inflation remains dormant.

The Labor Department says consumer prices rose 0.1 percent in September after having falling 0.2 percent in August. Core prices, which exclude volatile food and energy, also rose 0.1 percent after no gain in August.

Over the past 12 months, overall prices are up 1.7 percent and core prices are up a similar 1.7 percent. Both increases are well below the 2 percent target for inflation set by the Federal Reserve. The absence of inflationary pressures has allowed the central bank to keep interest rates at record lows to boost the economy.

SOCIAL SECURITY-COLA

WASHINGTON (AP) -- The government says millions of older Americans who rely on federal benefits will get a 1.7 percent increase in their monthly payments next year.

It's the third year in a row the increase will be less than 2 percent.

The annual cost-of-living adjustment affects payments for more than 70 million Social Security recipients, disabled veterans and federal retirees.

The government announced the increase Wednesday, when it released the latest measure of consumer prices. By law, the increase is based on inflation, which is well below historical averages so far this year.

Congress enacted automatic increases for Social Security beneficiaries in 1975. Until recently, the increases were rarely less than 2 percent.

AIR BAG RECALL

DETROIT (AP) -- The U.S. government is adding more than 3 million vehicles to a rare warning about faulty air bags that have the potential to kill or injure drivers or passengers in a crash.

The National Highway Traffic Safety Administration on Wednesday put out a new list of vehicles, increasing the number from 4.7 million to 7.8 million. The agency urged people to get their cars repaired if they're being recalled, especially in Florida and along the Gulf Coast.

The air bag inflators made by parts supplier Takata can rupture, causing metal fragments to fly out when the bags are inflated. Safety advocates say at least four people have died from the problem.

The warning covers many models from BMW, Chrysler, Ford, General Motors, Mazda, Honda, Mitsubishi, Nissan, Subaru and Toyota.

EBOLA MONITORING

WASHINGTON (AP) -- Federal health officials are significantly expanding the breadth of vigilance for Ebola, saying that all travelers who come into the U.S. from Ebola-stricken West African nations will now be monitored for symptoms of illness for 21 days.

The director of the Centers for Disease Control and Prevention says the program will begin Monday and cover visitors as well as aid workers, journalists and other Americans returning from Liberia, Sierra Leone or Guinea.

The program will start in six states: New York, Pennsylvania, Maryland, Virginia, New Jersey and Georgia.

CDC Director Tom Frieden says state and local health officials will check daily for fever or other Ebola symptoms.

Passengers will get kits to help them track their temperature and will be told to inform health officials daily of their status.

J&J-EBOLA VACCINE

J&J to spend up to $200M on Ebola vaccine program

NEW BRUNSWICK, N.J. (AP) -- Johnson & Johnson will start safety testing in early January on a vaccine combination that could protect people from a strain of the deadly Ebola virus.

The health care products maker says it has committed up to $200 million to speed up and expand production of a vaccine program being developed by its Janssen Pharmaceutical Companies.

J&J is developing the vaccine with the Danish biotech company Bavarian Nordic. It involves a regimen in which two vaccines are delivered two months apart. The combination provided complete protection in animals against a virus strain similar to the one causing the current outbreak in West Africa that has killed thousands of people.

The New Brunswick, New Jersey, company says it will also determine whether its vaccine protects against the version causing the outbreak.

MORTGAGE RISK RULES

WASHINGTON (AP) -- Federal regulators are proceeding with new rules that ease guidelines for banks selling mortgage securities and could mean fewer borrowers will need to make hefty down payments.

The Securities and Exchange Commission voted 3-2 Wednesday to adopt the rules, which six federal agencies have been working on since 2011. Three other agencies adopted the rules Tuesday, and the Federal Reserve has scheduled a vote for Wednesday afternoon.

The rules govern the amount of risk banks must take on when they package and sell mortgage securities in a multitrillion-dollar market. In the final rules, the regulators have dropped a key requirement: a 20-percent down payment from the borrower if a bank didn't hold at least 5 percent of the mortgage securities tied to those loans on its books.

MINI-OVERSTATED GAS MILEAGE

DETROIT (AP) -- The U.S. government has told BMW to reduce the gas mileage estimates on window stickers of four Mini Cooper models.

Testing by the Environmental Protection Agency lab in Ann Arbor, Michigan, discovered the overstated mileage.

The vehicles affected are the 2014 Mini Cooper three-door and Mini Cooper three-door S models with manual and automatic transmissions. BMW must cut the highway mileage by one-to-four miles per gallon depending on the model. Estimates for city driving and combined city and highway fuel economy also must be reduced.

The EPA says it audited the Mini gas mileage and came up with lower values than BMW, which makes the cars. It's the fourth time in the past two years that the EPA has found discrepancies in the gas mileage estimates provided by an automaker.

PEW-ONLINE HARASSMENT

NEW YORK (AP) -- A new study confirms what many Internet users know all too well: Harassment is a common part of online life.

The report by the Pew Research Center found that nearly three-quarters of American adults who use the Internet have witnessed online harassment. Forty percent have experienced it themselves.

The types of harassment Pew asked about range from name-calling to physical threats, sexual harassment and stalking. Half of those who were harassed said they didn't know the person who had most recently attacked them.

Young adults -- people 18 to 29 -- were the most likely age group to see and undergo online harassment.

The survey was conducted between May 30 and June 30 among 3,217 respondents.

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