The defeat of student loan refinancing

Updated: Friday, June 13, 2014
The defeat of student loan refinancing story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - Twenty-five million Americans saddled with high-interest student loans lost a chance Wednesday to have their rates lowered when Senate Republicans shot down legislation that would have allowed them to refinance their debt.

The bill was defeated, even as concerns are growing that mounting student debt is hampering economic recovery from the great recession because former students are so financially strapped and starved for higher paying jobs that they can't participate in our economy.

Tonight in Tom's Corner, Tom Van Howe says it's another example of our growing great, partisan shaped economic divide.

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So many things in this world are the result of to whom you are born. At birth you don't choose whether you're going to be a Christian or a Jew or a Muslim. You don't choose to be poverty-stricken or wealthy. You don't get to choose the color of your skin. Nor whether you live winters in a deep freeze or in warmth and sunshine.

You pretty much become a product of your environment.

It's the accident of birth.

So  its nobody's fault that 70 percent of the college students in this country have to borrow money to chase dreams of being engineers, scientists, social workers, programmers, pharmacists, cops, prosecutors, defenders, entrepreneurs and so on.

So with the student debt burden up around $1.3 trillion, with the default rate approaching 15 percent, and with so many young people unable to buy homes, cars, start businesses--unable to participate in and contribute to our economy in any meaningful way--it stood to reason that our Congress  would ride in to the rescue.

Not to wipe our their debt. But to restructure it so students could save thousands of dollars with lower interest rates.

After all, we do it all the time. We want people to give to charity, so we offer tax breaks for donations; we want people to own homes, we devise tax breaks. We give deductions for children to encourage families. Corporations get tax breaks on things most of us can't comprehend.

And who needs the help more right now? The banks and lending companies that ran our country into the sewer a few years ago? Or young Americans who are going to be leading the charge in the years ahead?

I thought I knew the answer to that. But I was wrong.

The Senate shot it down. It needed 60 votes to carry--it got 58.

Senate Minority Leader Mitch McConnell, who surely must have come to us from some parallel universe, said "Senate Democrats don't actually want a solution for their students. They want an issue to campaign on."

Seems to me he just gave it to them.

Now, there was a catch to the bill that was introduced by Massachusetts Senator Elizabeth Warren: to take up any slack the refinancing of student debt might have created, the bill would have added a small tax on wealthy households. Not the kind of burden that would have altered anyone's life style.

"With this vote," Warren said, "we show the American people who we work for in the United States Senate: billionaires or students."

After years of speculation, now we know.

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

Business News

Last Update on October 31, 2014 17:47 GMT

CONSUMER SENTIMENT

WASHINGTON (AP) -- U.S. consumers expect better economic growth and rising incomes in the coming months, pushing a measure of confidence to a seven-year high in October.

The University of Michigan says that its index of consumer sentiment rose to 86.9 from 84.6 in September. That's the highest since July 2007, five months before the Great Recession began. Still, the index regularly topped 90 before the downturn.

Richard Curtin, the survey's chief economist, says that almost six in ten of the respondents said the economy has improved recently, the highest proportion in more than 10 years.

The measure is the second this week to show consumer confidence has reached the highest level since the recession. Greater confidence and more hiring could lead to faster spending and healthier economic growth.

CONSUMER SPENDING

WASHINGTON (AP) -- U.S. consumer spending fell in September, the first decline since January, as shoppers took a breather after a big spending spree in August. Income growth posted the slowest gain this year.

The Commerce Department says consumer spending dropped 0.2 percent in September. Income edged up 0.2 percent in September, the smallest monthly gain since a flat reading last December.

The spending decline followed a big 0.5 percent increase in August. In September demand fell for durable goods such as autos and for nondurable goods, a drop that partially reflected falling prices for gasoline.

Spending is closely watched because it accounts for 70 percent of economic activity. Economists believe September will be a temporary pause as continued hiring gains pushing up spending and the overall economy in coming months.

GASOLINE PRICES

NEW YORK (AP) -- The average price of gasoline in the U.S. hit $3 a gallon Friday, and should soon drop below the benchmark for the first time since December 2010.

The price at the pump fell 33 cents in October, thanks mainly to plunging oil prices, according to AAA.

Many exuberant drivers have taken to social media to post pictures of gas station signs with prices of $2.99 or lower. Drivers in South Carolina and Tennessee are paying the lowest prices, with an average of $2.75 a gallon.

Drivers in New York are paying the most in the continental U.S., at an average of $3.37. That's still 22 cents cheaper than a year ago.

Gasoline is cheaper than milk again. In September the national average price of milk was $3.73 per gallon.

EARNS-BIG OIL

NEW YORK (AP) -- Falling oil prices hardly seem to be bothering the two biggest U.S. oil companies, but things could get tougher in the coming months.

Exxon and Chevron leaned on strong performances from their refining operations to increase profits in the third quarter despite plummeting global oil prices.

The global price of oil fell 18 percent from the beginning of the quarter to the end, and it cost both companies. Revenue slipped at Exxon by 4 percent and at Chevron by 8 percent.

But low oil and natural gas prices make for low raw material costs -- and higher profit -- for refining and chemical operations, which turn oil and gas into fuels and chemicals. Profit at Exxon's refining and chemicals operations rose 38 percent compared with a year earlier, and Chevron's profit from its so-called downstream operations more than tripled.

Those results helped Exxon's overall earning rise 3 percent in the quarter to $8.07 billion. Chevron's earnings rose 13 percent to $5.59 billion.

NISSAN-AIR BAG RECALL

DETROIT (AP) -- Nissan says it's recalling more than 1,800 Infiniti SUVs in the U.S. for an air bag problem that could send shrapnel into the passenger compartment.

The recall covers the QX56 SUVs from 2013 and the QX80s from 2014. The company says inflators made by Takata Corp. were built with an incorrect outer baffle part. That can cause pressure to build up, and the inflators can rupture if driver's side air bags are deployed.

Nissan has no reports of injuries from the problem. It was discovered after General Motors recalled 33,000 Cruze compact cars for the same problem in June. The Infiniti recall is part of a larger global recall of 260,000 Nissans announced last week.

Takata says the recall is separate from another one affecting 8 million vehicles in the U.S.

EUROPE-ECONOMY

FRANKFURT, Germany (AP) -- Inflation has crept higher in the 18 countries that use the euro but the rise to 0.4 percent in the year to October is unlikely to offer much relief to the European Central Bank as it tries to boost a weak economy.

The official figure released Friday was up from 0.3 percent the month before.

The European Central Bank is under pressure to give the eurozone another dose of stimulus measures in coming months because inflation is so low and growth so weak. There are fears the eurozone could even fall into outright deflation, a crippling downward price spiral.

Core inflation, a key measure because it excludes volatile food and energy prices, fell to 0.7 percent from 0.8 percent.

The bank's goal is to keep inflation just below 2 percent.

BRITAIN-RBS

LONDON (AP) -- Royal Bank of Scotland, which is majority-owned by the U.K. government, has set aside 400 million pounds ($639 million) to cover potential fines arising from international investigations into alleged manipulation of foreign currency trading.

The total represents over half the 780 million pounds the bank earmarked for "conduct and litigation costs" in third-quarter earnings released Friday.

The results show the bank, which was bailed out by the government during the 2008 financial crisis, swung back to profit during the July-September period. Its net income of 896 million pounds follows an 828 million-pound loss last year.

CEO Ross McEwan says the bank knows it has "a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers' trust in us."

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