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 June 02, 2015 17:05 GMT

AUTO SALES

DETROIT (AP) -- U.S. automakers are posting stronger-than-expected sales for the month of May, thanks to Memorial Day promotions and strong demand for new SUVs.

General Motors says sales rose 3 percent over last May, while Fiat Chrysler's sales rose 4 percent. Both automakers benefited as buyers continued a steady shift from cars into small and medium-sized SUVs. Sales of the Jeep Cherokee SUV were up 23 percent, while sales of the GMC Acadia jumped 67 percent.

Volkswagen surprised with an 8 percent sales gain. Ford's sales fell 1 percent and Toyota's sales were flat.

May is typically one of the biggest sales months of the year, as buyers flush with tax returns look forward to summer road trips. Last May, sales jumped 11 percent to 1.6 million, their highest monthly total in nine years.

After five years of growth after the recession, it's getting increasingly difficult for the industry to match those kinds of numbers. U.S. sales are expected to hit 17 million this year, near their historic peak of a decade ago, and automakers will have to work harder to post big gains.

But the industry isn't alarmed. Because of factory closures during the recession, output is closer to matching consumer demand, so car companies don't have to resort to as much expensive discounting as they did in the past. Demand for new vehicles also remains healthy.

FORD-INCREASED PRODUCTION

DEARBORN, Mich. (AP) -- Ford will shorten the traditional summer shut-down of some of its plants to meet strong demand for its vehicles.

The automobile maker said Tuesday that six of its assembly plants, as well as supporting powertrain and stamping plants, will shut down for only one week beginning June 29, rather than the usual two weeks.

Ford Motor Co. said that there's strong demand for its F-150 pickups, as well as vehicles like the Escape, Explorer and the Edge, a mid-size crossover. The company says that it will produce almost an additional 40,000 vehicles this summer with plants open longer.

It is the third consecutive year that the Dearborn, Michigan, company has kept plants open longer to meet demand.

TAKATA-AIR BAGS-CONGRESS

WASHINGTON (AP) -- Lawmakers are seeking answers from the maker of defective air bags and federal regulators as they focus on the biggest auto-safety recall in U.S. history.

Japan's Takata Corp. agreed last month to declare 33.8 million air bags defective. Faulty inflators inside the air bags are responsible for six deaths and over 100 injuries worldwide. A top Takata executive and the head of the National Highway Traffic Safety Administration are answering questions at a U.S. House hearing Tuesday.

Lawmakers want to know how the replacement inflators being installed are different so that they won't suffer the same defect, and how long all the repairs will take.

The chemical that inflates the air bags can explode with too much force, blowing apart inflators and sending shrapnel into the passenger compartment.

US-GULF-OIL-SPILL-TRIAL

NEW ORLEANS (AP) -- A federal prosecutor has told jurors that a former BP executive lied to federal investigators about how he came up with flow rate estimates after a 2010 rig explosion sent oil spewing into the Gulf of Mexico.

Defense attorneys countered Tuesday that prosecutors are trying to convict David Rainey based on an interview conducted a year after the spill.

They say there is no proof Rainey had any reason to lie about the way he tried to calculate the rate at which oil was flowing after the Deepwater Horizon explosion.

The jury in the case was selected Monday. Opening statements were delivered Tuesday.

U.S. District Judge Kurt Engelhardt says the case could go to the jury by the end of the week.

EUROPE-ECONOMY

BRUSSELS (AP) -- Official figures show consumer prices across the 19-country eurozone rose in May were up 0.3 percent from the year before, the first positive reading in six months.

The increase reported Tuesday by the EU's statistics agency, Eurostat, was slightly higher than market expectations for a 0.2 percent increase and suggests that the eurozone is past its period of falling prices.

The European Central Bank was worried that a protracted period of falling prices, called deflation, may hurt the eurozone economy. Falling prices can prompt consumers to delay spending as they await cheaper bargains down the line and businesses to rein in investment.

US-WORKING-WITH-DISABILITIES

CONCORD, N.H. (AP) -- A national survey that explores how people with disabilities find and keep jobs shows that more than two-thirds of them are "striving to work."

Researchers with the Kessler Foundation and the University of New Hampshire include three groups of people under that category. They are the 43 percent who are currently working, the 9 percent who are looking for work and the 17 percent who have worked since the onset of their disability.

The survey results they are releasing Wednesday also include information about what employment barriers people face and how often they overcome them. Officials hope the information will spur development of targeted strategies and programs to get more people with disabilities into the workplace.

TOYS R US-CEO

WAYNE, N.J. (AP) -- The chairman and CEO of Toys R Us is retiring and will be succeeded by an executive with experience in taking companies public.

The toy retailer said Tuesday that David Brandon will take over from Antonio Urcelay on July 1. The 63-year-old Brandon is the former chairman and CEO of Domino's Pizza, and helped that company with its initial public offering. Brandon also served as president and CEO of Valassis Communications and assisted with its transition to a publicly traded company.

Urcelay, also 63, had served as chairman and CEO of Toys R Us since November 2013. He'd worked for the chain since 1996.

The Wayne, New Jersey company went private in 2005 when it was acquired by Kohlberg Kravis Roberts & Co., Bain Capital Inc. and Vornado Realty Trust.

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