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 August 28, 2015 17:24 GMT

FED-RATES

WASHINGTON (AP) -- Federal Reserve Vice Chairman Stanley Fischer says that incoming economic data and market developments will likely determine whether the Fed boosts interest rates in September.

Fischer says that before the recent turbulence in financial markets, there was a "pretty strong case" for starting to hike rates in September. But he adds that the Fed is watching how events unfold following the surprise announcement by the Chinese that they plan to devalue their currency.

Fischer says that central bank officials have not made a decision yet on whether to raise rates but would be closely following data such as next week's jobs report and market moves before the Sept. 16-17 meeting.

Fischer said the plan is still to move rates up very slowly and gradually.

CONSUMER SPENDING

WASHINGTON (AP) -- U.S. consumers increased their spending by a moderate amount in July, while income growth was propelled by the largest jump in wages and salaries in eight months.

The Commerce Department says spending rose 0.3 percent in July, helped by a big jump in purchases of big-ticket items such as cars. June's result was revised up to a matching 0.3 percent gain.

Incomes increased 0.4 percent. The key category of wages and salaries rose 0.5 percent, the biggest advance since last November.

The report indicates that consumer spending, which accounts for 70 percent of economic activity, got off to a good start in the third quarter. Economists believe the economy will be fueled in the second half of this year by solid income and spending gains.

CONSUMER SENTIMENT

WASHINGTON (AP) -- Plummeting stock prices have taken a toll on U.S. consumer confidence, though there are signs the setback may be temporary.

The University of Michigan says its consumer sentiment index fell to 91.9 this month from 93.1 in July. The index is still up 11.4 percent from a year ago.

The figures provide an early read of the impact on consumers from the 1,900 point drop in the Dow Jones industrial average over six days through Tuesday. Stock prices have since recovered some of those losses.

The University of Michigan surveys consumers throughout the month and so some of the responses were tallied as the stock market plunged.

Even so, the survey also found that Americans remain confident about the U.S. economy and their personal finances.

FACEBOOK-ONE BILLION A DAY

NEW YORK (AP) -- You, your mom, your grandma and elementary school buddy Lawrence might have been some of the billion people who logged in to Facebook on Monday -- the first time that has happened in a single day. That's right, one billion people, or one-seventh of the Earth's population.

It was a big symbolic milestone for the world's biggest online social network, which boasts nearly 1.5 billion users who log in at least once a month. CEO Mark Zuckerberg marked the occasion with a Facebook post.

Most of the billion people who logged in on Monday were outside the U.S. and Canada. Of Facebook's overall users, more than 83 percent come from other countries. This is also where Facebook's next billions of users will likely come from as it grows.

CHEATING WEBSITE-CEO

NEW YORK (AP) -- The CEO of adultery website Ashley Madison is stepping down in the wake of the massive breach of the company's computer systems and outing of millions of its members.

Avid Life Media Inc., Ashley Madison's parent company, says Noel Biderman's departure was a mutual decision and in the best interest of the company.

Hackers originally breached Avid Life's systems in July and then posted the information online a month later after the company didn't comply with their demands to shut down.

Ashley Madison, whose slogan is "Life is short. Have an affair," purports to have nearly 40 million members.

GOP 2016-TRUMP-TAXES

WASHINGTON (AP) -- Republican presidential candidate Donald Trump is promising to offer a plan within a month to overhaul the tax system, calling himself "king of the tax code."

He's been hinting at such a plan recently, saying that wealthy Americans should pay more.

In a phone-in interview Friday on MSNBC's "Morning Joe" show, Trump says, "I know the hedge fund guys. ... These guys don't really build anything. They shuffle papers back and forth."

Trump says he'll unveil a plan to simplify the tax code and eliminate some deductions, asserting "nobody knows the tax code better than I do."

Trump says hedge fund managers are big supporters of Democrat Hillary Rodham Clinton and GOP rival Jeb Bush and adds, "I will have a plan."

He says hedge fund managers won't be happy.

PENTAGON-TECHNOLOGY

NEWPORT BEACH, Calif. (AP) -- Defense Secretary Ash Carter is announcing that the Pentagon will fund a new venture to develop cutting-edge electronics and sensors that can flex and stretch and could be built into clothing or the skins of ships and aircraft.

The high-tech investment could lead to wearable health monitors that could be built into military uniforms or used to assist the elderly. Or it could foster thin, bendable sensors that could be tucked into cracks or crevices on weapons, ships or bridges where bulky wiring could never fit. The sensors could telegraph structural problems or trigger repair alerts.

Carter plans to lay out the details for the newly created high-tech innovation institute in a speech Friday in California's Silicon Valley.

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