Student loan changes to get health care bill approved ?

[ebaycj]

Democrats dont like banks controlling student loans because they think all the money should be controlled by the Federal Government. More money is more power and less freedom.

Or, the banks make the loans more expensive while taking no risk (risk is all on the US Gov't), and thereby de-value the end product.

 

[TruePaige]

My understanding is 2 things:

1. It is counted as a revenue source for the fed gov by the CBO thereby supporting the claim that the HC bill reduces the deficit. Also, I think because Congress ended up pushing some of the benfits up etc, they needed something to pad the bottom line.

2. I heard this will benefit one of the Dakota's, and they needed that Senator's support. Not sure if that ended up in the final bill though.

Fern

Shouldn't it only be a revenue source in the long term though since it won't strip private banks of the already issued government loans?

This would make the first 10-15 years or so have outlays outstripping revenues from repayment.

 

[Fern]

Shouldn't it only be a revenue source in the long term though since it won't strip private banks of the already issued government loans?

This would make the first 10-15 years or so have outlays outstripping revenues from repayment.

IDK.

IIRC, presently if a student defaults the gov reimburses the lender AND allows the lender to keep whatever amounts they later recover from a student. IIRC, that's been corrected in this bill.

If so, that may account for some revenue gains.

Fern

 

[FuzzyBee]

My understanding is 2 things:


2. I heard this will benefit one of the Dakota's, and they needed that Senator's support. Not sure if that ended up in the final bill though.

Fern

Unless it was taken out, there was wording to the effect of "only state-run banks could issue student loans." Of course, only North Dakota has a state-run bank.

 

[Throckmorton]

And so, people who don't use their degrees will stop pursuing a geography degree when they see the outrageous interest rate banks charge and only geologists who are serious will pursue the degree. In a few years, the market will correct itself and serious geologists who start making decent money will change the interest rate on loans to new geology majors. Amazing how the free market works doesn't it?

You mixed up geography and geology.
Anyway, the problem is if only those of us who use our degrees major in geography, geography departments will cease to exist.

 

[Throckmorton]

BTW, I want to transfer my student loans to the government. Can you do that??

 

[Hacp]

You mixed up geography and geology.
Anyway, the problem is if only those of us who use our degrees major in geography, geography departments will cease to exist.

Ah I'm sorry. I thought geology is now called environmental science.

 

[theevilsharpie]

You mixed up geography and geology.
Anyway, the problem is if only those of us who use our degrees major in geography, geography departments will cease to exist.

Geography departments won't necessarily cease to exist, they'll be scaled down and absorbed into a broader department.

 

[Wreckem]

BTW, I want to transfer my student loans to the government. Can you do that??

You can consolidate your various stafford and plus loans into a federal direct loan once you finish school.

 

[Wreckem]

I am disappointed that the IBR changes dont help anyone with loans taken out before July 2014. I'll be finishing up school in May 2014 and consolidating sometime before Nov 2014, but wont be eligible for the 10% IBR plan. Fuckers.

 

[TruePaige]

I am disappointed that the IBR changes dont help anyone with loans taken out before July 2014. I'll be finishing up school in May 2014 and consolidating sometime before Nov 2014, but wont be eligible for the 10% IBR plan. Fuckers.

Hmm? Why aren't you eligible for IBR?

Am I missing something? If you are in the income brackets for IBR you should be eligible.

http://www.ibrinfo.org/can.vp.html

 

[Throckmorton]

You can consolidate your various stafford and plus loans into a federal direct loan once you finish school.

I'm not in school though. I consolidated my loans with a company called AES. That's what the university told me to do.I didn't even know there was a federal direct loan option.

 

[Wreckem]

Hmm? Why aren't you eligible for IBR?

Am I missing something? If you are in the income brackets for IBR you should be eligible.

http://www.ibrinfo.org/can.vp.html

Anyone with loans before July 2014 are eligible for the 15%/25 years IBR, those with loans after July 2014 get 10%/20 years IBR.

The IBR that went into effect July 2009 requires 120 (public service) or 300 payments of 15% of your discretionary income. This reform changes that to 120 (public service) or 240 payments of 10% of your discretionary income. Only NEW loans(no consolidations) dispersed after July 2014 will be eligible for the 10%/10 year(public service) 10%/20 year IBR plans.

That 5% difference is actually a very large chunk of change even on the 10 year plan. 5% difference plus 5 years less in payments is a HUGE chunk of change.

Dont get me wrong the 15% 10 year public service is still a really good deal that I intend on doing but I'm still annoyed they didn't change it for everyone. Rough calculations show I'll have to pay about $15,000 or more over 10 years than people that get loans after 2014.

 

[Wreckem]

I'm not in school though. I consolidated my loans with a company called AES. That's what the university told me to do.I didn't even know there was a federal direct loan option.

If you have already consolidated your loans you can no longer consolidate into a Direct Loan unless you go back to school and take out new loans.

 

[joutlaw]

If you have already consolidated your loans you can no longer consolidate into a Direct Loan unless you go back to school and take out new loans.

And then it's a weighted average of the previous consolidated amount and new loan amount.

I still think this is bad for students. We will have less choices. Ask any of your schools financial aid offices who they would rather deal with... Direct or one of private institutions. Like any government run agency Direct is slow to respond and generally inefficient.

 

[Wreckem]

And then it's a weighted average of the previous consolidated amount and new loan amount.

I still think this is bad for students. We will have less choices. Ask any of your schools financial aid offices who they would rather deal with... Direct or one of private institutions. Like any government run agency Direct is slow to respond and generally inefficient.

I havent had any problems with the Dept of Ed/Direct Loans or my consolidation. My direct consolidation has a lower interest rate if I had done a consolidation with a 3rd party.

 

[DanDaManJC]

we also get more free money too in the form of grants

 

[shortylickens]

we also get more free money too in the form of grants

Its not free. It comes from SOMEPLACE.

 

[joutlaw]

I havent had any problems with the Dept of Ed/Direct Loans or my consolidation. My direct consolidation has a lower interest rate if I had done a consolidation with a 3rd party.

Not possible... all student loans will consolidate at the same rate given their orignation/disbursement date and loan type, but the incentives each individual company offered for you to consolidate with them varies. i.e. 1% interest rate reduction if you have X amount or .25% rate reduction if you sign up for autodraft of your parent. I can guarantee you those perks will be gone for one simple reason - no competition in the market.

 

[ohnoes]

And then it's a weighted average of the previous consolidated amount and new loan amount.

I still think this is bad for students. We will have less choices. Ask any of your schools financial aid offices who they would rather deal with... Direct or one of private institutions. Like any government run agency Direct is slow to respond and generally inefficient.

I'm going to have to take out about 150K for gradschool. The finaid office
lists last year's rates under the old GRAD+ program at 8.5% with a 3-4% origination fee. After the switch to direct loans for 2010-11, it is now 7.9% w/ a 2.5% origination fee.

Seems like a pretty good deal to me.

 

[joutlaw]

I'm going to have to take out about 150K for gradschool. The finaid office
lists last year's rates under the old GRAD+ program at 8.5% with a 3-4% origination fee. After the switch to direct loans for 2010-11, it is now 7.9% w/ a 2.5% origination fee.

Seems like a pretty good deal to me.

Not really. When I worked in the business from 2002-2005 the rates reached a low of 2.77% for Staffords. I believe the Parent + loans were around 5%. I don't recall what the GRAD+ loanss were around that time but I'd say between those two.

My wife consolidated her loans @ 2.77% then with the perks of 1% off of 1 year of on time payments and .25% off for autodraft she ended up with 1.52%. Needless to say we haven't paid much in interest on her loans.

Now much has changed since then even before this. I don't think the rates have been that low for a while.

I'd say I'm somewhat biased because I did work in the industry. I was in college and was one of those people that called you after you graduated to see if you wanted to consolidate your loans. Most of the grads who knew about interest rates jumped at the opportunity when they were at 2.77%. Needless to say it was an easy job. I left in July 2005 and I think the consolidations and interest rate structure vastly changed after that.

What was happening though, and this is the bad part of the industry, was other companies were calling borrowers they had no business with and trying to get them to consolidate. When that happened the loans moved to them for servicing and they got the cut from government. These companies were ones like MOHELA, Sallie Mae, and CFS.

 

[ohnoes]

Not really. When I worked in the business from 2002-2005 the rates reached a low of 2.77% for Staffords. I believe the Parent + loans were around 5%. I don't recall what the GRAD+ loanss were around that time but I'd say between those two.

My wife consolidated her loans @ 2.77% then with the perks of 1% off of 1 year of on time payments and .25% off for autodraft she ended up with 1.52%. Needless to say we haven't paid much in interest on her loans.

Now much has changed since then even before this. I don't think the rates have been that low for a while.

I'd say I'm somewhat biased because I did work in the industry. I was in college and was one of those people that called you after you graduated to see if you wanted to consolidate your loans. Most of the grads who knew about interest rates jumped at the opportunity when they were at 2.77%. Needless to say it was an easy job. I left in July 2005 and I think the consolidations and interest rate structure vastly changed after that.

What was happening though, and this is the bad part of the industry, was other companies were calling borrowers they had no business with and trying to get them to consolidate. When that happened the loans moved to them for servicing and they got the cut from government. These companies were ones like MOHELA, Sallie Mae, and CFS.

GRAD+ loans are just like Parent+ but for grad Students. I believe they're a fairly new product and introduced only a few years ago. They're also fixed rate loans and so the direct loan program rate is relative to the 3rd party rate & should always be lower. Had they existed back in 02-04, I'm fairly sure they would've been 4.5% vs. the 5% you mentioned through 3rd party lenders.

 

[Wreckem]

Not really. When I worked in the business from 2002-2005 the rates reached a low of 2.77% for Staffords. I believe the Parent + loans were around 5%. I don't recall what the GRAD+ loanss were around that time but I'd say between those two.

My wife consolidated her loans @ 2.77% then with the perks of 1% off of 1 year of on time payments and .25% off for autodraft she ended up with 1.52%. Needless to say we haven't paid much in interest on her loans.

Now much has changed since then even before this. I don't think the rates have been that low for a while.

I'd say I'm somewhat biased because I did work in the industry. I was in college and was one of those people that called you after you graduated to see if you wanted to consolidate your loans. Most of the grads who knew about interest rates jumped at the opportunity when they were at 2.77%. Needless to say it was an easy job. I left in July 2005 and I think the consolidations and interest rate structure vastly changed after that.

What was happening though, and this is the bad part of the industry, was other companies were calling borrowers they had no business with and trying to get them to consolidate. When that happened the loans moved to them for servicing and they got the cut from government. These companies were ones like MOHELA, Sallie Mae, and CFS.

Federal Loans were pegged 6.8% by Bush and the Republicans in July 2006. Currently the interest rates are lowering for new borrowers for a set amount of time(undergrad only), I think its through 2013 when new loans are at 3.25%. They jump back up to 6.8%.

Those with loans befire july 2006 could have consolidated last year for undrer 2% if I remember correctly.

 

[Wreckem]

Not possible... all student loans will consolidate at the same rate given their orignation/disbursement date and loan type, but the incentives each individual company offered for you to consolidate with them varies. i.e. 1% interest rate reduction if you have X amount or .25% rate reduction if you sign up for autodraft of your parent. I can guarantee you those perks will be gone for one simple reason - no competition in the market.

Department of Ed/Direct Loans has those same incentives and are not planning on doing away with them.