Tag Archives: student loans

Student Loans Need Urgent Reforms

Student loans, can not live with them, can not live without them. We have a problem in congress where the rates will rise to 6.8 percent indefinitely without congressional action by the end of the month. Basically the cost of borrowing is going to double from the previous rate of 3.4 percent.

First, due to deficit reduction the subsidized graduate student loans were eliminated. So for myself personally I will have to pay interest on these loans while I am in school for the next year and a half in my program. I think there should be a compromise where student loan interest is at a partial percentage until graduation or when a student’s program ends due to withdrawal. Partial subsidy would be better than no subsidy at all.

Second, due to the Republicans dominating in congress asking for the full rate reduction is not likely. I was proposing that we should go halfway at 5.1 percent. If you borrow 10,000, you would be saving around 14 dollars a month in interest payments. If we want to be austere yet still give students relief the 5.1 percent rate could be a repayment incentive for 12 on time payments in a row.

Third, participate on Twitter with President Obama’s hash tag #dontdoublemyrate, call your congressional representatives in the US Senate and Congress and if you do not like your incumbent congress member ask the candidates running against them their opinions too.

A Reflection on Student Loans

After I graduated in 2003 I was on auto-pilot. I was not ready for prime time after I got my degree from UC Riverside. I applied for graduate school but the people who were supposed to sign my letters of recommendation never bothered to and they never had the fortitude to tell me they were not going to sign them. Maybe it was a good thing that I did not go to graduate school then.

It took me five years to realize I should enter the teaching field, but the economy crashed and it took me another two years afterwards for me to start on my subject tests so I could enter a credentialing program. When I passed my second out of third subject test I was thinking I should start the program now.

I realized that Cal Poly Pomona needed extra requirements such as prior involvement in education like how the plumbers union asks only asks friends and family members of plumbers in order to get in. So I investigated Western Governor’s University. It sounded great that I could do most of my coursework at home at my own schedule mostly, but they had some prerequisites before I was able to start the process. So I got delayed for a good year and a half in trying to meet the prerequisites that I finally met.

Now the cost of college is going up thanks to congress and President Obama. I put both sides at fault because President Obama blew the piggy bank and Paul Ryan is too austere for his own good. I do recognize that it costs six billion to fund the subsidy, but if progress can not be made we can meet each other halfway at 5.1 percent.

I am expected to borrow $10,000 and with the unsubsidized rate it is going to be a regressive 56 bucks in interest each month. Perhaps I am spoiled by my fixed 2.875 percent rate from my degree I am still paying for, but if tax cuts for the wealthy do not need to be paid for how come student loan subsidies have to be paid for? At least with my low yet reasonable rate I am still able to pay down that loan abet slowly.

I understand we want people to follow their dreams, but dead end degrees cost both the taxpayer and the student big time. Not all degrees are dead end degrees, but if the student is not going to do much with the degree then we are going to cause more problems in the long run. One of my Facebook friends is a big advocate of the Science Technology Engineering and Mathematics fields where if you enter in a field that has ties to these sectors you will do very well. History or Sociology may not give people the big pay, but I would not be as selective when people choose bachelor degrees in various humanities fields.

When we have limited resources we have to make sure we can give people the maximum opportunities for the least possible price. I would like to see better counseling services so we can maximize the opportunities for both the students and the taxpayer. We need to ask students the big question, what profession or what job opportunities do you expect if you obtain this degree? It may be nice to have a barista at Starbucks that you can chat about Election 2012 with, but that is a waste of potential.

I would like to see the student loan system restructured to state, the more you borrow the higher the interest. Borrow from 0 to 15k in a year you would get a 3.4 percent rate, anything from 15001 to 30k would be like 4 percent, anything 30001 to 50k would be 5 percent, and 50001 and above would be 6 percent. So if you borrow 16500, the first 15 thousand would be at 3.4 percent and the last 1500 would be at 4 percent. The more you borrow, the more you would need to pay.

And since we can not escape these loans with bankruptcy, we should make these loans easier to pay off. We do not want to cripple people to where they end up causing more trouble than they are worth. And we give banks lower rates than students, what a crime.

Student Loan Default Protest Counter Productive

The people involved in the occupy movement are working on a misguided effort to sink the credit ratings of those who participate in this protest. However there is one way we could share the message to the colleges and governments about the increasing costs of education and how they pass the buck with student loans. Do not enroll for a semester. If we make the schools empty, then that would also spread a message.

I think the best solution is personal responsibility, if you can not pay the loans off in a reasonable fashion or at least pay half of the cost back you should reconsider the program you enroll for.

Borrowing 100,000 for a BA degree is silly if you are not going to have the ability or future potential to pay the fees. Yes, we need to reasonably fund our state universities. Fees went up 125% since I last went to UC Riverside. Yes, I believe we should not give free rides entirely. However fees should go back to 7 or 8 thousand instead of 12 thousand for the University of California as an example.

Basically all I am asking for is people to borrow what they can reasonably pay off. I know student loan debt is a crippling burden and the legal rules stating that students can not declare bankruptcy makes it hard for students to write off this debt. I think limiting how much students can borrow in exchange for being allowed to declare bankruptcy after all avenues are exhausted would be a good idea.