student-loan-graphic-bigOn JULY 1st, 2013, the interest rate on new Federally subsidized Student Loans will DOUBLE  from 3.4% to 6.8%

The Federal Government currently makes 36 cents in PROFIT from every dollar they loan a student for education.

Bank On Student Loan Fairness Act

I’ve written extensively on the dangers and my concern for the over a  TRILLION dollars in College Loan Student Debt. (here, here,  here, and HERE)

The cost of higher education has grown far more rapidly than median family income, leaving students with little choice but to take out loans which, upon graduating into a labor market with limited job opportunities, they may not have the funds to repay.
Economic Policy Institute

Student Loan Debt by the Numbers

  • $1.1 TRILLION : Approximate amount of outstanding student loan debt—second only to mortgages in household debt.
  • 60% of the $1 Trillion is owed by Americans OVER the age of 30.
  • 37 Million people have outstanding student loans.
  • 1-in-5: U.S. households that have student loans.
  • $26,682: Average outstanding balance for a borrower with student debt.
  • 1-in-8: Share of borrowers with more than $50,000 in student debt.
  • 40 % : Share of American households headed by someone under 35 that have student loan debt.
  • 25 % : Share of borrowers under age 30 that spend more than 10 percent of their income on student
  • loan payments.
  • 30 % : Share of borrowers in repayment that are delinquent on a student loan.
  • 6.7 Million: Number of borrowers who are more than 90 days delinquent on a student loan.
  • 9.1% : The number of people who defaulted on their loans in 2012
  • 31 %: Percentage increase in the number of student loan borrowers between 2007 and 2012.

 Bank on Student Loan Fairness Act

In the video below, Sen. Elizabeth Warren (D-MA) introduces the Bank on Students Loan Fairness Act on the floor of the Senate. [Fact Sheet]

“Some people say that we can’t afford to help our kids through school by keeping student loan interest rates low,” said Senator Warren. “But right now, as I speak, the federal government offers far lower interest rates on loans, every single day–they just don’t do it for everyone. Right now, a big bank can get a loan through the Federal Reserve discount window at a rate of about 0.75%. But this summer a student who is trying to get a loan to go to college will pay almost 7%. In other words, the federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks–the same banks that destroyed millions of jobs and nearly broke this economy. That isn’t right. And that is why I’m introducing legislation today to give students the same deal that we give to the big banks.”
“Big banks get a great deal when they borrow money from the Fed,” Senator Warren continued. “In effect, the American taxpayer is investing in those banks. We should make the same kind of investment in our young people who are trying to get an education. Lend them the money and make them to pay it back, but give our kids a break on the interest they pay. Let’s Bank on Students” Unlike the big banks, students don’t have armies of lobbyists and lawyers. They have only their voices. And they call on us to do what is right.”


0% Chance of Passing?

Megan McArdle (@asymmetricinfo), special correspondent for Newsweek, writes:

Of course, this isn’t really a serious proposal, in the sense that it has any chance of getting passed. Elizabeth Warren is a very smart woman who knows how the financial system works; she’s very well aware of why student loans are expensive relative to the Fed’s discount window. And I presume that she is aware that the CBO will score her bill as costing rather a lot of money.

But passing this bill probably isn’t the point. Rather, it’s a populist values statement: we like students, we don’t like banks. As such, it’s probably going to be quite effective. But only among people who don’t know much about the banking system.

And sadly, she’s probably right.

Students and education are always paraded around when it’s convenient, but while education and education funding is in trouble, banks are getting bailouts and bankers are raking in record salaries.

Already we have Student Loan Fairness Act (H.R. 1330) introduced on March 21, 2013.

The Student Loan Fairness Act would create a new “10-10” standard for student loan repayment, in which an individual would be required to make ten years of payments at 10% of their discretionary income, after which, their remaining student loan debt would be forgiven.

However, according to it has a Prognosis of  “1% chance of getting past committee and 0% chance of being enacted.”


Is it Time to Re-Think College or Banks?

When 53% of graduates are UN-employed or UNDER-employed, and students continue to face an increasingly dim future, it’s time to re-think college. And many already are, as college enrollments fell this past fall.

As public anger over college costs continue, and legislators in some states get to work on their budgets, more colleges and universities are promising to freeze or cut tuition—in many cases, on the condition that they receive more taxpayer funding. Hechinger Report

The most pressing issue may be why college tuition is so high with increases nearly 500% in the past decade. But, one thing that can be done right now, and must be communicated prior to July, is to reduce the interest on student loans.

With federally subsidized, student loan interest rates scheduled to DOUBLE on July1st,  it’s time to get involved.
Spread the word. Contact your legislative representatives and let them know AFFORDABLE college is important to our country.


About kevin

A long-time technology enthusiast who, in the mid 80's, thought the internet might be something that would catch-on, so he taught himself programming. That started him on a very satisfying road as a course developer, trainer, online teacher and elearning evangelist. Thirty years later, he fancies himself to be a "futurist" and "thought leader".... those thoughts are more about learning that doesn't involve expensive technology and a vision of the future that makes education more critical than ever! More information at: