Say Anything Blog

Isn’t the interest on student loans that banks profit from a government subsidy of the banks as well?

It would seem to me that the government should end the Pell Grant free money that inflates the cost of education, allow everyone to take out zero-interest loans that they will payback and eat the cost of the tuition.

Student loan tuition is currently capped at 8.2% and if all the government subsidized was that interest, the cost of education would not grow so quickly.

I keep typing the wrong word..."tuition" at the end of the 2nd paragraph should be “interest”.

The CATO paper was on federal financing not on the interest rates for the student.  I think this is a great idea for families and student who are repaying school loans.

Any subsidy of higher education is going to artificially inflate tuition costs.

IF you want to whine about the price of tuition, you cannot support subsidies for tuition as they drive that price up.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

So you support taking tax money out of my pocket, that I could be using to pay for my or my child’s college education, and use it to subsidize the education of others?  Something that’s proven to drive up tuition?

Typical liberal.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

Pell Grants are huge chunks of tax dollars taken out of your pocket that drive up the cost of tuition.

The interest on money that students are paying back is a much smaller amount.

By prohibiting interest rates on student loans entirely AND eliminating the 100% free (to the student) Pell Grant money, you allow the regular person to pay off their debt quicker and take personal responsibility for the repayment of their tuition.

The left wing uses education as a sacred cow. Also they are in cohoots with the National Extoration Agencey aka the NEA. It more about making people dependant on government. I am sorry but I am sick and tired of being nickled and dimed to death to advance some left wing agenda.

If the Right opposes school funding the dems go out and say that the the right is a bunch of racists and biggots that only cares about their business buddies and doesn’t want to fund inner city school. Blah, blah, blah…

Check out:
Goon’s North Dakota Red Neck
Goon’s World

The interest on money that students are paying back is a much smaller amount.

So?  It’s still a subsidy, and it’s still money out of the pockets of tax-payers.

By prohibiting interest rates on student loans entirely AND eliminating the 100% free (to the student) Pell Grant money, you allow the regular person to pay off their debt quicker and take personal responsibility for the repayment of their tuition.

That’s a situation preferable to what we have now, but the optimum situation would be to have people just be responsible for their own higher education.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

So?  It’s still a subsidy, and it’s still money out of the pockets of tax-payers.

It’s progress.  Again, don’t forsake the good for the perfect.

That’s a situation preferable to what we have now, but the optimum situation would be to have people just be responsible for their own higher education.

There’s a reason the lefties believe in incrimentalism...It Works.

Well at least freeps on the right track and if we would have to go that far to get the pell grants taken off of the mix (and they are much worse) it’d be a good thing.

Another way to improve the system while not doing away with assistance completely is mandate receivers of these zero interest loans get grades above a certain level.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

It’s progress.  Again, don’t forsake the good for the perfect.

Good point.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

This bill doesn’t address what they’re trying to address.  Really, they want lower tuition costs.  How does lowering interest rates (that don’t have to be paid back until you’re out of college) affect who goes to school?  Really, you shouldn’t have to worry about paying school loans back because your education should get you a decent enough job.

A person goings to spend money that they have to repay better than free money.

Still, I know of several people that got their student loan money and went on a shopping spree.  Kids are kids and they aren’t going to always think about paying the money back.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Still, I know of several people that got their student loan money and went on a shopping spree.

Talk to any bar owner in a college town, they know when the disbursement checks are cut before the bank does sometimes.

On the ND State Level HB 1518 directs profits from interest to scholarship funds.  Since the Bank of North Dakota is owned by the taxpayers, this is an appropriate use of the interest profits instead of going to the general fund.

The only thing missing from this bill is specificly what kinds of scholaships it will go towards.

The CATO paper was on federal financing not on the interest rates for the student.

Puzzle,

Only a knowledge-deprived, dyed-in-the-wool liberal would make such an idiotic statement in public.

Interest is the price paid for the use money which is not immediately at hand.  This is true for individuals (credit cards, car loans, mortgages, and student loans), businesses (lines of credit, credit terms from suppliers, mortgages, etc.) or governments (Treasury Bills, Notes, and Bonds, municipal bonds, etc.).  And the rate of interest reflects the credit worthiness of the borrower as determined by the lender and the market.  To suggest that interest and the rate at which it is paid for money borrowed is not a cost consideration is an appalling display of basic economic ignorance.

Incidentally, Rob offers two reasons why congressionally-mandated below market interest rates on student loans in a bad idea.  I would offer one more.

By removing the market-based incentive, Congress will actually discourage lenders from making these loans at all.  A bank has no incentive to offer student loans at below market rates when they can earn a much more substantial return for their shareholders by lending for business loans, car loans, mortgage loans and home equity lines of credit.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Since the Bank of North Dakota is owned by the taxpayers, this is an appropriate use of the interest profits instead of going to the general fund.

I absolutely disagree.  That money belongs to the taxpayers and should be returned to the general fund so that the taxpayers can get a break.

Of course that’s no excuse to use those profits to give state employees an even better job, when their turnover is a quarter of the national average.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

By removing the market-based incentive, Congress will actually discourage lenders from making these loans at all.

No one is removing the market-based incentive.

The government guarentees the loans in exchange for limiting the interest of the loans to 8.2%.

Banks LOVE loans that they can make money on and be guarenteed will be paid back from someone.

I absolutely disagree.  That money belongs to the taxpayers and should be returned to the general fund so that the taxpayers can get a break.

I would suggest the state government is wrong to profit from the debt of it’s citizens in the first place regardless of where the profits go.

I would suggest the state government is wrong to profit from the debt of it’s citizens in the first place regardless of where the profits go.

There you go again freep, whining that the government (meaning the rest of us) should have just given you what you wanted.

The fact of the matter is that we the taxpayers gave up that money in the first place in order for it to be available to you to borrow it.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

TW: Not only that, but everything the govt confiscates from us is “profit”, in the sense that the infrastructure used to collect the money is an asset to the govt.  The govt bears no actual expense, and so our tax money is 100% profit for them.

Leftie political philosophy, from a DU commenter:

It doesn’t matter if it’s true or not. RUMOR IS TRUTH. The modern laws of media hype and political warfare have a useful tenet: Repeat ANYTHING or raise false concern over ANYTHING and it is likely to be planted in the conscious/subconscious of many voters.

No one is removing the market-based incentive.

Free,

Don’t be ridiculous!  An form of government guarantee, subsidy, or discount most certainly removes the market-based incentive.

The Savings and Loan debacle (remember the Keating Five?) was made ten times more expensive to the US taxpayers when Congressional Democrats quietly upped the now-defunct FSLIC deposit guarantee from $10K to $100Kper account.  Similarly, it’s estimated that today’s mortgage interest rates would be anywhere from 300 to 750 basis points lower were it not for federal interference with the market (FHA, and the on-going corruption at Fannie Mae).  A pretty sizable amount over the life of a 30 year mortgage.

As the your contention on the availability of student loans, apparently you don’t have college age kids.  Waiting at least 4 years for the start of repayment on a below market rate loan is hardly much of an incentive to any of the bankers that I regularly deal with.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Waiting at least 4 years for the start of repayment on a below market rate loan is hardly much of an incentive to any of the bankers that I regularly deal with.

The taxpayers via government pays the interest on Subsidized Staford Loans while the student attends school.

The Banks always get their money from somewhere and they don’t care where it comes from.

Money is money, it all spends the same....until the government prints more.

Money is money, it all spends the same....until the government prints more.

Free,

Had you wanted to sound just like an economically illiterate liberal Democrat you could not have done any better than this.  It’s the political equivalent of the old dumb blond joke, “I can’t be overdrawn… I still have checks.”

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Steney Hoyer talked before the House a couple of hours ago about the need to reduce loan rates and help students with college.  He did mention that tuition rates increased at twice the rate of inflation, and more, not one time did I hear one inquiry about why that rate of tuition is soaring.
Are all the politicians afraid to take on the education sector?  Maybe it is sacrosanct.  The Dems are not going to take on that priviledged group; plus you can buy a lot of votes with 3% or 4% interest rate.

Sam at SavetheGOP has about the only logical point against cutting the rates.

As long as there is a strong demand by students to attend a university there is no incentive for administration to get their costs under control.  If you can raise tuition 5% every year for some new pet project and the students continue to pay and enrollment thrives, why not keep raising it every year?  Want to build a new football stadium with all the latest and greatest amenities?  Raise the tuition.  Want to add a new set of worthless classes and pay a pompous professor to pontificate about the power of the penis?  (No, seriously) Raise the tuition.  I can go on, but you get the idea.

Students will pay the increased costs for the same reasons the universities raise them.  They too, can, which is why I am troubled by this cut in the interest rates making these loans more affordable.  As long as it keeps getting easier and easier for college students to buy their education on credit, the higher tuitions will continue to increase making it more and more expensive.  We’re already at the point where tuition at some schools surpasses the cost of a house.  While those with a degree do generally make more money over their lifetimes than those without, at what point will the cost of obtaining the degree outweigh the financial advantage in the workplace?

Essentially, tuition rates are the easiest taxes to raise.  The people that pay them have zero political power and no one in power seems to care how much debt they have to start life with.

So by lowering in the interest rate, the government makes it easier for schools to finance their tax increases on people that don’t make or have any money.

It’s definately a more convincing argument than lower finance rates = higher subsidies.