April 28, 2012
A Quick College Loan Question

How in the world can interest rates on college loans be scheduled to go up to 6.8%?

We borrow the money at basically O%. It’s a no-cost thing to continue to extend loans at 3.4%. My guess is the “cost” of the reduced rate (which, in the ever-delightful game of “screw you and your coalition” politics that so dominates Washington, has caused the Republican-controlled House to “pay” for continuing the lower rates by cutting health services for poor women) is really just the “cost” of losing the payments on loans offered at 6.8% rather than 3.4%.

So the “cost” you’re hearing about is the “cost” of future revenues the government won’t collect from charging higher interest rates on college loans.

Ah, friends: accountants are important. They are also dangerous!

9:34am  |   URL: https://tmblr.co/ZPUuPyKT_D2u
(Notes: 39)
  
Filed under: college loans American national politics partisanship 
  1. davidmanheim reblogged this from politicalprof and added:
    The problem is that the loans are paid back over a long time, and the world changes. Inflation, long term, is about 3%,...
  2. pinkpachyderms reblogged this from politicalprof
  3. atitierra reblogged this from sociolab
  4. mawr-meow reblogged this from politicalprof
  5. standard-vixen reblogged this from politicalprof
  6. nonyap-blog reblogged this from politicalprof and added:
    The cost to extend the lower interest rates on Student Loans is $5.8 billion, according to an analysis by the...
  7. definitelynotpizza reblogged this from sociolab and added:
    This 6.8% is not new. It was reduced to 3.4% for only like 2 years. Direct Subsidized Loans: Undergraduate students—If...
  8. sociolab reblogged this from politicalprof
  9. jocecavanaugh reblogged this from politicalprof and added:
    This is important. I don’t understand how anyone on either side of the aisle could be for raising student loan rates...
  10. politicalprof posted this