Obama's plan for student loans

From the wire and reportedly to be in the State of the Union.

I think this is a fantastic idea and I don't know how people could argue against it.

 

Anyone know what the average payment and payment length is for student loans? I finished up in just about two years, and my payment is about $125 a month for God knows how long. Might be set up for 10, 15 years. Can't remember off the top of my head.

 

Wouldn't this just cripple the lending institutions?

I have three college degrees, work in a school system (for 10 years now) and have tens of thousands still left on my loans. I consolidated all of them in 2002.

Does the lending instution just eat my loan in a few years?

 

I read this would cost the taxpayers around $1 billion.

 

I'm looking for some numbers, but if your removed a student loan payment, that money would still most likely be spent, just on something else.
Buy a car, buy a house. Buy something and the net impact, would seem, that it would quickly pump some serious money into the economy.
Plus, it encourages new grads to go into public service, and that seems like a good thing as well.

 

Still, someone has to pay for those loans that are forgiven, right?

 

That's it?

It seems like chicken shit when you think of all the money being thrown around these days.

 

That logic seems sound, but I have a feeling people would save the money instead. But we are Americans, and we do like to spend.

 

It would certainly further remove any incentive to pay back a student loan at any kind of pace. As it stands, the interest rates on many of them (or at least on mine, since my college years wrapped around the turn of the millennium) are so low that you're actually better off making a minimum payment and investing any extra money you would have put toward a loan in something else.

The rate of return on even a basic investment is typically going to be higher than any interest charges you would save yourself by paying the loan off early.

I would also imagine that lenders would immediately eliminate any long-range payment plan that sees the balance of the loan extended over more than 20 years, wouldn't they?

 

Two kinds of federal student loan programs actually exist. Stafford loans are money you borrow from a bank, with the Dept. of Ed. (DOE) backing (guaranteeing) the loan. Ford Direct loans, you borrow directly from the DOE / Treasury. Same basic loan program (terms, repayment, etc), although the Stafford program may have a slightly higher interest rate (but...they will work with you more, if you have repayment issues).

In the direct loan program, the feds would just eat the money. In Stafford (if it's allowed to continue.....that's the unspoken part of this...) the feds would have to repay the remaining amount to the lender.

 

Nothing Obama proposes or endorses will get passed. Period, end of story.

The GOP will enforce a cast-iron filibuster, and the Dems are too stupid/chickenshit to do anything about it.