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 User Rank
Platinum NO RATINGS 
Noreen- again good advice and a warning that we all should heed if even considreing co-sigining for a loan. The amount of student loans is staggering and with the cost of education continuing to outpace inflation, these issues will be wioth us a very long time.
 User Rank
Platinum NO RATINGS
The life insurance angle is, sadly, brilliant. The costs of education have skyrocketed so greatly since our generation went to college that today's parents just aren't doing the math and calculating their exposure.
It's bad enough to lose a child without living with the toxic aftereffects of unpaid student loans.  User Rank
Iron NO RATINGS
Agreed @Street Smart. As crass as it may seem to insure the life of your child, you have to be realistic about the possibilities, howvever disturbing they may be to consider.
 User Rank
Platinum NO RATINGS
Thanks for the information, Noreen. I just wonder if there is anything like 5 or 10 year fixed rate student loan. It looks that all these banks offered are variable rate loan. How do they decide the rate?
 User Rank
Blogger NO RATINGS
A few institutions offer fixed rate student loans but variable rates are by far more common.
User Rank
Platinum NO RATINGS
Thanks for the information. It seems that student Loan rate is much higher than that of comparable mortgage. No wonder so many banks love the business. I think the government is subside the loan, shall the rate be lower?
User Rank
Blogger NO RATINGS
The federal student loans (limited to $5,500 to $7,500 annually) are a bit lower. But the unsubsized ones aren't a great bargain The current rate on Direct Subsidized Loans for Undergraduate students
is currently fixed at 3.4%.
The fixed interest rate on unsubsidized loans (meaning interest acrues while you are a student) is 6.8%.
 User Rank
Platinum NO RATINGS
US Bank made a big deal out of the fact it planned to offer fixed rate student loans last summer. Now the bank has stopped issuing student loans at all -- and Chase plans to cut back.
After nearly 40 years in the student-loan business, Minneapolis-based U.S. Bancorp, the parent company of U.S. Bank, is no longer providing student loans, spokeswoman Amy Frantti said in an email.  User Rank
Iron NO RATINGS
Very interesting news, @Cat tail. What do you think caused the change in plans?
 User Rank
Platinum NO RATINGS
Student loans are under increasing scrutiny and my guess is they just are not as attractive as they once were. Relatively risky and potentially full of headaches,
 User Rank
Blogger NO RATINGS
The reason for the change in plans @Driven, is largely due to the takeover of student loans by the government. How can a bank compete when Congress reduces the interest rate by half?
Banks are owned by shareholders who expect to make a profit or they won't buy the stock and won't contribute the capital needed to make the loans. If a loan is not profitable why on earth should the bank make it? User Rank
Blogger NO RATINGS
The number of students who qualify for a subsidized loan - the one with the current rate of 3.4% -- is limited. You Won't get one if the family income exceeds about $50,000. The subsidized and unsubsidized federal loans are also limited to $5,500 to $7,500 a year, depending on your grade. This is often not enough - so students turn to private lenders. The banks don't have to compete with the government -- they have plenty of customers!
User Rank
Blogger NO RATINGS
Give them time @Noreen, give them time.
The responses in this and the previous thread show that opinion supports aid to students and their downtrodden parents, so votes are certain to follow. And I agree, all of these projects are laudable and are deserving of our help. But unfortunately, according to the US Debt Clock.org, the US is currently spending 3.57 trillion each year on an income of 2.25 trillion. The current deficit is 1.32 trillion each year, so if we double the federal income tax for the 52% of the citizens who pay any income tax we will produce an additional 1.09 trillion and will still have a deficit of 230 billion. Not only that, but by doubling the income tax of everyone paying it, the student loans will have to be increased because the parents will have less money with which to help their children while in school.  User Rank
Blogger NO RATINGS
@Fred
While it's true there's a debt problem and I agree we need to solve it pronto, student loans are the pimple on the elephant's ass. It really comes down to four things: Defense spending, Medicare, Medicaid, and Social Security. Those are the real spending issues, most other discretionary spending isn't even really a factor. User Rank
Blogger NO RATINGS
Well @Scott, we can disagree and still be friends.
You mentioned Defense spending, Medicare, Medicaid, and Social Security, and they are all big expenses. However, you have omitted certain categories. The following comes from www.usgovernmentspending.com and includes all government spending, local, state and federal. In descending order: Health Care 1.1 trillion Pensions 1.0 trillion Education 0.9 trillion (omitted above) Defense 0.9 trillion Welfare 0.7 trillion (omitted above) and let's not forget interest on the debt which is 0.22 trillion at a current rate of 1.37%, a rate that is not likely to continue very much longer. I don't think education is a pimple, but if you want to dissect student loans from education than why not dissect wars from national defense and unemployment insurance from welfare. You already separated medicare (13% of the federal budget) from medicaid (7% of the federal and 9.8% of the state) The point is that we must have priorities and cannot unilaterally decide that helping a student go to college is more important than protecting that student from getting killed because the borders are open to terrorists. I have expressed no complaint about how our taxes are spent, I just want people who complain about the evil banks to be aware that there is more to worry about than helping parents send their children to college. There will be no college and no jobs and no vacations and little to eat if we don't get started controlling our runaway government spending. The National debt has grown from 11 trillion to 16 trillion in three years and we do not even have a budget. I can name at least a half dozen books recently written about the current debt and its relationship to world history, but the one I am just finishing is as good as any. Currency Wars by James Rickards is more than worth the time.  User Rank
Platinum NO RATINGS
The banks don't have to compete with the government
@Noreen - Maybe they do. In the Health Care bill (of all places) didn't the Federal government take over several billion dollars of student loans? I think this was part of the effort to get to "revenue neutral". I'm sure they'll bring all the efficiency of the TSA and the GSA to the student-loan process. Might just make the big banks seem cheerful and kind by comparison. I can hardly wait. User Rank
Blogger NO RATINGS
Thank you @predictableChaos for reminding us of that. It was two years ago and I had forgotten what lies ahead.
User Rank
Blogger NO RATINGS
PC - the loans you are referencing are the same federally issued ones I have been pointing out repeatedly -- the ones that are limited to $5,500 to $7,500 a year per student. As I said several times, this still leaves plenty of unmet need, which the banks fill with market rate products that are issued jointly to parents and cosigners.
User Rank
Blogger NO RATINGS
I posted this last month but I'll repost it here in support of Scott's point that education spending lags far behind defense and Social Security. Source: federal budget
User Rank
Blogger NO RATINGS
We can also drill down to federal higher education costs. This is a better number to use than the one cited below because it only addresses federal spending, the focus of our discussion. ((in millions of dollars). You can see we actually spent a lot more in higher ed in 2006 than we do now.
User Rank
Blogger NO RATINGS
@noreen
Yes anybody who argues that Educational spending is part of the problem is clearly not looking at any facts. Education spending has not caused our budget problems. In fact it is down as a % of GDP in the budget. User Rank
Blogger NO RATINGS
C'mon @Scott, this is not fair.
GDP = C + I + G + (X - M) That's Consumption, Investment, Government spending eXports and iMports The biggest factor in the increase in GDP has been government spending in the last three years. So, ff you bloat up the GDP with a failed stimulus package, higher interest payments due higher debt, higher government spending like Solyndra and lavish parties by government bureaus you will have a higher GDP. Then you can complain that the increases in education spending aren't as big as the increase in the GDP. It will appear as a lower percentage of the total GDP even though it is climbing. Let's face it, we're being duped in an attempt to permit more wasteful spending for reelection purposes. Let's wipe out all student loans on October 25th so we can count on the votes of the students and their parents. User Rank
Blogger NO RATINGS
>The biggest factor in the increase in GDP has been government spending in the last >three years.
Well, I totally agree with that. Not arguing with that at all. I guess you are not really reading my posts. Government spending is too high and needs to be reduced. But I did notice that you, like many of the critics of the current budget boondoggle, didn't address the two elephants in the room that I point to: Entitlements and defense spending. We can continue to make a silly debate about education but really it's a waste of time because the big money must come out of defense and entitlements. Why can't we compromise? Why can't be cut both defense and entitlements? And that's the problem -- the Repubs won't budge on defense and the Democrats won't budge on entitlements. These are the stubborn, illogical realitics of our political gridlock. I really would like Paul Ryan to stand up and explain to me how if he hates big government, why he wants to spend more on corrupt multi-billion dollar jet-fighter contracts. And while they're at it Nancy Pelosi can explain to me how we can continue to afford spiraling Medicare costs and paying for people to retire at 62 when there aren't enough workers to support them. User Rank
Blogger NO RATINGS
Yeah @Scott, I read all of your posts on this subject. If you read mine you would not accuse me of suggesting that education be cut and defense be expanded. I have said that all government spending must be reduced by at least the waste.
If you think education should be excluded from the cuts then we have a source of disagreement. I think raising taxes to continue the waste and stealing in all aspects of government is ridiculous. If you don't want to discuss education, how about health care. Do you think taxpayers should pay for the same blood tests taken by six doctors in six months? I don't and yet medicare pays for it. It also paid 30 doctors in Florida around $25 million for fraudulent charges. All I have read from those in this thread is that we should help the parents pay for their kids' college. I have not read a single word about getting parents active in stopping the waste and fraud in education so the tuitions will be lower. Your answer is tax more, mine is tax enough to pay legitimate expenses, not ever increasing expenses due to fraud, waste and campaign funds. User Rank
Blogger NO RATINGS
Fred, your numbers are vague and unhelpful. I think they were taken from astroturfing site. They are inaccurate. Most of the numbers you cite are part of the entitlement programs. Discretionary spending is less than 19% of the budget and has actually been stable as a % of GDP for many yeras. Here is a real pie chart from the CBO:
 Now, I have spent hours studying the budget and both sides of the story. Basically both "sides" exaggerate their position. The budget problems are quite simple, actually: 1) Wars. Three wars are very expensive. 2) Entitlement spending. This can be broken down into two parts: a) Entitlement spending "bloat" due to inefficiences and bureaucracy -- and rising healthcare costs. b) Declining demographics. More retired people, less workers. You can fix a but you can not fix b. So yes, I agree, we need to fix the budget, but we need a realistic perpective on what the problems are. Any time somebody starts with a "budget is out of control" tirade but refuses to bring ridiculous amounts of military spending into the picture (Paul Ryan, for example), it is a non-starter for me. And, by the way, I am all for entitlement reforms I am under 50 years old and I don't expect to see any social security, I am planning accordingly. At the minimum raising the retirement age would be a good start. User Rank
Blogger NO RATINGS
Well @Scott, perhaps you didn't note the following in my post:
" The following comes from www.usgovernmentspending.com and includes all government spending, local, state and federal." This may explain the differences between your figures and Noreens to my astroturfing site "www.usgovernmentspending .com" I included all government spending local, state and federal while you focused only on federal. The States are important since so many of them are bankrupt and the fed keeps dumping more mandates on them. Then, there's the question of how much is the RIGHT amount to spend on education. I think the RIGHT amount is attached to the RIGHT amount to spend on the pensions, salaries and research expenses that are now tailored towards the reelection efforts of incumbents rather than on the educational requirements of students. We always hear that we don't spend enough on education but we never hear that we are wasting at least as much as we are spending. When will you address the value of the spending instead of assuming it is the RIGHT amount but that the taxes aren't high enough. When will you address the inadequacies of the current educational system without simply telling taxpayers that we are not spending enough. Let's get the cart behind the horse for a change. Fix the spending before increasing the income instead of never. User Rank
Blogger NO RATINGS
Okay, I get it Fred, you think government spending on education is evil. And I think spending $2T on wars is evil.
Personally, I think education has a better ROI than bombs, regardless of whether it's public or private spending. Period. I'm the first to agree that our "Big Government" has gotten too big, apparently where we disagree is where and how this got to be. The facts are still that the biggest problem -- Federal Government -- is bloated in entitlements and defense, nowhere else has it grown much as a % of GDP. So the question and debates -- well documented in U.S. Congress -- are about how and where to cut. You didn't address the true problems of the budget which aren't in education at all -- they are related to defense and entitlements. This is fact. I don't really think you can mix state and federal data because states are all required by law to balance their budgets. The federal government is not. Also most public universities are funded by state budgets so the voters in each state decide whether that is a priorty. Over time, however, these budgets have been cut and contributed to the escalating costs of public education -- this is fact. So I'm not really sure what your point is -- our budget problems are related to education spending? really? I am still looking for some facts to support this argument. I have not seen any yet.  User Rank
Iron NO RATINGS
Maybe we should pull all that money we're spending on old people and spend it all on the young. Youth is a better investment than seniors, don't you think? Anyone who is depending on SS to live in retirement is a poor planner - a loser really. So who cares what happens to him? The kids at least have potential to do great things.
User Rank
Blogger NO RATINGS
Strawman argument @Scott. I said nothing about cutting spending on education, I want to cut the waste. And I said nothing to justfy the implied accusation that I think education is bad and war is good.
I think a large part of what the government spends is wasted in all fields and I'm trying to get the point across that a percent of GDP is a silly way to estimate the spending and taxing requirements. Its sophistry. Stick to the facts. All your pretty pictures showing a cut in the dollars/student have nothing to do with the total spent on education. Why should the dollars/student increase when the number of students is increasing, do you need to increase the infrastructure in the same proportion, one new teacher for every new student? The total dollars have not been reduced, it is just that GDP has been increased wastefully which makes it appear that education is a smaller percentage. Where is it written that the percent of GDP must stay the same for anything. If that were the case then we'd still be spending a lot on buggy whips.  User Rank
Platinum NO RATINGS
Fred, what is "welfare" in those totals? Does Medicaid and social security count in that category? And for defense spending, are they including the costs of the wars in Iraq and Afghanistan, which in the the us budget are typically counted outside of DOD funding?
User Rank
Platinum NO RATINGS
I find it ludicrous to suggest that it is wasteful for banks to make loans to students for education. Certainly there is a crisis here with escalating costs. But we can't encourage a generation to avoid college while we sort out the mess.
User Rank
Iron NO RATINGS
Fred, if even a fraction of your attitude resulted from things you learned in college, then you are reason enough to keep my kids out of post secondary school.
User Rank
Blogger NO RATINGS
"Fred, if even a fraction of your attitude resulted from things you learned in college, then you are reason enough to keep my kids out of post secondary school."
Well @BigJim, I learned the definition of "ad hominem" in college and you have given a perfect example. Instead of "killing the messanger," why not take the time to show me where my facts are wrong. I accept the fact that you don't like my attitude as you perceive it, and I wear it as a badge of honor. It is your right to disagree with your assessment of my attitude. Show me the facts that are incorrect and I'll gladly change my presentation. However, my attitude is not for your to determine or to attempt to shut me up because your attitude (as yet undisclosed) is different. I would be perfectly comfortable if you were to decide to stop reading anything I write in the future, that is also your right. User Rank
Platinum NO RATINGS
How the hell does any of your comments, Fred, relate to cosigners being released from loans, which is the subject of this post? And how can you protest cosigners being released from a loan once the primary borrower is deemed fit to have full responsibility for the debt?
User Rank
Blogger NO RATINGS
asked and answered @Tenacious.
Two days ago I said cosigners should have the brains to take out life insurance on the cosignee before signing. Does that make the facts presented incorrect, or just inconvenient. I made no comment and have no criticism if a bank wants to release a cosigner, that's up to them. User Rank
Iron NO RATINGS
This post is about cosigners being released from the loans.
User Rank
Blogger NO RATINGS
@driven
LOL. Thanks for getting us back on track. User Rank
Blogger NO RATINGS
You wrote
"@driven LOL. Thanks for getting us back on track." @Scott, it seems instead that we have been driven completely off the track LSMFT (Laughed So Much Felt Tired) User Rank
Blogger NO RATINGS
Thanks for asking, @Broadway. The data comes from a pretty detailed website at www.usgovernmentspending.com, in spite of Scott denigrating it as Astroturf.
Here's the breakdown, but if you go to the site and click on the little + signs you can drill down to the amount spent on toothpick for corporals in the army:    User Rank
Platinum NO RATINGS
Fred that website you cite -- www.governmentspending.com -- isn't even a valid link!
User Rank
Blogger NO RATINGS
You are right @Drivewaygirl, and thank you for picking that up and letting me know.
I left out the "US" The correct link is www.usgovernmentspending.com User Rank
Platinum NO RATINGS
You talk about media with an agenda-- that site is run by a man who identifies himself as a "writer and conservative."
I don't care whether someone is conservative or liberal, but it does make me think twice about their data -- if they are so fanatical that they label themselves one or another, User Rank
Blogger NO RATINGS
Look @Tenacious, if you question the data please refer me to a site you like. I don't care where the facts are posted as long as they are facts. If you find an error let us know.
 User Rank
Silver NO RATINGS
I was under the impression that once you sign your name, you're just as stuck as the borrower is. But thank you Noreen for the enlightening information on student loans/co-signors.
User Rank
Platinum NO RATINGS
My father once co-signed a loan for a friend. My father did not understand exactly what the terms were. The friend defaulted and my father had to pay this off. It was not a student loan but it does show the risk here. You need to be very careful co-signing a loan and understand the risks.
User Rank
Blogger NO RATINGS
I always shudder when an adult with good credit agrees to cosign for another adult with bad credit. If there is a reason no one wants to loan money to this person, why would you think he would make good on his debt this time? Odds are, the credit worthy adult will be stuck holding the bag. The empty bag, that is...
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Platinum NO RATINGS
I wish more people took the time to really understand what it means to cosign. Somehow it seems they don't really believe they have legal liability for the loan.
User Rank
Iron NO RATINGS
I think it's great that there are options for cosigners to get off these loans. It's a win for everyone: the ex-student, because he has demonstrated responsibility with the loan, takes over his own account and the cosigner gets the debt off his back (and his credit report.)
User Rank
Platinum NO RATINGS
Maybe we should just start thinking of college as a 5 year experience: You attend school four years and work like hell the fifth -- and dump everything you earn on your loans. Then, in year six, you can start your life.
User Rank
Platinum NO RATINGS
LOL @cat tail. I almost prefer that than thinking of a huge weight hanging over my head for years to come.
User Rank
Platinum NO RATINGS
@cat tail, you better be making a load of money in that 5th year! That again gets down to the issue of: is what you're studying in school going to earn you enough $ post-graduation to make those loans worth it? And I don't think we want to answer that question yet in our society ... otherwise, we risk truly becoming a hollowed-out commercialized shell of a multi-corporate globalist slave state.
User Rank
Iron NO RATINGS
Remember when getting a liberal college education -- just for the sake of learning -- was something our society valued?
User Rank
Blogger NO RATINGS
@cat tail
yes that is a seriuos amount of money. What are they going to do for it -- work at Goldman Sachs?  User Rank
Iron NO RATINGS I think that the life insurance option should be provided for every loan too many do not understand the implications of what they are signing when they get any type of loan. They should specifically have to decline it; it would save everyone a lot of heartache and a lot of money. The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose. |
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