Student Loan Borrowers Will Get Interest Rate Cut If They Sign Up For Auto Pay (npr.org) 91
An anonymous reader quotes a report from NPR: Student loan borrowers who enroll in automatic payments will get a much bigger discount on interest starting July 1, the U.S. Department of Education says. Auto pay has long offered a modest discount off borrowers' interest rate -- .25 percentage points -- but after millions of borrowers opted out during the long COVID repayment pause, with some making no payments for years, the nation's student debt portfolio swelled to $1.7 trillion. On Thursday, the department said it will temporarily increase its auto pay interest rate discount to one full percentage point. Practically, that means an undergraduate borrower with a loan at the current 6.39% would see their interest rate drop temporarily to 5.39%. The rate cut will last for two years, from July 1, 2026 through June 30, 2028. Borrowers already enrolled in auto pay do not need to act. They will automatically receive the rate cut. [...] The department says borrowers will have until Sept. 30 to sign up for auto pay and qualify for the two-year interest discount.
Cool Cool (Score:5, Interesting)
Sounds like a good plan.
Can we talk about the fact that these loans are at 6.39% when the 30 Yr. bond rate is only 4.9% and the 10 year is 4.45%?
Re:Cool Cool (Score:5, Insightful)
Can we talk about the fact that these loans are at 6.39% when the 30 Yr. bond rate is only 4.9% and the 10 year is 4.45%?
Sure, let's. Student loans have a higher-than-market rate because there is increased risk to the lenders. The lender can't repossess a college degree to make themselves whole.
That said, I think the real discussion is why students need to go into debt in the first place. Many other countries besides the USA have lower tuitions and lower per-student debts. Why? Government support for education.
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Student loans have a higher-than-market rate because there is increased risk to the lenders.
There's increased risk from this loan you can only discharge through death, or through a program that people are getting cheated out of eligibility for that pays back the lender? Could you draw us a flowchart showing how you came to that conclusion?
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Show me the flow chart how your panties got into such a bunch on a Saturday
Well, friend, it involves a student loan that I was promised I had a ~3% rate locked in on which is currently only not accruing over 6% because of SAVE which the rapeublicans want to destroy.
Re: Cool Cool (Score:1)
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That handout isnÃ(TM)t coming stop asking for it
The boomers got the handout. I don't want anything they didn't get.
I don't expect to get it. I do expect to immediately discount any bullshit from the hypocrites who got it and think I shouldn't get it.
You didn't get it, and you're insisting nobody deserves it because you didn't get it, which is sad. You're sad.
Re:Cool Cool (Score:4, Insightful)
Trump could waive student debt and the republicans would stand up with tears in the eyes yelling bravo sir! Biden tried it and was immediately stopped by the courts.
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Trump could waive student debt and the republicans would stand up with tears in the eyes yelling bravo sir! Biden tried it and was immediately stopped by the courts.
Well, I think Trump would be immediately stopped by the courts, too. Probably faster than they stopped Biden, since they've very reasonably gotten intensely skeptical of almost everything this administration does.
Partisanship aside, presidents really should obey the law. If the law is bad, the solution is to change it, not to break it. Yes, that means we need a functioning Congress, something we haven't had for quite some time, but that's still no reason to break the law.
Re: Cool Cool (Score:2)
if you're comfortable with the tautology that the law (as determined by the Supreme Court) is the law, that's cool. But when they determine things pretty contrary to a normal reading of stat
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Do you honestly believe that mass debt forgiveness -- after COVID was already over! -- was a necessary emergency response to the pandemic? Suspending payments (and interest) during the pandemic made perfect sense, and that was not struck down. I don't recall that it was even challenged.
No, the debt forgiveness clearly had nothing to do with the (already-ended) emergency, it was just an attempt to skirt the law, and the courts were quite correct to strike it down as executive overreach. If Biden wanted
Re: Cool Cool (Score:2)
And you clearly misremember the legal posture of suspended payments and interest.
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Necessary? I thought we were talking about what was legal. My mistake.
Appropriateness of the response to the emergency is part of the legal considerations. Congress granted the power for a reason. Taking that and assuming it means arbitrary power is not operating within the law, not for Trump, not for Biden.
And you clearly misremember the legal posture of suspended payments and interest.
In what way? Please correct me.
Re: Cool Cool (Score:2)
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You seem to have completely missed the point, which is that what Biden *should* have done -- while his party held both houses -- is changed the law, rather than issuing an order that broke the law. Trump has been far, far worse about this, but it's clear that part of Trump's goal (or the goal of someone with his ear, since I'm not sure he is capable of making and pursuing goals over longer time periods than a few days) is to establish that the president doesn't need Congress.
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What debt forgiveness are you talking about? Most of the debt forgiveness that was in the news was for groups of people that were suing the education department because they weren't following their own student loan repayment rules. That wasn't extra or new forgiveness. That was forgiveness that was already owed to those people by the terms of the loan contracts they signed.
Biden created a new SAVE program. It had better loan repayment terms than existing plans. However those existing plans already incl
Re: Cool Cool (Score:2)
(Yes, the 18-year figure assumes stable Treasury interest rates and takes a few other reasonable liberties, but it's not off in principle.)
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He would immediately be stopped by a court, which would have its ruling immediately stayed by a different court, until the Supreme Court puts an end to the case permanently.
The courts, in totality as a branch of government, have been a rubber-stamp. You can point to a couple of times when they've tried to save face by making a show of ruling against him, one of the only times being the tariffs case. Lo and behold, even after that case, there are still Trump tariffs in effect.
The Supreme Court has been a jok
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Your comment mischaracterizes what has happened. The Supreme Court has absolutely bent over backwards to let Trump do what he wants in temporary rulings, including jumping in to to stay lower-court orders that no previous court would even have responded to. But their on-the-merits rulings, when they have to issue a full opinion, have been much less friendly to Trump. There have been some incredibly bad ones (e.g. immunity) but Trump has lost more than he has won in SCOTUS final judgements.
Re: Cool Cool (Score:1)
Have you forgotten that countless borrowers (former students) either simply don't make payments or, as we've discussed here frequently, will chose to simply move out of the country, in order to avoid paying for the education they wanted?
PS - there are NO HARD ASSETS securing student loans, which can be described as giving loans of tens of thousands of dollar/year for years, to someone who's never held a job/drawn a paycheck or even made a loan payment before getting approved.
Re: Cool Cool (Score:2)
Re:Cool Cool (Score:5, Informative)
No. Federal loans are not readily dispatchable, are supposed to be an investment in the future of the country, and still Congress sets the rate stupidly high.
Re: Cool Cool (Score:2)
Re: Cool Cool (Score:2)
Re:Cool Cool (Score:5, Insightful)
> The lender can't repossess a college degree to make themselves whole.
No but if the borrower can't get a good job there should be cause of action for Warranty Act claims against the college.
Extremely few people go to college with the expectation of borrowing to be unemployable.
Re:Cool Cool (Score:5, Insightful)
>"No but if the borrower can't get a good job there should be cause of action for Warranty Act claims against the college. Extremely few people go to college with the expectation of borrowing to be unemployable. "
THIS
The colleges/universities should be held at least partially financially responsible for loan-enrolling so many people who probably are not ready or suitable for college (or at least THAT college) and are destined to either pick a useless major, or drop out. The colleges currently have ZERO risk, and their behavior and spending/pricing exactly matches that reality.
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No but if the borrower can't get a good job there should be cause of action for Warranty Act claims against the college.
It's not up to a college to make you money. It's up to a college to get you a degree. If that degree renders you unemployable that has nothing to do with the college or quality of education you received.
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Re: Cool Cool (Score:3)
Mass debt is profitable to the ones pulling the strings of our government.
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>"Mass debt is profitable to the ones pulling the strings of our government."
Actually, it is much more profitable for the colleges/universities that rake in tons of zero risk money and have zero accountability for their admitting and spending/charging behavior.
Re: Cool Cool (Score:2)
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That only explains why most (but not all) universities go along with the grift. It doesn't explain how we got into a situation where the entire government got behind it, and think tanks publish essays and establish a party platform around denying free college or cheaper tuition.
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The people pushing those positions in the government also have investments in those schools or are accepting donations from those who do. You don't need a huge conspiracy theory to hinder the population when simple greed is easily explained. It's far easier to nudge people away from college and into poorly paid jobs than it is to educate them then hope they don't notice your scams.
Re: Cool Cool (Score:1)
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That's how it used to work here in the USA. Then the subsidies were terminated in favor of forcing students to get loans. Then a US senator led a campaign to prevent those students from discharging that debt through bankruptcy. That senator's name was (and is) Joseph R. Biden.
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Sure, let's. Student loans have a higher-than-market rate because there is increased risk to the lenders.
False. Given that student loans can't be discharged through bankruptcy it's one of the lowest risk loans out there. It's a loan that follows the person for life and turns into a nice paycheck.
That said, I think the real discussion is why students need to go into debt in the first place.
That's a good one. Though even if you do argue that students need to go into debt, the question is why this has anything to do with private lending. Why isn't this a standard government loan, indexed purely to inflation and recovered via taxation of income like in many other countries?
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Sure, they can't repossess a degree, but thats why student loans are very difficult to discharge even in bankruptcy, so the are pretty much guaranteed to be paid at some point.
Re: Cool Cool (Score:1)
Many other countries besides the USA have lower tuitions and lower per-student debts. Why? Government support for education.
So let's start with your last item first - do you imagine the U.S. Government, and state governments, DON'T support education? How much money does each state pour into state and community colleges? Acvording to you, nothing.
You know what the difference is between all those "free colleges" in Europe and elsewhere and US Colleges? The vast majority of foreign "free" colleges are run by the gov't, enrollment is limited, and students get in based on merit. In America, the vast majority of colleges are privet, "
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But, if you make it a dischargeable debt, you might as well just print pallets more money with nothing to back it... oh, wait... the US has been doing that for decades, hasn't it?
Carry on, nothing new here.
You can only cram so many students into AI Programming 101, though... and, once everyone has a degree in that program, then might as well be nobody has a degree in anything because there won't be 300 million jobs in AI Programming (or whatever will be left for jobs once the AI dust settles).
Re: Cool Cool (Score:2)
Re: Cool Cool (Score:1)
What needs to be done is make these dischargeable debt.
We tried that, graduates would declare bankruptcy, get the student debt discharged, and just have to wait 7 years or whatever to take out a loan to buy a house.
This will make lending focused on degree payback and the college graduation rate.
How do you figure? Right now student loans are all but guaranteed for all that apply, and we have tremendous delinquency rates despite the debt not being discharge able. If you make student debt discharge able, what's the incentive to pay it back? Maybe you meant to add "and put student debt back in the hands of private lenders, who will bear the cos
Re: Cool Cool (Score:2)
But I dunno, maybe you easily pay a 4.6% federal tax on the balance of your mortgage and can't understand why that might be an issue for others.
Could have done four years in the military (Score:1)
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100% accurate. Today the strait is closed again because Israel won’t stop attacking Lebanon.
Gulf War 3.0 baby!
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everything's always Trump's fault with you people.
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It's not mutually exclusive. They fluff each other.
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Trump is the useful idiot to AIPAC, Stephen Miller, and Putin.
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It might be an option, but should not expect everyone to take that "bargain". Moreover, with the reliance on stop-loss in recent times, four years is hardly a guarantee.
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Exactamente. I had friends that got stop-lossed for Iraq. Even if I were morally bankrupt enough to sign up for a four year stint potentially murdering people so that oil companies or Halliburton can make more profit, I wouldn't be dumb enough to believe they wouldn't keep me for longer.
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Not to mention that not everyone qualifies or will make it through even basic training.
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That's socialism.
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Go down the list and it perfectly aligns with christian conservatives.
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Auto-pay is evil (Score:2)
lets the other side control when to turn it off. If they flake or go rogue, you are left holding the bag.
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That is why you should set up a second checking account with your bank, specifically for this situation. Still need to remember to transfer funds between accounts (usually monthly).
Government in charge of X makes X political (Score:2)
and subject to considerations and incentives of politicians rather than X mission success and success alone.
If a private actor were to lead with their own subjective considerations rather than mission success, they would either make it work or they'd fail entirely on the merits and demerits of their judgements.
If a government actor leads with politics and falls flat, you and I pay for it and if the politician gets reelected in a landslide for giving away our taxes to his or her constituents...well then, who
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Lower rates (Score:2)
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And, what if you don't have the $$$ in your account... overdraft? Bounced payment? Now you're really screwed.
And, that is why you never enable auto-payments... because you hand over the control.
Good idea... but (Score:3, Informative)
We really should abandon the Student Loan idea.
1) It is not reasonable to expect people that by definition have NOT had a college education to make good decisions about student loans. Some of their parents may have collage degrees, but not all.
2) They are long term loans that cannot be refinanced. If interest rates rise, the borrowers make out like a bandit. But if they fall, they get screwed.
3) Scholarships are better ideas.
Why scholarships are better:
You can quite easily pick the person who really needs it and/OR the person that most benefits from it.
You can get much stricter on which education institutions qualify for them. This will end a bunch of scams, such as the schools that if graduate from get a $60,000 per year job but cost $900,000 to go to.
You can put in grade requirements for continuing them for next year.
Scholarships fight educational inflation, while loans encourage it. If schools know the main government scholarships only pay Y on average, they will have immense pressure to keep their costs below Y. The government can easily set the values of the scholarships to discourage inflation because they do not want to pay more.
But banks will always be willing to increase the amount they loan to the students. To them, the cost of education is a GOOD thing because larger loans means larger profits.
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I refinanced mine multiple times.
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You can quite easily pick the person who really needs it and/OR the person that most benefits from it.
So deny a right to education? Look someone will always benefit from something more than you, does that mean you should be locked out of doing said thing through an insurmountable paywall?
You're almost right there. Scholarships are a great idea, we should give them to *everyone*. Education should be available to *everyone* who wishes to pursue it without financially crippling them.
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Where does this "right" come from? Can I claim a right to have you give me money?
>Education should be available to *everyone* who wishes to pursue it without financially crippling them.
Public libraries are free.
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You are either an AI bot, a paid propagandists, or an uneducated fool. Not paying for something is not the same as denying you the right to do it. The pay wall is not insurmountable. There are lots of cheap colleges that cost less than $5,000 a year.
Federal scholarships are not the only source of scholarships. States routinely offer them (and there are states that hate the liberals and states that hate the conservatives). In addition there are LOTS of private charities that already offer scholarsh
It's a trap (Score:1)
Trump is a crook and everyone knows it. Every single thing he does has to be scrutinized for the angle. Meanwhile they just retired Air Force One and replaced it with a foreign made plane that is probably stuffed full of listening devices. It was also a 1
Working as a collections agent for the lenders (Score:2)
This is nothing but an effort by the lenders to ensure repayment/income to their portfolios -- does absolutely nothing for those out there struggling. The student loan "system" is a corrupt series of companies, regulations and laws that no other agency would get away with. The entire system needs to be deleted.
Re: Working as a collections agent for the lenders (Score:2)
Force schools to back and pay off useless degrees (Score:2)
*-studies, *-history and philosophy degrees should not qualify for a taxpayer backed student loan.
If schools want to offer these degrees let them use their own money for the loan.
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Not all degrees necessarily train you for a future in the field of your degree. They train you to think, to analyze, to organize your thoughts into creative and effective outputs, and to meet deadlines.
autopay is catch-22 (Score:3)
Good luck with autopay. Try getting it turned off. Even if you close the bank account, the bank will still charge you for denied withdrawals.
Here's what can happen. I signed up for autopay with PSE&G, NJ power company. Eventually, I needed to turn it off, years later. I called them.
"What is your phone password?"
"I don't have a phone password, I never had to set one."
"Sorry, we can't stop autopay without your password."
"Let me speak to the supervisor."
Supervisor comes.
"You have to have a password, there is nothing I can do."
"I never had to set a password."
"There has always been a password the whole time I've worked here."
"How long is that?"
"5 years."
"I signed up 9 years ago."
I had to contact the CEO office and raise hell. Good luck trying that with the government.
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What you said doesn't check out, I'm guessing you're leaving something important out. People forget passwords all the time, which means they have a process to "reset" the password (a HUGE percentage of people have no idea what the 'password' to their account is when they call places like this in general.) You probably just didn't want to go to a physical office or go through whatever hoops they had or have to wait for them to mail a letter. However, that wouldn't have made an interesting a story, so I get i
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What horrible bank are you using that charges you for failed transactions on an account you no longer own?
I don't think autopay will be a major issue here. I'm more interested in the Sept. 30 deadline. The SAVE plan ends July 1st just as the RAP plan starts. Millions of accounts will be applying to move off SAVE and onto various plans. This discount probably won't apply until you're actually making payments and there's a huge amount of uncertainty about how well those accounts will transition to the oth
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You could have just asked them to perform a password reset rather than fighting a battle with the CEO. *shrug*