2.3 Million Californians Could See Savings, Lower Interest Rates Under Bill
Today, Congressman John Garamendi (D-Fairfield, CA) announced that he is co-sponsoring the Bank on Students Emergency Loan Refinancing Act of 2015. The bill was introduced today by Congressman Joe Courtney (D-CT) in the House of Representatives and by Senator Elizabeth Warren (D-MA) in the Senate.
“If the Bank on Students Emergency Loan Refinancing Act became law, a typical borrower would save about $2,000 over the course of a student loan. An estimated 2.3 million Californians would see savings,” said Garamendi, a former University of California Regent and California State University Trustee. “It’s unfair that millions of hardworking borrowers are currently denied the ability to refinance their student loans at lower interest rates that are now available. At the same time, many big banks are borrowing at a 0.75% rate. This bill simply makes paying off student loans a little more affordable, and it deserves a fair hearing in Congress.”
The bill comes after the House Republican budget introduced this week freezes the maximum Pell Grant award at the current $5,775 for the next ten years. This comes only months after the UC Regents voted to raise tuition 27.6 percent over five years.
The Department of Education estimates that nationwide 25 million borrowers would benefit from the Bank on Students Emergency Loan Refinancing Act, including an estimated 2,328,000 borrowers in California. Under the bill, a typical participating borrower would save $2,000 over the life of his or her loan.
The Bank on Students Emergency Loan Refinancing Act would allow borrowers with high interest rates on their existing student loans (public and private) to refinance these existing loans to lower interest rates, similar to those available to new student loan borrowers. Currently, some student loan borrowers are stuck with interest rates as high as 8 percent on their existing loans.
The bill would allow borrowers with existing undergraduate student loans issued prior to July 1st, 2015 to refinance those loans to a 3.86 percent annual interest rate. Graduate school loans could be refinanced to 5.41 percent, and parent loans for a child’s education to 6.41 percent. According to estimates from the nonpartisan Congressional Budget Office, half of the outstanding loan volume for federal student loans—about $460 billion—would be refinanced under this bill.
Unfortunately, in the last Congress, the Republican Caucus voted to block bringing up this critically important student loan refinancing bill in the House and filibustered the bill in the Senate.
Student loan debt is greater than $1 trillion. Student loans are America’s second largest source of household consumer debt, behind only mortgage debt.
I tried to find statistics on this, and they are few and far between.
http://projectonstudentdebt.org/files/pub/CDR_2014_NR.pdf
What seems to be the statistics I am looking for are:
1: Do these people graduate, get jobs, and default?
2: When following up om them, are they working now? At what income? Did they buy a house, yet then default on the loan?
3. Did they default because they are typically broke just out of college, or do they do this as a plan so they can buy a house?
The article I cite mentions “for profit” schools, which siphon off legitimate GI Bill and other money in what started to be trade schools. They typically take more than they give, as the recent closing of many of them demonstrate. The fallacy of their “graduates” with degrees is like seeing elementary school kids in caps and gowns for their “graduation”. Makes ya feel good, but means little.
I don’t see how making it easier to borrow then default is helping what should have been a self sustaining entity?
Typical. Instead of solving the root cause problems… out of control spending on government employee pay and benefits that forces the state to send less money to the public universities, and the hyper inflation cost increases for the public universities, a good Democrat sticks it to taxpayers and private businesses.
Banks priced these student loans based on the cost of funds at the time the loan was made and they made the accounting entries. Refinancing will cause a loss write down on the books.
And this legislation will also cause a change to the pricing for current loans to hedge the risk that they can be refinanced… basically raising the cost of new student loans as a consequence of allowing existing borrowers to refinance. More kicking of a can down the road.
Lastly, it won’t matter anyway because so few college graduates can find a good jobs these days thanks to the broken economic policies of our left-leaning state.
Frankly, based on your logic consumers should never be able to re-finance a home when interest rates drop.
When a home gets refinanced the old loan is paid off but if I’m not mistaken this new bill would force existing loan’s interest rates to go down without the loan being paid off.
Yup. This is forcing the existing note holder (lender) to refinance the debt, not the borrower going to a new lender and asking to refinance the loan.
The reason this works with real estate is that
1. There is collateral to back the risk of the loan
2. There are fees that are added to the principle for the refinance and the lenders are motivated to make those fees.
I assume the lenders in this case will not be able to increase the loan principle to fund the work to restructure the loans to a lower rate.
If that’s what it does I’m in total favor of it. All those millions of young people who went into debt thinking a college degree was going to guarantee a decent income and finding out the economy can’t absorb everyone would now have a reason to be optimistic about the future. They would see light at the end of the tunnel. It would free up a part of their income to spend on other local services and products or even think about buying a house and becoming part of their community.
On second thought, nah, let ’em twist in the wind. I got mine. Bwahahahah!
Oh, yeah. About financing it. Just a fraction of what the U.S. Government gave away to the large financial institutions and pumped into the economy in terms of lower interest for businesses and the rest of us. Why shouldn’t these “kids” get a small fraction of the action?
Or we could do the obvious and provide a free education or vocational training thus avoiding the issue of loan defaults altogether to say nothing of providing and incentive to remain in school or training.
Good idea Tia Will, now tell us how we’re going to pay for it?
Ok, I will. We pay through our taxes. We manage to pay for this kind of education for those entering the military. Why not do the same for students in all areas. Provide them with the education, and then expect them to pay back in years of service. This is the deal that every serviceman or woman makes. It is the deal that I made when I agreed to serve in the non arms bearing branch of the military. I do not see why we could not make similar arrangements for all functions of our society.
If we can afford to do this to send soldiers into war zones, surely we could afford to do it for construction for our infrastructure needs, for educating our students, for the provision of medical care …… you name it, we could choose to pay for it. The choice is ours. The outlandishly expensive education system that we have is a creature of our own making. We are the only ones who could choose to re make it. We have a model, why not use it ?
Are you willing to give up your MD job? With the millions and millions of people graduating every year with guaranteed jobs where they will have to work at depressed wages for a time as the trade for getting a free education will end up costing the jobs of people already in those positions. That’s how the military works, you get a free education for giving the military four years of your life at depressed wages.
BP
I not only was willing to do it. That is what I did do. I accepted the deal of two years of support from the military in return for two years provision of rural care in Arizona at what you are calling a depressed wage, but which was plenty to live on frugally. I only needed the two years since I had saved enough by working full time while going to college which combined with my Regents Scholarship was enough to pay for the first two years of medical school. I would be willing to do it again in a minute and I think it is the model that we should be using. As for putting people out of work…..hardly, we have a tremendous deficit of primary care providers. We are so far away from a glut of physicians that we will not have to worry about that for the foreseeable future.
Theoretically I like your idea, but we have become a nation and state that doesn’t pay our bills, can’t manage projects, aren’t financially responsible, and we get caught up in numerous non-core issues that further inhibit our ability at success. Our official debt is now about $20 Trillion, with roughly $200 Trillion in unfunded mandates.
Any sane financial planner knows that we need to raise the retirement age, gradually, for Social Security and Medicare, but 10 years or more have gone by and we haven’t done that common-sense approach. We probably need to make a minor adjustment to COLAs, and raise some taxes on the margin. The longer we wait, the tougher it becomes. So Bush added 4 or 5 billion in new debt, and Obama has added 6 or 7 billion in new debt, and also added the largest new social program in 50 years. On top of this, we continue to add more recipients to our social programs, both legal and illegal.
We have a new $7-10 Billion bridge that is a disaster unfolding, and we’re going to build a $60-100-200 high-speed light rail to nowhere, that may never be completed, that is being built in the wrong location.
Our government no longer seems to know how to get things done correctly, and economically, but there are some bright lights in the private sector (Internet, Apple, natural gas / fracking, etc.).
The outlandishly expensive education system became outlandishly expensive because we gave the operators free and easy money and they had no management incentives to figure out how to constantly improve the quality of their product while also improving efficiency and lowering costs.
So if you just increase taxes to give more to the schools, you will exacerbate that trend.
It would be better if we issued college student vouchers at a baseline cost-per unit and inflation-adjusted per year. That way the colleges would have to attract the students and also consider keeping the costs at or near the baseline and keeping their costs connected to inflation.
But then the kids graduate and they have to move to North Dakota and Texas to get a job.
Frankly
“It would be better if we issued college student vouchers at a baseline cost-per unit and inflation-adjusted per year. That way the colleges would have to attract the students and also consider keeping the costs at or near the baseline and keeping their costs connected to inflation.”
I see this as a reasonable way to structure the payments. It has been many years ago but I believe that the government payed the university a fixed amount and I got a small living stipend which was just enough for me to live in a shared apartment under very modest circumstances. That, plus having to move to Arizona was not ideal, but certainly did not do me any harm and was an education in and of itself.
The Nordic countries are outstanding examples of how to run educational systems. The US is way behind them in terms of cost and outcomes, and will probably become even more irrelevant in the future, due to short sighted oligarchic policies. Right now, Finland is the world leader in both health and educational outcomes. Why can’t we learn from them?
If we are to be like Finland we would need a much smaller population, and to become much more ethnically, racially and culturally homogenous. Lastly we would need to look for another super power to provide our protection while we consume more alcohol.
However, I think South Korea is known for having some of the best education outcomes. Maybe we should be like South Korea instead?
And we’d have to put up with much higher prices for food and other goods as well as very high tax rates. And don’t even get me started on those long, dark Finnish winters 🙂
We’d also have to close our borders and expel 40 million illegal immigrants.
First of all, no way is there 40 million people who are undocumented immigrants. Second, even if there were, you realize how disruptive that would be to the country? Third, even if it weren’t disruptive to the country, the logistics of trying expel large quantities of people like that would be prohibitive. Think about the bureaucracy that Germany needed to kill “just” six million Jews. Multiply that manyfold.
David, I am not advocating such, but showing the absurdity of his analogy. Our history and demographics are far more complex and nuanced than Finland (from what I have read). Many of those countries are almost monolithic, not that that is bad, just different.
My figure of 40 million is closer to the truth than the laughable figure of our government of 12 million, which they have used for years. During the Reagan administration there was an amnesty for an estimated 1 million, and 3.6 million signed up, so multiply 12 million by 3.6 for one estimate. The Obama administration also recently put out an RFQ for green cards with an estimated maximum of, get this, 34 million IDs.
http://www.breitbart.com/big-government/2014/10/19/exclusive-obama-admin-quietly-prepares-surge-of-millions-of-immigrant-ids/
I’m not advocating it, but let’s also have a real discussion based on facts. FWIW, here is what the liberal-leaning factcheck.org says on the topic of deportation:
“- Truman did not try to “create jobs for returning veterans” by ordering deportations. In fact, he signed legislation protecting the rights of Mexican migrant laborers recruited legally to help harvest U.S. crops, and was unable to win congressional approval of measures to crack down on employers of illegal immigrants. During his nearly eight years in office, about 3.4 million were deported or left “voluntarily” under threat of deportation.
“-Eisenhower did not deport 13 million Mexicans. Only one-tenth that number was ever claimed by the federal officials in charge of “Operation Wetback,” and even that figure is criticized as inflated by guesswork. Officially, just over 2.1 million were recorded as having been deported or having departed under threat of deportation.”
http://www.factcheck.org/2010/07/hoover-truman-ike-mass-deporters/
BTW, last I read Hilter killed 12 million people in camps, but that’s a far different and I think irrelevant comparison. Truman and Eisenhower are better, if that’s where you want to go.
Actual numbers, not from the government: http://www.pewresearch.org/fact-tank/2014/11/18/5-facts-about-illegal-immigration-in-the-u-s/
Don, by definition people who are here illegally don’t want to be detected. It’s pretty simple logic. Government entities also often lie to us for various reasons.
Consultants in private industry have plugged the hols and logic in government estimates, and their estimates range from 20 to 50 million.
The Myth Of The 11 Million: Wall Street Analyst Estimates 21-25 Million Illegals Now In U.S.
A 2004 estimate by D.A. King in VDARE.com was 20 million illegal aliens.
“And in January 2005, Robert Justich and Betty Ng, analysts at the major Wall Street investment bank Bear Stearns, caused a stir with an exhaustive report, The Underground Labor Force is Rising to the Surface.[PDF]…”
“…Justich and Ng found the claims and the processes of the Census Bureau lacking in credibility. Seeking to get more accurate numbers, they developed a brilliantly inventive methodology. As variables, they measuredcash remittances (wire transfers) to the nations that are the chief sources of what they call “undocumented immigrants”; housing starts; the building of new schools; and border-crossings. Based on these, Justich and Ng estimated that there were 20 million illegal aliens residing in America.”
“I recently spoke to Justich, now a consultant. He told me he now thinks that there are 21 million to 25 million illegal aliens present on American soil….
http://www.vdare.com/articles/the-myth-of-the-11-million-wall-street-analyst-estimates-21-25-million-illegals-now-in-u-s
“
James H. Walsh, a retired Associate General Counsel of the Immigration and Naturalization Service and federal (DOJ) prosecutor, and Fred Elbel, of the Colorado Alliance for Immigration Reform, both guesstimated the number of illegals on American soil to be 38 million. Walsh and Elbel both used the “get away” ratio method for determining the total, with a ratio of 3:1—three illegal aliens that got away for every one that got caught. As Elbel emphasized to me recently, other observers used ratios of as high as 7:1. Elbel told me that he now believes the total to be closer to “50 million.”
Just to reiterate, the numbers I gave you were from Pew, not from the government. Your sources are using methodologies that probably have little validity (“brilliantly inventive”), but even they only bump the numbers up to 20 million or so. Not the 40 million you started with. AIR is an advocacy group with zero credibility, and even they call their numbers “guesstimates.” Unlike AIR, Pew has no agenda on this issue.
Your 40 million number is bogus.
TBD… your 40 million is closer to making the point related to education and the differences between the US and Finland because Finland does not allow anchor babies and the US does not count theirs in the illegal immigrant census estimate. I’m not saying we need to deport the anchor babies, just that 40 million is a closer number if we are talking about the full population impact of illegal immigration.
But this comparison to Finland is really asinine with their 5.4 million people that are 89.33% Finnish. 75.3% are Evangelical Lutheran. Their population density is 17 per sq km. Basically Finnland is a much more homogenous and much less population-dense Wisconsin.
Sure it would be wonderful to be Finnland if you like the dark 7 months out of the year and like to drink a lot.
And I’m not sure I could stand all that yucky fish they eat.
Don, if my 40 million figure is bogus, why does the Obama administration, on their own RFQ, place an upper limit at 36 million? (Which of coarse, can always be raised.)
I read portions of the Bear Stearns study years ago, and they were very thorough, going through school enrollment data, health care, etc., to debunk myths and come up with a better estimate in 2005. Add in over 1 million a year, and we get to that range.
Don’t forget, the government estimate in 1986 was off by a factor of 3.6.
I’ll use Breitbart, since you’ll probably approve of that source.
The Obama Administration does not estimate 40 million undocumented immigrant population. The RFQ is not a measure of the present population of undocumented immigrants.
Your number is bogus.
And here is Snopes: http://www.snopes.com/politics/immigration/greencards.asp
I think that is why they drink a lot.
Don, I guess it really doesn’t matter how big the numbers are – 12 million is a farce – because Obama is going around Congress and the Constitution is his zeal to “fundamentally transform America”, and it’s a disaster our children will inherit. The deficit and debt (which Bush Jr contributed mightily to) are a ticking time bomb, when interest rates go up to even the average rate, we’re screwed. (Illegal) immigration is just another massive issue where Obama is skirting our laws using executive action, and our children will pay the bill and reap the consequences.
So whether it is 20, 34, 40 or 50 million, the number is huge. On top of that, with family reunification and birth rates, we’ll soon become Northern Mexico. Don’t get me wrong, I speak a little Spanish (decent accent, limited vocabulary), love Mexican food, appreciate the culture… but our melting pot may become less so with unregulated and unchecked illegal migration.
All Congress has to do is pass an immigration reform bill. That’s all they have to do. The Senate passed one. The House didn’t. They’ll all get another chance in 2016 or so, and we all know what the parameters of any comprehensive immigration reform bill will be. It will look somewhat like the 2013 bill. The only question is how long the Tea Party wing of the GOP will hold the while thing hostage. Apparently to them, the status quo is better than reform.
Meanwhile the president has exercised his discretion as head of the executive branch to determine how resources will be spent in enforcement. We don’t have enough money or manpower to round up and deport everyone that’s here illegally, nor would that be desirable. It is inhumane and unnecessary to deport children who were brought here illegally or to deny them education and basic services.
As far as I can tell, you advocate apprehending and deporting all illegal immigrants. Millions of them, regardless of their ages, how long they’ve been here, regardless of the contribution they make to our society and our economy. I think we’re a better people than that. We certainly need comprehensive immigration reform. It will and should include a path to citizenship for those already here, with many qualifications and conditions as to the process. The GOP is increasingly out of touch with the rest of America on this issue. And is increasingly strident about it.
jrberg, you might as well compare the US educational system to Palo Alto, Los Gatos or Davis, you’ll find the same difference.