I am not a fan of Elizabeth Warren’s, but I think there are valid points in The Two Income Trap. This book came out in 2004, before she was on the political radar. I think the claims of the book are separable from the student loan interest rate question. It’s worth the read.
And @hebegebe conveniently ignored the fact that the proposal was only to be effective for one year. It was designed to get legislators moving on the loan issue. It was never meant to be a permanent solution.
And as far as her “mental capacity” Elizabeth Warren managed to become a U.S Senator and taught at University of Pennsylvania Law School as well as Rutgers and University of Houston Law Schools. She was also a tenured professor at Harvard Law School. Not bad for the daughter of a janitor at Montgomery Ward who had to wait tables at the age of 13 to help her family pay the bills.
Have you attended a HYPSM or equivalent? I have. The professors there run the gamut from incredibly brilliant, to ones scratching your head as to how they could get hired in the first place.
And as for being elected Senator, a common technique to get elected is to tell people what they want to hear, regardless of whether or not it is true. That applies to candidates from both parties.
@dfbdfb said:
I believe that student loan rates should reflect actual risk of loss. Rates should not be set artificially low, which in effect makes them a hidden subsidy.
If you want to subsidize college student loans by charging low interest rates during the term of the loan, then the subsidy should be clear for the general public to review. Furthermore, I think that the subsidy should also be taxable to the loan recipient.
@Hebegeb Attacking Elizabeth Warren’s “mental capacity” is your way of expressing disagreement with her proposal on an issue? People who do that usually don’t have much of an argument to make. If they did they would just make it and skip the personal attacks.
Sorry to hear that you encountered some less than qualified professors. That has not been my or my family’s experience with those schools. But based on your previous comment it could just be that the professor took a position that you didn’t agree with.
You misunderstand.
If Elizabeth Warren is saying that student loan rates are “profitable”, when by general accounting measures they are not, and further suggesting that loan rates should be further lowered, then there are only two reasons for doing so:
- She knows the "profitable" statement is false but is pandering to the public, or
- She believe this is true.
The second outlook to me suggests a lack of mental capacity. If you have reasons to state otherwise, please do so.
I don’t “misunderstand” much @hegebege. Her proposal was to tie student loans to the Federal Reserve discount rate for the next year only (2014) with the goal of allowing recent graduates to take advantage of low interest rates forecasted within that year. It was never meant to be more than that.
Seems to me you “misunderstand.”
Ok @HarvestMoon1, explain to me how she defends the student loans as being profitable.
Just like Congress does not have follow the laws it passes (legally, this is a fact), government plays by a different set of rules and does not follow general accounting rules that applies to everyone else per the IRS codes.
Therefore, Warren can “truthfully” state student loans are profitable. However, what she depends on is people’s ignorance in not knowing that their definition of profitable is very different than hers, i.e., same word, but different fundamental criteria in its meaning when used by government. What a snake!
@hebegebe she defends it by providing data from the federal Government Accountability Office. And our president elect appears to agree with her. Are you going to attack his “mental capacity” as well? Somehow I doubt it.
At least this post implicitly admits that government is a rip-off artist re student loans, as there would be no need for Warren to propose as much if the rates were market-driven, not set by Congress. If rates were not artificially set and left alone, the rates would already be much lower.
Warren’s proposal is an example of Congress creating its own mess in order to pretend to people they are being constructive on fixing a problem. How about do not mess it up in the first place? But, then again, they depend on the ignorance of people not knowing that they (Congress) screwed it up in the first place.
This is why I really do think there is no real effort from the inside to fix public schools (and outsiders are required) - because, if schools are properly fixed and student really learn, they would be on to this stuff. Therefore, the dumber schools are kept, the more government can pretend to be good, and people, like sycophants, just keep following along.
She specialized in bankruptcy law. If she was even marginally competent in that role, she would understand the problem with using the GAO problems.
That makes you 0 for 2 today, @HarvestMoon1. Want to try again?
Speaking as one who dealt firsthand with the student loan system under private banks and Direct Loans, I firmly believe that DL is better for students. Can the system be better? Sure. But I would rather see a move to improve the present system than a move back to banks. And don’t think it would lead to reduced federal costs - the oversight required to make sure banks do their jobs would add plenty of new federal jobs. The fox cannot be trusted alone in the henhouse.
@hebegebe I am not keeping score.
You asked how she defended her “profitability” claim. The answer is the GAO’s January 2014 Report to Congressional Committees on Federal Student Loans.
If you want to join the ongoing public debate about the accounting method mandated by congress versus the “fair value” method preferred by the CBO, take it up with them. And actually in Warren’s letter last year to the Secretary of the DOE she claims even the CBO’s recent baseline produces billions in profits over the next decade. Five other U.S. Senators co-signed that letter with her.
What I take issue with is attacking the “mental capacity” of someone rather than offering a reasonable response to whatever it is that you disagree with. Whether Elizabeth Warren (and many others) are right or wrong in their conclusions is a matter for discussion - I just do not understand the need for personal attacks.
“At least this post implicitly admits that government is a rip-off artist re student loans, as there would be no need for Warren to propose as much if the rates were market-driven, not set by Congress. If rates were not artificially set and left alone, the rates would already be much lower.”
If you went to an ivy league school, awcntdb, you must have majored in philosophy and never studied market finance, because if you did this claim is bogus, pure and simple. A student loan in the banking industry is an unsecured personal loan, and rates for those for let’s say 50k as I had in a link in another post are running around 6%. To claim the government is overcharging is utter bs, and I challenge you instead of claiming the market is cheaper to show me similar loans from banks that are cheaper. I have had similar arguments with people, and they dredge up things like 0% financing on cars, they dredge up 30 year mortgages, they dredge up special financing for cars from banks, and leave out that these are not valid comparisons. That special auto rate from a bank represents only the top tier of borrowers, for example, whereas direct student loans lend to a broad cross section of people. Mortgages are secured, as are car loans, so they aren’t valid. A typical personal loan with a principal of 50k would have an interest rate at least 6%, I cited it in another post, so where is the market?
The rate that treasury notes pay is a rate that private borrowers could never get, that is the riskless rate of interest, that the government gets because it is considered good to pay in all cases. Elizabeth Warren is arguing that student loans should have that rate and it would be way below market rates. If it is the government that is lending, they de facto would be breaking even on the loan, assuming it would be paid back, since they pay that same rate (a bank could make something on a loan at that rate, since these days they borrow money from the fed at 0%).
In any event, there is no slight of hand, what students are paying on student loans from the feds are market rate for unsecured personal loans, so arguing they are artificially high is basically at the very least, not true, and at most is a deliberate falsehood.
Here’s an opinion piece about charter schools, with some interesting comparisons to the subprime mortgage market.
I disagree. IMO, at 6%, they are priced under-market.
Students loans would barely exist w/o the guarantee. Think about it: $65k unsecured to a teenager who may have never had a job in their life (other than lawn mowing and baby sitting), and may not get a real job for 5+ years??? Not gonna happen for most without a co-signer.
The biggest change is likely to be a repeal of the “dear colleague” letters that force colleges to use an unfair process for handling sexual assault claims.
https://studentaid.ed.gov/sa/about/announcements/interest-rate indicates that federal direct loan rates are 3.76% for undergraduates, considerably lower than 6%.
https://studentaid.ed.gov/sa/types/loans/interest-rates#older-rates shows previous rates. The last time federal direct or Stafford loan rates were 6% for undergraduates was in 2008-2009 for subsidized loans (6.0%), and 2009-2010 for unsubsidized loans (6.8%).
No apparent bias in that statement, is there?
I agree that there are likely to be changes in Title IX enforcement. Whether the changes to be made are likely to be a net positive or a net negative, I have no idea, but I suspect the latter, at least according to my own biases.