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Shall we allow the student debtors to refinance?

Ann Schnoebelen at the Chronicle of Higher Edumacation reports on some well-meaning group of activists who imagine that the US Government should just allow the kids to refinance their student debt in much the same way that a home owner refinances a mortgage. Silly dreamers. Don’t you know that the US Government makes a big profit on these loans? Don’t you know that they’ve already spent it?

If Congress tries to allow this, the Congressional Budget Office will come up with a price tag that won’t be pretty. The extra interest charges bring in billions of extra revenue for the government. It’s good to be the King when you can borrow money at close to 0% and then loan it back out at 6%, 7%, 8% or even higher.

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This entry was written by admin and posted on February 14, 2013 at 1:10 pm and filed under Uncategorized. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.

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4 Comments so far (Add 1 more)

  1. If the Governments numbers show that they are making money on student loans at current rates, the numbers are wrong. There is no way they can make money on this deal given current default rates. Rates that we know are being cooked on the low side because they do not consider deferrals.

    1. Walter Sobchak on February 14th, 2013 at 5:17 pm

  2. Five Reasons The Government Shouldn’t Subsidize Higher Education
    By Jarrett Skorup | Feb. 13, 2013 | http://www.michigancapitolconfidential.com/18279

    The headings are below RTWT to learn the supporting arguments:

    1. There is no link between higher education subsidies and economic growth, and none between college degrees and job creation.

    2. More subsidies equals more waste.

    3. When comparing earning power between college graduates and non-graduates, correlation is not causation, and the actual cost of college matters.

    4. Ensuring that everyone has college schooling would not enhance the labor market — it would dilute a university degree.

    5. Higher education may be the next bubble to burst.

    2. Walter Sobchak on February 14th, 2013 at 5:18 pm

  3. And if we stop subsidizing Higher Ed, it will certainly be the next bubble to burst.

    3. admin on February 14th, 2013 at 5:31 pm

  4. Oh geez, look at this: Students who go to cheap state schools have a higher default and dropout rate…duh. It reminds me of the old saw, hard admit, easy to stay in – easy admit, easy to wash out.

    http://money.msn.com/saving-money-tips/post.aspx?post=ed6924ba-1a32-4761-9950-0773d1ab258f

    It’s the calibre of the students, you morons….

    4. carol on February 14th, 2013 at 8:36 pm