Here are the best articles from around the web this week talking about student loans…
For the week ending Friday June 7, 2013
Student Loan News:
1. How Student Loans are Suffocating the Middle Class:
Most economists agree that a thriving middle class is key to a flourishing economy and while there have been steady economic improvements over the last year that hint at a sustainable recovery, one critical barrier remains: massive student loans.
In fact, student loan debt is counter-intuitive to economic growth via the middle class, says Mark Kantrowitz, founder of FinAid.org. “If you are spending money on loans, you aren't spending as much cash on homes, cars, clothes or food.” And that’s bad news for the economy since consumer spending makes up three-quarter of gross domestic product. Learn more: http://www.foxbusiness.com/personal-finance/2013/06/04/college-loans-hurting-middle-class/
2. State student loan agency to open call center in Green Tree:
A state agency that underwrites Pennsylvania's college grant program and keeps tabs on more than $200 billion in student loans nationwide will open a loan service call center in Green Tree later this year.
A spokesman for the Pennsylvania Higher Education Assistance Agency said the call center will employ 150 workers who counsel borrowers on student loan payment plans.
State and county officials will join state Sen. Wayne Fontana, D-Brookline, the agency's vice chairman, at 11 a.m. Friday for the official announcement at 11 Parkway Center in Green Tree, said agency spokesman Keith New. Details here: http://triblive.com/news/allegheny/4143362-74/agency-center-student#axzz2VPoEzadS
3. Student Loans on the Cheap:
Last month Senator Elizabeth Warren put forward her first bill as a senator, a proposal to allow students to borrow for college at a 0.75 percent interest rate, the same rate that the Federal Reserve Board charges banks for borrowing reserves. In putting forward the bill Warren noted the rapid run up in student debt at a time when recent graduates face an especially bleak job market.
As much as I think it would be good to help struggling students, I initially did not like the proposal. As a general rule it is best for the government to be transparent in its subsidies, which means appropriating money directly from the budget. For much more: http://www.huffingtonpost.com/dean-baker/student-loans-on-the-chea_b_3393577.html
Student Loan Blog Posts:
1. Your Guide To The Battle That's Raging Over Student Loans In America:
Congress has one month to reach an agreement before interest rates on new federally subsidized student loans double to 6.8 percent.
For once, both Democrats and Republicans see the increase as a problem that needs to be solved.
As expected, though, they have very different solutions, each with their own benefits and shortcomings.
President Obama emphasizes the importance of college affordability, but a Fidelity Investments survey shows that new graduates are getting stuck with $32,000 in debt — a staggering sum even before interest costs are included. Read post: http://www.businessinsider.com/guide-to-the-student-loans-battle-2013-6
2. Obama urges Congress to follow his lead to extend student loan rates:
With student loan rates set to double in a month, President Barack Obama on Friday urged Congress to extend the current rates, a demand which Republicans rejected as needlessly partisan.
The president called on Congress to follow his approach and extend the low, 3.4 percent federally-subsidized student loan rate past the end of June, after which those rates would automatically double to 6.8 percent.
“If Congress doesn't act by July 1, federal student loan rates are set to double. It's like a $1,000 tax hike,” the president said on Friday at the White House, where he was surrounded by college students. Check out: http://nbcpolitics.nbcnews.com/_news/2013/05/31/18655903-obama-urges-congress-to-follow-his-lead-to-extend-student-loan-rates
3. Elizabeth Warren Calls for Grassroots Movement on Student Loan Debt:
On Monday night, Sen. Elizabeth Warren held a briefing on student debt with the progressive policy group MoveOn.org, taking calls from students, parents, and graduates struggling with student loan debt. Warren discussed the the current fight in Congress over student loan interest rates, and what kinds of fixes would work best for the 37 million Americans with student loan debt. And she called on Americans to take matters into their own hands.
Over the past decade, student loan debt has nearly quadrupled, and now stands close to $1 trillion. On July 1, rates for federal need-based student loans are set to double from 3.4 percent to 6.8 percent. The deadline has lawmakers scrambling for a fix. There are a bunch of proposals out there, including Warren's call for students to be allowed to pay the low, low rate that big banks pay the Federal Reserve for their short-term borrowing; a plan President Barack Obama laid out in his budget in April; and the GOP plan that recently passed the House, which Warren and Obama hate. Full article: http://www.motherjones.com/mojo/2013/06/elizabeth-warren-grassroots-movement-student-loan-debt