student loans

Remember the Obama administration official who said judging colleges was like “rating a blender“? Not so, says Reason, because “unlike blenders, colleges obstruct efforts to test their performance”:

Uncle Sam hands out $150 billion in financial aid to universities every year—about twice as much as all the states combined. Yet, notes State University of New York-Albany’s Ben Wildavsky, colleges resist independent, national, standardized testing that would allow lawmakers to judge what exactly this aid is accomplishing—and give parents the information to determine the educational bang they are getting for their buck.

The administration’s proposed “scorecard” includes what’s known as a loan forgiveness provision:

Currently, “new borrowers” who obtained their first federal student loan after 2007 are eligible to signup for something called the “Pay As You Earn” program. This program caps their loan repayment at 10 percent of their income for 20 years after which the remainder is written off. … In other words, students take loans according to their needs, and repay them according to their ability and hit taxpayers for the rest. The president wants to expand this socialist prescription to all students who receive federal loans.

Even Sallie Mae, the government’s student-debt manager, acknowledges that costs are skyrocketing — up “27 percent beyond inflation over the last five years” — in part because “parents are picking up an ever smaller share of their kids’ college costs and the government (and other) grants ever more,” Reason says. 

Read the whole article here.

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IMAGE: LendingMemo.com/Flickr

Here’s a clever little story.

A Michigan student with mammoth student loans has come up with an ingenious scheme to shave off some of the debt. He’s selling ad space on top of his graduation cap.

Alex Benda, of the University of Michigan-Flint, has piled up about $30,000 in student loans on his way to a business degree.

Now Benda is attempting to sell one hundred 1in squares on his 10x10in cap at the rate of $300 per square.

Happens to be the exact amount he needs to pay off his college debt.

“It’s scary to think I’m about to go out into this economy and try to find a job and have all this debt I’ll have to start paying,” Benda, 22, told USA Today. “I started thinking, Do I have anything available I could sell?”

Benda claims he has already raised $1200. According to my calculations, that leaves him with 96 squares left to sell.

Not sure how much marketing buzz you’ll generate with a 1in ad on top of a random guy’s graduation cap in Flint. But hey, you’ve got to admire this fellow’s creativity–and his P.R. chops.

(Image: trustypics.flickr)

This funny student loan “horror” video is making the rounds online. It would be more funny if it weren’t so real…

The comment thread on YouTube indicates that quite a few young people out there can sympathize with the lady in this video.

YouTube user Leu Yang wrote: “No too real man, just too real.”

Roberta Las Casas wrote: “OMG can you imagine this for real!!! I would have one of those suckers at my house everyday!!! LOL”

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Fox News reports that the deal struck Thursday to lower student loan rates back to their pre-July terms is already prompting criticism from some who called it a stopgap measure instead of a permanent solution:

A highly touted student loan “deal” began to run into criticism Thursday as advocacy groups and Democratic lawmakers complained it would merely provide short-term relief in exchange for higher borrowing costs on future students.

A few years from now, students with subsidized loans could easily be paying far higher rates than the average person paying off a car loan. In the near-term, the college agreement would rein in student loan rates, which for new subsidized Stafford loans had doubled from 3.4 percent to 6.8 percent at the beginning of the month.

Under the deal, undergraduates this fall could borrow at a 3.9 percent interest rate.

But higher rates would still loom. The rates would only last through the 2015 academic year, after which interest rates are expected to climb above where they were when students left campus in the spring. Rates for undergrads would be capped at 8.25 percent.

Sen. Jack Reed, D-R.I., was one of the first senators to criticize the plan, after the official roll-out of the proposal earlier Thursday.

“Instead of preventing the doubling of these rates to 6.8 percent, it would gradually raise these rates above 6.8 percent,” he said in a statement. “We might see one or two or three years of rates that are relatively below that number, but inevitably, mathematically those rates will go beyond 6.8 percent. And the caps are rather high.”

Liberal advocacy groups echoed the complaints.

Some leading voices in the black community have recently sharply criticized President Barack Obama over his efforts – or lack thereof – to help young African Americans pursue college.

United Negro College Fund President Michael Lomax called the Obama administration’s denial of “student loans to disproportionately large numbers of black parents because of blemished credit histories” a “nasty surprise,” summarized Courtland Milloy in The Washington Post, citing an op-ed Lomax penned for The Root.

Milloy went on to note that:

“We’re getting calls and e-mails from parents, at least two and three a day, saying the denial of their student loans is a disaster,” said Johnny Taylor, president of the Washington-based Thurgood Marshall College Fund. “You have black students from low-income households about to enter college or already there and pressing towards graduation, persisting just as Obama urged them to do, only to have his administration pull the rug out from under them.”

In the past year, for historically black colleges and universities (HCBU), the Obama administration’s policies have led to a 36 percent drop in the volume of parent loans. That translated into an annual cut of more than $150 million. The reason, according to Education Secretary Arne Duncan, is to prevent parents from taking on too much debt — which is as patronizing as it is hypocritical. …

Nevertheless, from Howard University in the District to Morehouse and Spelman colleges in Atlanta, enrollment at HBCUs is declining as the realities of Obama’s revamped loan policies make a mockery of his high-flung rhetoric.

“It is particularly ironic that at a time when this administration has set a goal to increase the nation’s college graduation rate to 60 percent by 2020, this policy shift occurs that will make reaching the goal impossible,” said Cheryl Smith, senior vice president for public policy and government at the United Negro College Fund. “The tougher credit criteria are having a disparate impact on underrepresented minority students, the very ones that stand to benefit the most from a college education.”

It sounds like a fiscally conservative stance is not popular among Obama’s typically biggest fans.

It’s also important to note that all families with low incomes and poor credit have been hit with this, not just minority ones.

Read more.

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IMAGE: David Porchlife / Flickr

All this week, the White House is sponsoring a “text the president about student loans” gimmick, intended, apparently, to convince young people that the president himself is so interested in their lives that he is sitting around with his phone answering questions from random young people about student loans.

Former College Fix assistant editor Robby Soave has written a humorous article for The Daily Caller about his attempts to text chat with Barack Obama.

TheDC News Foundation: PREZ.

Automatic Response: Welcome to Text with the Prez! He’ll answer 1 Q each day on student debt. Got a Q? Reply w/ it in 160 characters or less. (Seriously, the Pres. will text u.)

TheDC News Foundation: If we keep subsidizing students’ education, won’t colleges respond like they always do — by raising tuition?

AR: Awesome. Got ur question! Now just reply with your first name, last name & age to confirm. (e.g. Ron Weasley, 17)

TheDC News Foundation: Robby Soave, 24

AR: Sweet, got it. Stay tuned: the President will txt u from 38383 to answer 1 Q submitted by a DoSomething member each day this week Got another Q? Reply QUESTION

Despite the president’s enthusiastic “Sweet, got it,” response. Robby never does get any of his probing questions answered by the Prezzie-in-chief.

I have to shake my head at these kinds of gimmicky campaign tactics the Obama administration uses in order to make young people feel like the president is their buddy. I don’t know, just strikes me as silly and condescending. Most likely, this is just a way for the Democrats to gather tens of thousands of cell phone numbers for use in future political campaigns.

Check out the rest of Robby Soave’s text conversation with “the president” at The Daily Caller.

Nathan Harden is editor of The College Fix and author of the book SEX & GOD AT YALE: Porn, Political Correctness, and a Good Education Gone Bad.

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