Student Loans Just Got A Lot More Expensive For Our Snowflakes

Tyler Durden's picture

Snowflakes looking to take out massive student loans for next year to fund the $50,000 price tag of their liberal bastion of choice, and maybe the occasional binge-drinking trip to Cancun for Spring Break, are about to get a little price hike.  But, don't worry, you won't have to start paying on those loans for at least 4 years.

Beginning in July, interest rates on new federal student loans are set to rise by 0.69%, per data published by the Treasury, which would drive the interest cost of new undergraduate loans up to 4.45% from 3.76% for the academic year ending in June, a nearly 20% increase off an historically low base. Meanwhile, rates on some graduate loans are set to rise from 5.31% to 6% and rates on loans to parents and guardians are due to jump from 6.31% to 7%.  As an example, the cost of a $10,000 loan would increase by about $400, according to an online calculator maintained by Bankrate.com.

Of course, these higher borrowing costs shouldn't be that big of a deal as some 44 million Americans only owe $1.4 trillion on their student loans, or a modest average of only $32,000 per borrower. 

Student Loan Debt

 

As Bloomberg points out, the Obama administration changed the methodology for calculating student loan rates in 2013 to link them to then sinking 10-year Treasury rates.  And while that helped to lower rates for students for the past several years, now that the Fed is in rate-hiking mode, it's having the opposite effect.

The government's interest rate increase has its roots in a 2013 provision signed into law by President Barack Obama. In that law, the Republican-led Congress and the Obama administration teamed up to change how the feds set interest rates on student loans. They moved away from a system in which Congress defined interest rates years in advance to one in which rates would be tied to the U.S. government's cost of borrowing over 10 years. By linking students' borrowing costs to those of the government, policymakers sought to create an environment in which students would benefit from low interest rates when the economy wasn't growing very much but would pay up when economic growth was accelerating and higher rates would be more affordable.

 

Treasuries

 

But snowflakes shouldn't worry too much, as we pointed out before (see "Obama Student Loan Foregiveness Plan To Cost Taxpayers $137 Billion, GAO Finds"), the GAO currently estimates that taxpayers will ultimately have to cover $137 billion of their student loans outstanding...an obligation we're certain will only grow over time.

Student Loans

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PGR88's picture

The graphics and pop-ups for adverts on ZH are becoming really annoying.

Stroke's picture

Download ublock for your browser

Citxmech's picture

Ghostery is pretty awesome.  Blocks tracking software too.

JonNadler's picture

but Tylers wont make any money

JamesBond's picture

what would happen to the federal government with interest rates that high? its rhetorical...

jb

PrayingMantis's picture

... $50K ... that's a lot of Soros-funded snowflakes' protests they have to work on ...

;)

sharonsj's picture

I know your right-wing brain doesn't deal in facts, otherwise I'd list all the sources that disprove the Soros-funded-protesters conspiracy theory.  But perhaps you might learn to use the computer for research before you spew out complete crap.

PrayingMantis's picture

@sharonsj

>>> "But perhaps you might learn to use the computer for research before you spew out complete crap."

... below are just a few of the "complete crap" (your triggered words) that I had been seeing on occasion these last few months or years about Soros' use of his finances to destabilize the US, let alone, the world (and these news outlets are pretty much run of the mill on both sides of the political spectrum)

... and (just to appease your triggered conscience), these are only a few of the libtard snowflakes' protests funded by your idol Soros ...

>>> "Soros Funding Airport Protests, Ban Lawsuits Against Trump's Order" >>> http://www.newsmax.com/Newsfront/liberal-activist-soros-funding/2017/01/29/id/770919/

>>> "Soros-Funded Orgs Behind Violent Anti-Trump Protests Across America"
>>> http://www.thegatewaypundit.com/2016/11/soros-funded-orgs-behind-violent-anti-trump-protests-across-america/

>>> "George Soros funds Ferguson protests, hopes to spur civil action"
>>> http://www.washingtontimes.com/news/2015/jan/14/george-soros-funds-ferguson-protests-hopes-to-spur/

>>> "Soros-funded group promises even more anti-Trump protests"
>>> http://www.wnd.com/2016/03/soros-funded-group-promises-even-more-anti-trump-protests/

>>> "Billionaire George Soros spent $33MILLION bankrolling Ferguson demonstrators to create 'echo chamber' and drive national protests"
>>> http://www.dailymail.co.uk/news/article-2913625/Billionaire-George-Soros-spent-33MILLION-bankrolling-Ferguson-demonstrators-create-echo-chamber-drive-national-protests.html

... I was going to add more, but there might be a limit to your IQ ...

 

... and btw, if I'd agree with your statement, we would both be outright stupid ...

 ... cheers!
     PM

;)

silverer's picture

Use a Mozilla based browser and add NoScript (it's right within the Mozilla add-ons in the menu bar, and it's free).

BustainMovealota's picture

Never noticed-

Use Ublock Origin and Ghostery,, should be good.  VPN too , aint a bad idea.

meditate_vigorously's picture

Meanwhile, those of us perusing years and years of intense academic study, just to contribute to the advancement of scientific knowledge, are paying the price of liberal arts nuttery.

artichoke's picture

After the bachelor's, they should be paying you for "pursuing" your further degrees.

GhostofBastiat's picture

Ad Block Plus works nicely with ublock origin if you run Chrome...Ghostery sometimes not so much

Also No Script with AdBlock plus and Ghostery in Firefox seems to run ok...bigger software, more plugins, maybe slower...

victoriamproletari's picture

Yeah almost as bad as the articles have gotten. Snowflakes lol. Youth is always going to be naive. They arent the ones who amassed 20 trillion in debt, last I checked. 

onewayticket2's picture

SoFi is also attracting away the creme from the student loan portfolio - leaving only moderate and poorly performing loans.  

 

roadhazard's picture

I didn't think repukes went to college. I was right.

FreeShitter's picture

Repukes and Demonrats.......same shit diff stink.

MCDirtMigger's picture

If I don't have to start repaying until I graduate, what if I NEVER graduate?

quesnay's picture

Ah, no wonder they take 8 years to do a 4 year program now. :-)

101 years and counting's picture

thats ok.  they'll be able to roll it into their 50 year mortgage when they can finally afford the 5K down payment for the home on their 40th birthday.

Maghreb's picture

Pfff Japan are already doing intergenerational mortgages. U.K is apparently starting it up as well. Road to Motherfucking Serfdom.

Apparently it´s only available now with Metro Bank. Metro Bank outlets look like something between a vegas casino and a scene from Charlie and the Choclate Factory. I think their interiors are designed as an accurate reflection of the world we are moving into.

http://www.dailymail.co.uk/news/article-3615190/Now-s-bank-granny-grandd...

Considering the Demographic situation in many areas of the developed world we are probably going to see squatter communities in the ruins of the crap built before 2008 mortgage crisis. The same shit happened in the 70´s in both London and New York with squatters taking over sections Manhattan that were cleared out. Even heard rumours about groups moving into the crypts beneath Paris. Other nasty stories about fires on industrial estates an areas with access to tunnel systems. Pet Shot Boy´s wrote a song about one. I can´t remember if it was before or after the fire at Kings Cross.

https://www.youtube.com/watch?v=9fv8YiZXlOQ

You´d be better off giving these kids portable generators, water purification systems and M16´s.

Tyler´s can go fuck themselves with the Snowflake bullshit. If they stop popping the pills and taking the beating the future isn´t going to be 100 year loans it´s going to be Manson Family values. If it happens and I see it i´d love to tell them once they go feral who the Tyler´s really were and where they now live.

Deep down we are all rooting to see those Snowflakes turn as cold as ice and as hard as nails...... 

ThirdWorldNut's picture

Labour party in UK is promising free tuition, problem solved!

The only thing holding growth back is not enough graduates. Only if we had realized this earlier, wouldn't have wasted 10 years pumping out money into banks ;-)

Maghreb's picture

Tuition is practically free on the continent. Blair just threw a bone to the City of London to help everyone get in more debt. 

The Rothschild report, cruelly dubbed 'project hero', shows that from the very beginning of its tuition fees policy, the government has been looking to sell the whole thing off, including pre-2012 loans taken out on quite different terms. Post-2012 loans are unattractive to sell due to the large amount that will never be paid back, while the report points out that the rates of interest on pre-2012 loans offer slim pickings, calculated at the bank of England base rate (currently 0.5%) plus 1% or the retail price index (RPI), whichever is lowest.

He´s also might have his own stake in some the Private colleges since the Department of Business Innovation and Skills deregulated the entire system. A certain outfit in Central London has been caught behaving in an unethical way many times.....

https://www.youtube.com/watch?v=O4a8EoycRXM 

silverer's picture

Wasn't the Deep State plan just to send them directly to the license plate stamping facility anyway?

Matthew John's picture

So what does the interest rate matter if you aren't planning on paying it back anyway?

Stan Smith's picture

We should bring back debtors prisons.    Weather its hard labor (unlikely with this crew) or serving up coffee in Starbucks, have these kids work of their loans.

rejected's picture

"...have these kids work of their loans." 

When I was a whippersnapper just out of High School we were called young men. So when do you get that designation today,,, 30?, 40?

NordikAvenger's picture

Young men, often coming home from the army too might I add.  So I wonder what these troll types think-- was education always never worth it, or was it undervalued when we were doing this in the 70's?  How is any of this justified today?  Why have the proles accepted the transformation of universities into trade/vocational schools *plus* the added bonus of 5-7 fold increase in the cost of eduction?  

Wait wait - -- -- the free market thus spake.....

....right bitchez....the free market......when government issued loans coming out of the wazoo....

whatever.

MoreFreedom's picture

Student loans, unlike other unsecured loans, can't be dissolved in bankruptcy. They're really a subsidy to universities and really ought to be abolished. Along with government support of universities: http://www.salon.com/2014/10/16/robert_reich_the_ivy_league_is_ripping_o...

These loans essentially make students debt slaves. If one can't justify their masters in puppetry, poetry, "fill in the blank minority" studies, etc, from a financial sense, they shouldn't be pursuing these degrees.

Ghordius's picture

+1 using human life as collateral = no right to default (as firms are allowed to do) = debt serfdom = immoral -> make illegal

either that... or corporations become 1st Class Citizens and simple humans 2nd Class (or worse, serfs and slaves) citizens

Wake Up, America.

First you put the poor and the blacks back to slavery (aka "corpo-prisons") and now...

... you really, really want to put a whole generation of middle class youth in bondage? Are you sure?

A Friend in worry

artichoke's picture

During the primaries Trump talked about having private lenders partially underwrite those loans.  Black studies, sociology, probably no funding forthcoming for those borrowers.  Engineering students in good standing, loans available.

Am waiting to see Betsy DeVos do something at the collegiate level, beyond getting booed all to hell for giving a HBCU graduation speech.

Catahoula's picture

31 before mine were paid off. These poor pitiful bastards today will never be able to repay. Slaves

arby63's picture

You're right. Pretty scary. I was about your age too when mine were paid. That's a long time. I graduated when I was 23. I only had $13K total but it sure seemed like a lot.

csmith's picture

Let's see...4.45% X the zero dollars I'm planning to ever pay back = zero.

3.76% X the zero dollars I'm planning to ever pay back also = zero.

 

Nope, no real change here that I can see...

sharonsj's picture

Perhaps Tyler Durden should understand that all college students are not "snowflakes," and that they all don't go to liberal colleges, before letting his tiny alt-right brain take over his so-called journalism.  The business of selling college degrees to young people is a giant scam that verges on indentured servitude--but I guess right-wingers think that's fine and dandy because somebody is getting rich from it.

Fidelios Automata's picture

Silly liberal Tyler's not a real person.

Cognizant Millennial's picture

Apparently everyone in your life followed Rule 1 and never talked about Fight Club.

 

What a boring life you must lead.

NordikAvenger's picture

Why downvote this?  ZH is no longer a place for intellectual exchange.  It's a pity.

arby63's picture

My son begins college this fall. Public university. Engineering. I'm paying the bulk but I do intend to have him take on a small debt each year (maybe $2500) that he has to re-pay every summer. 

I know what Tyler means about the snowflakes. They are indeed all over the place these days. Mainly on the crazy coasts though. 

My kid likes physics, chemistry, math and challenges. I suspect he will be just fine.

artichoke's picture

As long as he develops a decent work ethic (no offense but it's not possible to do that in high school, there's no really hard work to do there) he will indeed do just fine.

Panic Mode's picture

May the loans be with you.

BustainMovealota's picture

Shit,, I had to work for my education.  Whatever happened to that concept?  At least I'm not making some Jew banker rich.

Faeriedust's picture

Looked at the price of college these days?  Pay-as-you-go might get you a degree before the school goes belly-up and closes, along with whatever credits you've accumulated.  Might.

TheFulishBastid's picture

Ha ha haha ha ha, we're running young people's future! That's hilarious!

joego1's picture

Sounds like another joo banker plot to me.

Helix6's picture

The government should not be in the loan business.  Its proper role is prudent oversight over those businesses to kep them on the up-and-up.  Without Federal student loans, tuitions would plummet.

Faeriedust's picture

The government should not be in the loan business, and profiteers should not be in the education business. The government should, however, provide all QUALIFIED students with all necessary education to enter those fields in which they are best capable of contributing to society, based on competitive admissions limited to the number of jobs rationally predicted to be available.  Because every girl wants to be a ballerina, but there aren't a dozen openings a year for the job. Ditto for fighter pilots and NASCAR drivers.  The vast majority, unfortunately, will still end up endlessly repaving the roads and rebuilding our decaying bridges.  But those who do qualify for training as doctors and future judges should not graduate burdened with a lifetime's worth of debt.