Senate Tying Interest Rates to Markets-How Safe is Your Loan?

The Senate has approved a bipartisan plan that ties interest rates for student loans to the financial markets. The Senate voted 81 to 18 and it drew overwhelming support from Republicans while 17 Democrats voted no.

Some liberals are arguing that the new plan leaves out lower and middle income students who are vulnerable to the swings in the market. The plan helps maintain low interest rates in the short term but higher interest rates in the long term if the economy does recover.

Loans to undergraduates and graduate students and their parents under the plus program would be subject to a fixed rate tied to the 10 year treasury note, specifically the yield on the 10 year note as determined by the last auction held before each June. Liberal critics said that while interest rates are low now, economy forecasters are predicting a rise in interest rates considerably.

This really begs the question, should we be tying student loans into the financial markets given the instability of the current financial system? Are our student loan programs really safe if they're tied to the markets or is this a last-ditch effort to consolidate everything into a financial system that is bound to collapse in the next decade?

According to the Obama administration they have estimated that the fix would help 11 million borrowers who will take out loans this year. The new rates would apply to people who had only taken loans since July 1 of this year.

Do you have a student or family member who is going to be affected by these great changes? If so I decided to give you some links to read up on the new Senate approved student loan plan and you can read those links below.

“Congress has trouble with deadlines. I think we all know that,” said Senator Joe Manchin III, Democrat of West Virginia, who helped broker the deal. “We’re here today trying to fix the problem we have with the government’s student loan programs because we kicked the can down the road last year.”

Obama at Knox College: 'Washington has taken its eye off the ball' - Washington Post

Follow these simple steps to determine the return on investment for your college future. It's a simple ROI calculator for anything related to investing including college: How to calculate ROI

Senate Approves College Student Loan Plan Tying Rates to Markets - New York Times

Ask Matt: College costs can add up fast - USA TODAY

More Evidence That Colleges Are Giving Money to Those Who Need It Least - Businessweek

Colleges Deploy New Student Engagement Strategies with Mobile Applications

A new mobile application is in development to help increase student engagement. The current generation don't respond well to emails or online soliciting. And so developers have created a new application called Student Engauge. 

The app, Student Engauge, is part of a larger trend toward mobile outreach, as colleges seek ways to engage with students who often don’t respond to e-mails or online pestering, says Justin Reich, a fellow at Harvard University’s Berkman Center for Internet and Society. The app follows in the path of mobile warning messages that many colleges have adopted to alert students of campus emergencies.Once downloaded on a mobile device, Student Engauge syncs to a student directory, allowing students to authorize their accounts using their existing credentials. The college can then send out questions or alerts based on those data—for example, asking a student whether he or she liked a professor, or asking a specific group of students if they found a counseling session to be helpful.The app “taps into the one device students absolutely never put down, and that’s their cellphone,” says Nate Frechette, a recent graduate of Le Moyne College, who started the service with Aidan Cunniffe, a rising sophomore at Syracuse University.While Student Engauge is the first app Mr. Reich has heard of that reaches out to students via their phones, he believes it fits into a broader effort in higher education to collect data about students’ experiences to improve college offerings through strategies such as online and in-class surveys.“It’s pretty hard to get students to want to respond to these kinds of things, like course evaluations,” he says.Le Moyne recently offered Student Engauge to its new freshman class, asking students who attended its summer-orientation program to download the app, and then sending out questions about their experiences or sending information to their cellphones. The college will expand the launch to the rest of the student body as the fall semester begins.Deborah Cady Melzer, Le Moyne’s vice president for student development, says that after just one orientation session, students have already given feedback that has allowed administrators and staff members to improve the program.“Without the app, we would have had to wait weeks, even months to receive evaluative feedback about the program that would not be able to be implemented until the following year,” she writes by e-mail. Syracuse, too, has begun using the app.Of course, the response rate runs the risk of quickly falling at colleges that overuse the technology, says Harvard’s Mr. Reich: “I would imagine a lot of students saying, ‘This is annoying—I’d rather be text-messaging with my friends. Why do I want to interrupt that to answer a poll for you?’”But finding ways to ask students about their learning experiences is something that every college should be doing, Mr. Reich says. And although there may be some “reasonable privacy concerns” about collecting too much information about students, he says, “the more we learn about students, the better we can do to serve them.”



ᔥFaster Outreach to Students, Through a Mobile App

West Virginia University gets New Wifi

Looks like students at WVU will now have a great reason to go to class. The university has announced what is now calling "broadband" internet access. But it's the way the university is providing it, skipping the standard wifi-hot spot. Read on...

West Virginia University has announced that it is now providing broadband Internet access to its campus and the surrounding area via unlicensed and unused television channels. This move away from traditional wi-fi hotspots makes the university the first in the nation to use television channels to provide Internet connectivity, said Michael Calabrese, director of the New America Foundation’s Wireless Future Project, which assisted in the transition.Julius Genachowski, a former chairman of the Federal Communications Commission, described the notion of providing Internet service through television channels as “super wi-fi” because such connectivity can be broadcast for great distances and can penetrate large obstacles that standard wi-fi hotspots struggle to overcome.

Source: West Virginia U. Provides ‘Super Wi-Fi’ Through Unused TV Channels

Brazen Life: Tips for Minimizing the Pain of Federal Student Loans

Lifestyle and career blog
Each year, millions of students walk out of the classroom, get a job and realize there's no earthly way they can make their student loan payments and cover the rent.
A quick call to the student loan servicer results in a forbearance. But forbearance means your balance will keep going up while you get a breather. Once that ends, those student loan payments will be even worse.
Luckily, the federal government has ways of helping you minimize the pain of federal loans. Follow these quick steps to keep ahead of the game:
To understand what you're up against, get the facts about your student loans. Grab your Federal Student Aid PIN and head over to the National Student Loan Data System for Students to get a printout of all of your federal student loans.
The U.S. Department of Education has a Repayment Estimator to help you see monthly and overall payment estimates. You'll need to sign in with your Federal Student Aid PIN to use this tool.
If you've got multiple federal student loans, look into consolidation. This will make repayment easier because it brings all of your loans under a single servicer and allows you to make one payment. This Forbes article breaks down the pros and cons of student loan consolidation.
Forbearance is a sucker's bet because it causes interest to capitalize. In other words, interest piles up during forbearance, and you end up paying interest on top of interest long-term.
Rather than falling into that trap, look into a repayment option that works for your financial situation. For many borrowers, repayment plans that hinge on your income will give you the best bang for your buck.
Federal Student Aid gives you a comprehensive overview of the repayment plans, but here's what you need to know:
Graduated repayment. The standard repayment option for federal student loans is 10 years, but most people make far less in the first few years after school than they do later on. The graduated repayment plan lets you keep payments low for the first two years, then rises gradually every two years for the life of the loan.
This is a tricky plan to take on because it results in far higher payments later on than would otherwise be the case. For those who need a little time to ramp up their income, however, it's a choice to consider.
Extended repayment. Rather than paying for 10 years, you can get your loan term extended to 20 or even 25 years. This will lower the monthly payment amount, but beware: by extending the term of the loan, you could be spending more than double on interest charges.
Extended graduated repayment. This is like the graduated repayment option, except it extends the repayment for up to 25 years.
As with graduated repayment, payments will skyrocket as time goes on. And the interest charges over the life of the loan will be much higher than in a 10-year repayment scheme. Use this option only when you've got no other viable choices.
Income-based repayment (IBR). Under IBR, your payments depend solely on your income and not on the amount of the loan. IBR is designed for people who are having financial hardship, and the payment due under this program will never be higher than what you'd pay under a 10-year standard repayment.
Payments change each year based on your income, and at the end of 25 years, the balance of the federal student loan debt is wiped away. You can check out a handy IBR calculator here.
Pay-as-you-earn (PAYE). PAYE, a program that was rolled out in 2012, is designed for newer borrowers. Like IBR, your payments and repayment terms are capped.
So, what are differences between PAYE and IBR? Under PAYE, you're paying 10 percent of your adjusted gross income when taking into account the poverty level, rather than IBR's 15 percent, and repayment under PAYE ends after 20 years rather than 25 years.
PAYE is a great option for newer borrowers. As time goes on, more will become eligible for this program.
Income-contingent repayment plan (ICR). ICR is similar to IBR, but payments are calculated differently. ICR depends in part on your income and loan balances and remains helpful if your loans don't qualify for IBR treatment.
If you've got federal student loans, you probably also have private educational debt. None of the above programs are available for private loans, so it's important to do everything you can to make those payments on time each month. Those private loans often carry higher interest rates, so it's a good idea to tackle those loans first.
Using one of the repayment options that lowers your monthly federal student loan debt can free up extra money for the private loans. Don't be shy; send in that extra money each month, and you'll work closer to your goal, little by little.
Jay S. Fleischman is a student loan lawyer practicing in New York City and the Los Angeles area. You can find him on Google+ and Twitter.

Brazen Life is a lifestyle and career blog for ambitious young professionals. Hosted by Brazen Careerist, we offer edgy and fun ideas for navigating the changing world of work. Be Brazen!
Share your Comment:
Get top stories and blogs posts emailed to you each day.

For Students, No Relief From Senate

Sorry for all of those who are waiting for student loan relief (I too am one of them)…this is the latest news:

A Senate vote to restore low interest rates temporarily on some new federal student loans failed to advance Wednesday, increasing the odds that college students will rack up additional debt due to Washington inaction.

Supporters had hoped to restore the 3.4 percent rate of interest on subsidized Stafford loans, or loans made to undergraduate students from moderate- and low-income households, that had prevailed for the last few years. The interest rate on new subsidized Stafford loans doubled to 6.8 percent on July 1, as previously scheduled. The proposal on Wednesday was supported by 51 senators and opposed by 49, needing at least 60 votes in order to advance to a final vote.

"We will not give up on this issue," said Sen. Tom Udall (D-N.M.). Shortly before the noon vote, the White House said it "strongly supports" the measure.

Roughly 7 million students, or a quarter of all new federal students loans to be made this year, are affected. The average student will pay roughly an extra $1,000 over the life of the loan due to the doubling of the rate. If no further action is taken to reverse the increase, the typical incoming freshman could pay about $4,000 more in interest to pay off four years' worth of subsidized Stafford loans.
Wednesday's vote was one of a handful of recent votes that likely has disappointed students and their families. Democrats and Republicans have spent weeks trying to advance separate proposals either to restore last year's 3.4 percent rate with a promise to overhaul the entire federal student loan program in coming months, or to scrap key elements of the current scheme immediately in favor of a program that ties student interest rates to the U.S. government's cost to borrow.

The legislative jockeying comes amid a government forecast that the Obama administration will reap a $51 billion profit this fiscal year from the federal student loan program, according to the nonpartisan Congressional Budget Office. Nearly all new loans for higher education are provided by the federal government. The profit, generated thanks to near-record spreads between the government's cost to borrow and what students pay in interest, has contributed to the cumulative $1.2 trillion in educational debt carried by U.S. households.

Policymakers, including those at the Consumer Financial Protection Bureau, Federal Reserve and Treasury Department, are increasingly worried that student debt risks reducing consumption and impeding economic growth over the next several years as student debt repayment crowds out household spending, auto and home purchases, savings and retirement nest eggs.

Against this backdrop of dire macroeconomic warnings, Republican and Democratic lawmakers and the White House have sought to capitalize on the political aspect of the doubled interest rate by blaming one another for failing to stop the rate hike. But despite using Twitter and other social media to gin up support for changes, their advocacy has yielded no substantive action.