This blog used to be about debt. Now it's about a few more things. But really, it all comes back to debt. Trust me.

Thursday, January 11, 2007

At Last the Disappointing Details

Thanks to the Project on Student Debt for the heavy lifting. They analyzed the incredible shrinking Student Loan Bill to see just what the impact would be. Enjoy the footnotes on how it affects me personally (or, more specifically, how it doesn't transport me to a more agreeable level of student loan hell. Not one bit. But I'm not bitter. Enjoy, you snivelling undergrads!).

The highlights:

  • The rate cuts only apply to Federal Stafford Loans. If your family also needs private loans, you're out of luck. 1

  • The rate cuts get phased in over 5 years. So after congress finally enacts it (remember, the senate has to chime in, and W needs to pen the thing), students have to wait 5 more years for any rates to actually cut in half.

  • The rate cut only applies to new loans. If, say, you took out loans one day before the bill is enacted, you are out of luck. 2

  • The bill only applies to undergraduate loans. If you take out grad school loans, you are out of luck (don't go and get too educated, now!) 3

  • An Example: if you take out a $20,000 loan and pay it over 10 years, your monthly payment will decrease by about 30 bucks, saving you about $4000 over the life of this loan. 4

Download the full pdf here.

1. I needed both private and federal loans to cover my Gucci institution. It seemed like a good idea at the time.

2. I've already graduated (twice) and consolidated (twice). Forget the fact that I don't get any help from this bill. I have to say, this is just dumb. Imagine the effect on the economy if you reduced interest rates for people who were working, paying taxes, and suddenly had more money to pour into the ipod econoshpere! Sorry, I know it is asking too much of congress to accomplish two things simultaneously.

3. Ok, I got an expensive Master of Fine Arts degree, which makes me dumber than congress. But what about people who went to medical school? law school? public health? social work? You should have known better too.

4. It's very easy to put that $30 per month into a 401k or retirement account, making the $4000 grow. You don't need it for rent or anything.

I'll stop whining now. At least I used small fonts.


Blogger Tisha! said...

Why didn't they apply it to Graduate degree studies that's ridiculous, it may be shorter but also costs a fortune in the US?

January 12, 2007 9:32 AM

Blogger reversed said...

Good question! Baby steps I guess. One could also graduate school is inherently optional. Whereas an undergrad degree is increasingly "mandatory" if you want to get anywhere in life.

I know congress can't do everything at once. But this seems like the tiniest step possible.

January 12, 2007 9:36 AM


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