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Will Student Loan Reprieve Fall Short?

A last-minute deal by Congress on Friday to prevent interest rates on student loans from doubling received a surprisingly lukewarm reception from some consumer advocates.

Rates on subsidized Stafford loans, which were scheduled to jump to 6.8% on July 1, will remain at 3.4% for undergraduates for the coming academic year.

The freeze means some borrowers will save thousands of dollars over the life of their loan, but those who take out loans after the year is up will miss out, unless Congress acts again. The deal excludes graduate students.

“It’s not the perfect solution, but it’s a step in the right direction, and it buys us time to find a longer-term solution,” says Rich Williams, higher-education advocate at the U.S. Public Interest Research Group, a nonprofit based in Washington.

Congress’s move will benefit undergraduate borrowers who enroll in college this fall. Freshmen who borrow the maximum $3,500 for the year in subsidized Stafford loans will typically save $700 to $1,719 over the life of the loan, depending on how they repay the loan, says Mark Kantrowitz, publisher of, a student-loan tracker.

Sophomores who take out the maximum $4,500 will typically save $900 to $2,211. Juniors and seniors who borrow the $5,500 maximum can save $1,100 to $2,702.

More student borrowers turn to subsidized Stafford loans than any other type of college loan. Roughly 9.3 million students signed up for one during the 2010-11 academic year, according to The federal government pays the interest on these loans while students are in school. With other student loans—including unsubsidized Stafford loans—borrowers are responsible for all the interest.

Rates on most private student loans are variable. Recently, though, the largest private lenders introduced fixed-rate college loans, which can be cheaper than some of the federal government rates. For example, Sallie Mae fixed-rate loans start at 5.75%.

The changes come at a time when students are borrowing at record levels to keep up with rising tuition costs. Total outstanding student-loan debt surpassed $1 trillion for the first time in 2011, according to the Consumer Financial Protection Bureau.

The annual cost of tuition and fees at four-year private universities averaged $28,500 in the 2011-12 year—a 15% increase from five years earlier, according to the College Board. The in-state cost at four-year public colleges rose 28% over that period, to $8,244, on average.

Students qualify for the subsidized Stafford loan based on financial need, which is determined in part by the cost of attending a school. More than a quarter of undergraduate students with family income of $100,000 or more received subsidized Stafford loans at colleges costing $30,000 or more in 2007-08, according to the latest data from

The savings from the temporary extension could be short-lived. Rates on subsidized Stafford loans are scheduled to jump to 6.8% once more in July 2013 unless Congress acts.

That month, another restriction will kick in for part-time students: First-time borrowers pursuing a bachelor’s degree won’t be able to sign up for the subsidized loans for more than six years. Currently, there is no time limit on these loans.

“This is a Band-Aid approach that puts [us] in the same place next year,” says Linda Sherry of Consumer Action, a consumer-advocacy group headquartered in San Francisco.

Graduate students will feel the biggest pinch. While they have been charged 6.8% interest on subsidized Stafford loans for years, the subsidy comes to an end for new borrowers in June.

These borrowers will be limited to other federal loans—including the unsubsidized Stafford loan, which charges a 6.8% rate, and the graduate PLUS loan, which charges 7.9%—or a private loan.


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      Kia sales pass Jeep on icon’s own turf – Toledo,OH – posted in Competing Products: http://www.toledobla…D=7329104232807

      Kia sales pass Jeep on icon’s own turf

      Jeep may be the signature vehicle of Toledo,but among Lucas County residents,it’s losing ground to autos made by a South Korean manufacturer.

      Kia,which built its reputation on low prices,has surpassed the Toledo-born Jeep brand in the number of new vehicles registered in the county,according to records obtained…
      Kia sales pass Jeep on icon’s own turf – Toledo, OH – Competing Products – Blue Oval Forums
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      Kia sales pass Jeep on icon’s own turf – Toledo, OH
      Started by
      , Aug 22 2007 12:23 AM
      Please log in to reply
      2 replies to this topic
      Blue Oval Member
      Blue Oval Member
      1,227 posts
      Posted 22 August 2007 – 12:23 AM
      Kia sales pass Jeep on icon’s own turf
      Jeep may be the signature vehicle of Toledo, but among Lucas County residents, it’s losing ground to autos made by a South Korean manufacturer.
      Kia, which built its reputation on low prices, has surpassed the Toledo-born Jeep brand in the number of new vehicles registered in the county, according to records obtained from the Lucas County Auto Title Bureau.
      Kia registrations jumped 20 percent to 2,203 for the year ending July 31, the first time the Asian company has outpaced the iconic Jeep brand in its home county.
      The number of new Jeeps registered increased less than a percentage point to 1,764 during the same period.
      Lucas County, OH Car Sales 8/1/06 – 7/31/07
      1. Ford 3,810 <— Nearly 2 to 1 vs. Chevrolet!
      2. Honda 3,004
      3. Dodge 2,933
      4. Chrysler 2,239
      5. Kia 2,203
      6. Chevrolet 2,158
      7. Jeep 1,764
      8. Toyota 1,167
      The surprising thing is that Ford doesn’t even have a large presence in the Lucas County area. GM has the Hydramatic in Toledo, and Chrysler obviously has the Jeep plant. How many employees does/did Maumee Stamping have?
      Technically, a lot of Jeep employees buy/lease a Chrysler product, so the Jeep/Dodge/Chrysler numbers should have been accumulative for comparison purposes. Chrysler still actually outsold the competition overall in this particular geographic area.
      But…. the strength of Ford vs. GM (especially), and also Toyota is nice to see.
      And, the Kia numbers also are an interesting side note, esp. in a traditional union town like Toledo. I wouldn’t be surprised if a number of Hyundai-Mobis employees (Chrysler’s on-site contractual provider of rolling chassis for the Wrangler) aren’t taking Hyundai-Kia up on employee purchase discount plans.
      Edited by Ovaltine, 22 August 2007 – 12:26 AM.
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      No brakes? No problem!
      Blue Oval Member
      15,282 posts
      Current Vehicle:2009 Focus SES
      Location:Local 600
      Posted 22 August 2007 – 01:06 AM
      Ovaltine, on Aug 22 2007, 01:23 AM, said:The surprising thing is that Ford doesn’t even have a large presence in the Lucas County area.
      Bigger than you think. The Monroe ACH plant has many workers that live in Lucas County, as well as the Milan Plant. I live close enough, that if I tripped out my back door, I could fall into Ohio.
      But, these numbers may be deceiving. When a Michigan resident buys a vehicle in Lucas County, it is titled in Ohio first, then the buyer must transfer it to a Michigan title. Monroe county, at least to the south, has no Hyundai/Kia dealer. Just over the boarder is the Taylor/Kia dealership which sells a lot of cars to Michigan residents. It is very large, and advertises in Monroe on T.V., direct mailings, and newspapers.
      I’m not saying a lot of Lucas County residents aren’t buying them (I see a lot of them with Ohio plates), I would just like to know if the numbers are differentiated.
      Also, there are not that many employees at the Hyundai/Mobis plant to explain those numbers.
      Back to top
      Blue Oval Member
      Blue Oval Member
      1,012 posts
      Posted 22 August 2007 – 01:42 AM
      Well, I guess since it’s the first time it’s bound to be noticed, but is that really surprising?
      Grand Cherokee
      I’m more surprised that the "volume" models of Kia didn’t overrun Jeep earlier, to be honest. Despite DCX $ Chrysler’s best (worst? I mean, Compass, seriously?) efforts, Jeep simply cannot be an "all things to all people" brand. And in a town that’s struggling as much as Toledo is low-priced vehicles are going to have a strong value proposition that Jeep nor anything Chrysler can match. Except the base model Caliber and all of it’s cheap, plastic awfulness…seriously, give me the Spectra!
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    • Student loan debt will become the next huge financial crisis to hit the country. People are graduating with huge loan debts and no job to help them repay. What is the government thinking? Why can’t student loans be discharged in bankruptcy? Every other debt can. College costs are out of control and financial aid counselors push students into borrowing the maximum. It’s a time bomb ticking.

    • as Brandon replied I’m shocked that some people can profit $8609 in four weeks on the internet. have you seen this web site makecash16com

    • Not All Good News For Students

      “In the last year, Congress has actually trimmed tens of billions of dollars in student aid,” says Joel Packer, executive director of the Committee for Education Funding.

      Packer says lawmakers — Republicans and Democrats alike — have actually made it more costly for students to borrow, and those costs dwarf whatever savings students can expect from lower interest rates.

      For example, graduate students will now have to pay the interest on their loans while they’re still in school. All students will have to start paying back the money they borrowed immediately after graduation — the six-month grace period during which the government paid the interest is gone.

      “That’s disappointing because Congress shouldn’t pay for one education program by cutting another — in this case it’s actually cutting the same one,” Packer says.

      That’s not all, he says. Lawmakers have limited the number of semesters needy students can receive a Pell Grant and made it harder to qualify for the maximum award.

      “So they’ve made a whole variety of changes. Overall, about $4.6 billion came out of students’ pockets to pay off the federal deficit,” Packer says.

      The total cost to students, according to some estimates, is $18 billion to $20 billion extra over the next 10 years.

      Chipping Away At Education Budget

      This all began a year ago, during the pitched political debate over the federal budget, the deficit and what federal government programs to cut. The student loan program was clearly not exempt, says Getachew Kassa, legislative director for the U.S. Student Association.

      “This was disheartening. When we started this campaign as a coalition of student advocates, we said that ‘No way in hell are you going to take money from education,’ ” he says.

      But that’s what lawmakers did, says Kassa. So even with interest rates remaining low, he says, the bigger story here is that students appear to have lost more than they gained.

      “In the past year, we’ve had deals where students have basically been robbed. I think the real question to ask is at what point is this going to stop?” he says. “Because sooner or later — you take a little bit here, a little bit there — you have nothing else to take away from.”

      Kassa expects both Republicans and Democrats to take credit for keeping interest rates from doubling. But he says students will be back in nine months, yet again fighting to keep interest rates at 3.4 percent for another year — and fighting to keep Congress from cutting student aid even more.

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