Comments on The View on the Ground

• Long-term solution
• Posted by David Starr on July 23, 2008 at 9:35am EDT

• I don't know what "long-term solutions" the financial aid officers had in mind (bullet that is second or third from the bottom).

  It had better be that Congress make it economically viable again for well-run financial institutions to participate in FFELP. Congress's little experiment with expecting lenders to lose money for the privilege of offering federal student loans has failed. Unless, of course, you long for a single lender system. How quickly will the Direct Loan program's 800 number be answered then?

  Beep, beep, beep, beep, beep, beep....

• Posted by Greg on July 23, 2008 at 12:40pm EDT

• here is a thought, why doesn't the Gov'mnt get out of the loan business. Put the money towards the New GI bill, and build up a new standing military force? Then afterwards they can be students on the GI bill :-)

  Greg

• Posted by student loan analyst on July 23, 2008 at 6:15pm EDT

• Unfortunately, I think a lot of educational institutions would be in financial trouble if the government totally got out of the business of providing and backing cheap student loans. In the short term, enrollment would decline - in the long term, prices might come back down to where they can support higher enrollment. To accomplish that, schools would probably need to cut back on non-instruction activities to make education more affordable.

• Federal Direct Loan Program Should Be Encouraged
• Posted by Mark , graduate student on July 24, 2008 at 5:00am EDT

• Although there are certainly times when students might need recourse to an alternative (ie, private)loan, in the vast majority of cases federally-backed loans, as with the Stafford and Perkins loan programs, should be adequate for students attending public universities; moreover, they have low, fixed interest rates and students in need of an emergency deferment after graduating from school, can easily get one without the risk of incurring steep financial penalties, as happens with private loans (I know from personal experience).
  Virtually all private loans have exorbitantly high interest rates and most lenders will only allow students to defer them for a maximum of "6" months upon graduating--even if one decides to return to school again in the future (again, personal experience)!
  The bottom-line is that issuers of private loans--like with credit cards--are in it purely for making a lot of money in as short amount of time as possible, to please their ever-restless shareholders.
  Now that Congress has increased the aggregate (ie, total) federal loan amounts that both undergraduate and post-graduate students are eligible to receive, this should greatly alleviate a lot of the financial stress students feel when financing their education, and mitigate the need for unwisely reverting to the private loan market (especially if students can just hold back a bit on purchasing that new car or laptop right away).
  In short, hopefully universities and colleges--not to mention high school counselors--are clearly emphasising this awareness to their students; for students' long-term future financial health is no less than at stake here!

• The Crisis Will End Soon
• Posted by Student Loan Watcher , Founder at StudentLoanWatcher.com on July 24, 2008 at 10:30am EDT

• As long as there is money to be made in lending, there will be companies there to make it possible. The recent "Credit Crunch" has forced many lenders out of the game, but there are still plenty out there who are picking up the scraps.

  Essentially, all of the posturing by the government has created a situation which will result in less competition which often means a worse product for students. So once again, the quick reaction to the student loan scandal has done little but create another barrier to students.

  The same rules still apply, students need to pick a college or university that is within their means, they need to borrow as little as possible, and they need to get a diploma that makes sense and will ultimately get them a job which will be profitable.

• George Bush: Wall Street got drunk...
• Posted by feudi pandola on July 24, 2008 at 11:10am EDT

• If I hear one more person say the lenders are losing money on GUARANTEED loans, I'll scream. This is THE BIG LIE that some folks are trying the sell the public in hopes that the feds will jack up rates again. Even George Bush now says that much of this current credit crunch is because "Wall Street got drunk." To paraphrase the President's comments, much of this mess was created by the greed and stupidity of the investment community trying to game the system with "no income verification loans", "off balance sheet transactions" and "crazy quilt investment vehicles" so convoluted and byzantine that, in many cases, you can't determine who actually owns the underlying asset!

  As I've written many times before, if the banks were really losing money, there would be no FFELP program. Gimme a break.

• Drunk? I think he might have been stoned!
• Posted by Student Loan Watcher , Founder at studentloanwatcher.com on July 25, 2008 at 10:40am EDT

• Just because lenders are making money on loans, does not necessarily mean that they are making profit. The servicing costs, operational costs, and collection of debt does not come free.
  Every company in this country has a right to make a profit on a product, and when that margin falls to a rate at which it is no longer profitable, then they get out of the business. Less competition equals a worse product for consumers.
  So please Feudi, save your George Bush soundbytes for another forum, perhaps late night television or talk soup. If I was looking for a true opinion on the state of the economy, George Bush would be the LAST person in this country I would go to.