Log in

No account? Create an account
notes from a small island

curiouswombat in whirlybirds

Money, Money Money...

I wonder if the current credit squeeze on both sides of the Atlantic will make finances for our students harder?

Petzi sent me this link to do with student finance in the USA.

One British bank (HSBC) has already stopped giving interest-free over-drafts to students - I don't know about any of the others.

I have heard a rumour, unsubstaniated but from an ex-teacher, that our own I-o-M government might be going to means-test its payment of student fees in future.

::waits hopefully for daughter to get job in future to keep me in a manner to which I would like to be accustomed, after all this pay-out for her education...!::


Congress is working to get the Direct Loan program (the one directly financed by the government, no private lenders involved) geared up to fill in for any lenders that leave the program. They have an income-contingent repayment plan that is linked to the amount reported as earnings to the IRS each year. Some people pay nothing while out of work or working for low wages.

Also, Congress wants to increase the amounts students can borrow under the government-funded programs, which are a better deal for students all around.
Sounds like a good idea, except ... government is doing it. You know they're going to either screw it up, or pay out some outrageous amount of overhead.

(That's not totally fair, I'm sure there's some kind of effecient, well-run government program that always runs smoothly. Stop giggling, I'm serious.)

You'll be sorry you raised this subject

I happen to know a lot more about this than you ever wanted to know!

I've got issues with the way the Direct program is run, but for the sake of my job I probably shouldn't go into that in public anywhere, even under a pseudonym:) Besides, I have issues with the way all the programs are run.

Direct Lending isn't a new program. It's been around for a while and has a good percentage of the overall lending volume. It was rocky when it was first started, but now customer complaints are no greater than for most of the commercial lenders, and less than some of the big private sector lenders.

The main problem the Direct program has had is that the commercial lenders have offered incentives like paying the initial loan fees or slight interest cuts for all on-time payments, which made the commercial loans cheaper for students. (The commercial lenders lobbied Congress to make it illegal for Direct to offer the same incentives.) However, the commercial lenders are now dropping those incentives. Direct Lending was also the best bet for borrowers who were in default and wanted to consolidate their loans, so they have many high risk borrowers, but are also a good choice for people in trouble who want to repair their credit.

There are a lot of partisan arguments about whether the FFEL (commercial) or Direct program costs the taxpayers more. Common sense says that Direct Loans would be cheaper because commercial loans are set up to make a profit and the government reimburses lenders in case of default so there's no risk to the lenders. The government winds up trying to collect all the worst of the defaults. For actual numbers on program costs, I'd go with what the GAO has to say, since they are the government's accountants:


Re: You'll be sorry you raised this subject

Oh, I usually am sorry when I raise subjects. :-) but how else is one to learn things?

Basically I think services should be provided in the way that gets the job done with the least expense, but of course it's usually way more complicated than that. Thus the possibility that studies are being slanted by "methodology" ... although it sounds more to me like the Republicans are just upset at being proven wrong. (I should point out that I'm registered Republican. You have to register as something, to vote in Indiana's primary, but now that I'm a town councilman I guess I'm part of the machine.)

Often private ventures can do a job better and cheaper by competing and taking out levels of red tape, but of course the whole point of their existance is to make a profit. Both the companies and the government have to be watched very, very closely for people who care more about lining their pockets than about taking care of the customers. It sounds like in this case the commercial lenders have turned it into a monopoly, which takes away the advantage of using them. That being the case, this is one anti-government person who wold have to rule in government's favor. But I'm still going to make fun of them.

Meanwhile, it would be helpful if they'd listen to the ideas of people who have problems with how programs are run!
Oh, and there's my favorite financial aid program -- Work Study. You get a job at the school or working with a local non-profit, the school pays your wages, the government reimburses the school.
Oh? My girlfriend expressed an interest just yesterday in helping the local women's shelter -- sign her up!

January 2013



Powered by LiveJournal.com