Monday, March 4, 2013

More on the Student Loan Scandal at the Lutheran Seminaries.
Borrowing Against Your Future To Feather the Nests of the College and Seminary Professors



bruce-church (https://bruce-church.myopenid.com/) has left a new comment on your post "LCMS Seminary Cost Scandal: Fabulous Costs To Supp...":

Due to the Sequester, the student loan origination fee will rise by a modest amount (or maybe I should say "has risen" since it appears nothing will be done to soften the sequester). However, what more worrying is that come July 2013, interest rates on all undergraduate student loans are set to double, so all student loans will be between 6% and 8% annual interest rates if nothing is done to avert that. It seems unlikely that, in this time of austerity, legislation would pass again that has halved the interest rate on student loans in recent years. Also, one wonders whether the federal govt will continue subsidizing undergraduates student loans so that interest does not accrue as long as undergraduates are in accredited schools. Already, interest accrues on loans that graduate students take out from the moment they sign the origination documents. Will that be the fate for undergraduates too?!:

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Student Loan interest rates:
http://www.direct.ed.gov/calc.html

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http://www.shreveporttimes.com/article/D4/20130228/OPINION01/302280012/EDITORIAL-One-more-try-needed-avoid-sequester

While the Pell Grant will be protected through 2013, other programs are in immediate danger. Under sequestration, federal student loan origination fees would increase 7.6 percent, according to the Office of Management and Budget. Other discretionary programs, such as Federal Work Study, the Supplemental Educational Opportunity Grant and other programs would see an 8.2 percent cut, affecting millions of students, including local ones.

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The executive branch's OMB department that prepares the President's budget proposals says that under sequestration, student loan fees are to rise by 7.6%:


http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/stareport.pdf

Page 9: Savings from uniform percentage reduction: 38.021 5.534
From 7.6% increase in student loan fee.

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bruce-church (https://bruce-church.myopenid.com/) has left a new comment on your post "LCMS Seminary Cost Scandal: Fabulous Costs To Supp...":

Citations continued from previous comment:

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http://pointpleasant.patch.com/articles/monmouth-university-sequester-cuts-will-adversely-affect-student-loans-grants-for-low-income-students

"Student loan origination fees will increase from 1% to 1.076%," Shaw said. "For a first year student taking their maximum loans ($5500), previously the origination fee would have been $55, and the new fee would be $59. For grad students the take the maximum $20,500 the loan fee was previously $205 and the new fee will be $221."

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http://www.mndaily.com/2013/02/05/federal-debt-could-affect-u-students

The Stafford loan could soon go through changes as well.

Qualified students can receive more than $50,000 in Stafford loans over four years but have to pay the money back with interest.

The interest rate on Stafford loans is 3.4 percent through June 30, but without congressional action, the rate will double beginning July 1.

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United States: The Year In Bankruptcy: 2012, 11 February 2013:
http://www.mondaq.com/unitedstates/x/220670/Insolvency+Bankruptcy/The+Year+in+Bankruptcy+2012

A report released by the U.S. Education Department and the Consumer Financial Protection Bureau in July 2012 estimated that total outstanding student-loan debt in the U.S. for the first time exceeded $1 trillion (with an average loan balance of more than $23,000), surpassing the total U.S. credit-card balance ($693 billion) and the total U.S. auto-loan balance ($730 billion). Moreover, as the number of people taking out U.S. government-backed student loans has exploded, so has the number of those who have fallen at least 12 months behind in making payments—about 5.9 million people nationwide, up about a third in the last five years. In all, nearly one in every six borrowers with a student-loan balance is in default. Student-loan debt collection is a booming business. In FY 2011, the U.S. Department of Education alone paid more than $1.4 billion to collection agencies and other groups to hunt down defaulters. On July 6, 2012, President Obama signed legislation freezing federally subsidized student-loan rates for a year, averting a doubling of interest rates. The change helped more than 7 million students.

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