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Jones: Costly college loan? You're stuck with it
March 25th, 2014
09:19 PM ET

Jones: Costly college loan? You're stuck with it

(CNN) - If you took out a loan a few years ago to buy a flashy sports car, you could save buckets of money by refinancing at today's low rates.

But if you did the smart thing and took out federal student loans to pay for an education - sorry, you are out of luck! Federal student loans cannot be refinanced.

If that sounds insane to you, you will like the plan Sen. Elizabeth Warren unveiled in a speech recently at the Center for American Progress.

Last spring, Congress passed bipartisan legislation to lower student loan interest rates as of July 1, 2013. But they did little for people who already had borrowed at higher rates.

Say you took out a loan even a day earlier, on June 30. At that point, the congressionally mandated rate was 6.8%. You are locked into it. No matter what else Congress does to help new borrowers.

Unlike almost every other type of loan, federal student loans are set in stone even if rates change for the better. (There are private refinancing options but they have strict requirements and limited scope.) This might not constitute a crisis if college cost what it did in the 1970s. But with middle class wages flat for decades, the soaring cost of education has become a mammoth debt dilemma dragging down an entire generation.

Today, Americans hold an all-time record $1.3 trillion in student debt. It cannot be discharged by bankruptcy or even death. In some cases, Social Security benefits are being garnished to pay for a grandchild's debt if a grandparent co-signed. Parents are still paying off their own bills while contemplating putting their kids through college.

The solution is simple: Let Americans with federal student loans refinance to today's low rate. But the reason why Congress refuses to act may surprise you. FULL STORY

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Filed under: CNN Opinion • Education • Student loans • Van Jones
soundoff (12 Responses)
  1. George Williams

    According to DegreeRegistry.org , a general MBA can be obtained for as little as $6k and as high as $120k. If students would do a little research, they would find that it is not nearly as expensive to get a college degree

    April 14, 2014 at 5:13 pm | Reply
  2. Rick Rock

    People need to be careful how much they borrow. They need to know how much their monthly payment after graduation is. They need to know how much they can earn in a job after graduation There are so many things to consider.

    March 29, 2014 at 6:58 pm | Reply
  3. TC

    This is 100% inaccurate. When I graduated, I refinanced 50,000+ in student loans into a low rate 30yr loan.

    March 29, 2014 at 11:23 am | Reply
  4. KJ

    Yes, college is over priced. Yes, people get poor degrees. The point of the article is that THE GOVERNMENT IS MAKING A PROFIT FROM OUR STUDENT LOANS and giving the money to the rich SOBs that already have it. We are all pretty much indentured servants to the 1% of this country. These days the only people getting any money from that 1% are politicians. Time to take back our country.

    March 28, 2014 at 9:08 am | Reply
  5. Minnie Mouse

    Student loans should be discharged for death because the federal government is allowing a lot of them to be dismissed for people who are disabled. These people can't work possibly full time anymore or maybe none at all, and neither can a dead person because they are no longer alive to work. Why should anyone's children or grandchildren have to pick up the slack when a family member passes on who has a student loan out when a person who becomes disabled with the possibility to be discharged of student loans. This needs to go both ways for being discharged for a death and disabled for people who can no longer work at all.

    A lot of the loan problems start with our federal government because your loaning out more than you need to, to a lot of people. Your allowing students to borrow for now to pay off in the future when you loan out extra money just because they are qualified even though it is above and beyond the college costs. Once graduating college you automatically start out in debt of more than what the college even costs.

    College needs to be free for everyone and not just the low income or the costs of the college tuition needs to based upon your degree and potential earning income when you graduate. The more you can earn in a degree the higher the costs and the less you can earn with your degree the lower the costs.

    Student loans are loans and regardless if they come from the federal government, we should have the right to pick and chose where and how if we want to refinance since we are the ones having to pay back the loans.

    March 28, 2014 at 7:40 am | Reply
    • walkerny

      no children are "on the hook" for their dead parents student loans. parents are only if they cosigned.

      March 29, 2014 at 10:13 pm | Reply
  6. Anthony Ciora

    Too many people are getting worthless arts degrees that frankly aren't in demand.

    March 26, 2014 at 9:22 pm | Reply
    • victor

      BA (Sociology) – Aug 2013
      Drove the country – Aug to Sep
      Working – Oct 1 in Dubai
      Has nothing to do with arts degrees.
      There are many other factors at play that are keeping people out of work.
      That is all.

      March 27, 2014 at 8:05 am | Reply
  7. Elizabeth

    Federal student loans CAN be refinanced. While the government doesn't currently refinance federal loans,there are a handful of private lenders that will refinance private AND federal loans into one private loan with rates lower than what many grads are carrying. Three of these banks that offer refinancing will work with individuals that have federal loans: https://studentloanhero.com/featured/5-banks-to-refinance-your-student-loans/

    March 26, 2014 at 4:34 pm | Reply
  8. kurt

    It's a minor issue to be honest.

    The key factor is that education is too expensive. In 1990, the school I attended had a yearly tuition of just under 2,000 dollars in state, 5,000 out of state. Now it's 7,500 in state and 26,000 out of state.

    That's 3.75 times the expense for in-state and 5.2 times the expense for out of state (note, that's just tuition, not room and board and other fees).

    The median family income was about 30,000 in 1990. Today it's about 50,000 dollars.

    So... incomes have increased by 1.65 times and the costs of tuition have increased by 3.75 times in state and 5.2% out of state.

    That's the problem. The interest rate for student loans is secondary.

    March 26, 2014 at 11:37 am | Reply
  9. Hector Slagg

    Too many Freebees now. Time to pay the going rate.

    March 26, 2014 at 10:52 am | Reply
    • CB

      Freebee? Why should the going rate be almost double what people can currently get a mortgage for?

      March 31, 2014 at 1:26 pm | Reply

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