Monday, May 15, 2017

AMERICAN STUDENTS GOUGED BY AMERICAN GOVERNMENT

US Federal student loan interest rates set to rise in July

By Anthony del Olmo 
15 May 2017
On Wednesday, the Department of the Treasury released figures indicating interest rates for new federal student loans for the 2017-18 school year are set to increase by 0.69 percentage points.
Although the Department of Education has yet to officially announce the new rates, Treasury Department figures show that undergraduate Stafford loan rates will rise to 4.45 percent from 3.76 percent. Graduate Stafford loan rates will increase to 6 percent, up from 5.31 percent. Rates on PLUS loans, those for parents as well as graduate students, will increase to 7 percent, up from 6.31 percent.
The government’s interest rate increase has its roots in a 2013 provision signed into law by then President Barack Obama. In that law, the Republican-led Congress and the Obama administration coordinated in establishing how the Federal Reserve set interest rates on student loans. Moving away from a system in which Congress defined interest rates years in advance, interest rates are now tied to financial markets via 10-year Treasury notes.
Although rates had fallen slightly in the years following its implementation, the response by Wall Street to the election of President Trump has provided a significant impetus for their gradual increase.
On top of subjecting student loan rates to the volatility of the financial market, the debt burdens students will confront after they leave college are compounded by the oligarchic and militaristic aims of the Trump administration.
Since the election in November, Treasury yields have risen from 1.71 percent to 2.4 percent as financial speculators have anticipated more federal borrowing based on Trump’s campaign promises for major cuts in corporate and personal tax rates, an infrastructure spending program which will benefit corporations through massive tax write-offs, and increased military spending.
So far Trump’s budget proposal for an expansion in military spending at the expense of social services as well as the tax breaks for the wealthy indicated in the version of the American Health Care Act passed by the House confirm these reactionary promises.
The increase in federal loan rates comes several weeks after current Education Secretary Betsy DeVos reversed plans made under the Obama administration to build a new student loan servicing system by consolidating contracts with private creditors into a single vendor.
Despite the largely token measure taken by the previous administration, the move is in line with DeVos’ repeated plans to cut the federal funding and regulations overseen by the Department of Education.
Regardless, the Education Department continues to profit from its contracts with private lenders. Currently, the federal government has $800 million in contracts with nine different loan servicing companies to carry out the tasks of sending bills, collecting payments, and dealing with borrower issues. Under this setup the federal government directly benefits from the student loan crisis to the tune of about $10 billion per year.
With the increase in student loan rates, private lenders are also anticipating higher profits since private loan rates will begin to look more favorable as federal rates continue to increase. David Nelms, CEO of Discover Financial Services, said during an April 25 earnings call, “If the government backs off of that market … we would take the position to take advantage of it.”
Despite the higher rates for private loans, with average fixed rates from 6 to 12 percent and market variable rates from 4 to 10 percent, these lenders account for nearly 10 percent of all student loans, roughly $7 billion to $9 billion.
Notwithstanding their smaller presence, these companies have been known to take advantage of their clients; most private creditors also do not provide income-based repayment programs or deferment plans. Navient, for example, has been prosecuted several times for malpractice, most recently for siphoning nearly $4 billion from millions of debtors.
For private lenders, student loans have created a nearly $200 billion market for asset-backed securities, particularly following the 2008 financial crisis. Known as SLABS (Student Loans Asset-Backed Securities), these securities currently account for over one-third of the $1.4 trillion of student loan debt since their creation by Sallie Mae in 1992. As students are forced to borrow and repay more and more money, a growing student loan bubble could threaten to destabilize the economy just like the housing and dot-com bubbles.
Today, 44 million Americans, one-sixth of the population, collectively owe $1.4 trillion in student loans, which averages to roughly $32,000 per debtor. An estimated seven of every 10 students to graduate college leave in debt. Under the Obama administration, major cuts were made to public funding for higher education. Public universities compensated for this loss with a 33 percent tuition increase nationwide in the first six years of the Obama presidency.
A 2015 study by George Washington University found that millennials, youth roughly between the ages of 18 and 30, are becoming increasingly distressed by this reality. The study found that over 50 percent of millennials are concerned as to how they will repay their student loans, over 80 percent have one long-term debt, and nearly 30 percent are regularly overdrawing their checking accounts.
To compound the pressures placed on students, the likely future interest rate increases will have an impact on their monthly student loan payments and total repayment costs after graduation. Currently, interest rates are fixed for each school year and do not change throughout the life of the loan, but since most students take out loans on a semester or yearly basis, the fluctuations in interest rates per year will require recalculations of monthly payments. Assuming rates will increase each year, this will mean that monthly payments will increase as well.

TRUMPERNOMICS: IMPLEMENTING OBAMA-CLINTONIMCS


 “CRIMINAL BANKSTERS WILL CONTINUE TO RULE AMERICA!”     Twitter Trumper

THE SINS OF THE FATHERS: THEIR GLOBAL LOOTING of the POOR

THE OPEN BORDERS PARTY of GEORGE SOROS, HILLARY & BILLARY CLINTON, BARACK OBAMA and DONALD TRUMP

 DONALD TRUMP, HIS PARASITIC FAMILY, HIS GOLDMAN SACHS 
REGIME and GOD FATHER, GEORGE SOROS… .global looters of the poor!

 http://mexicanoccupation.blogspot.com/2017/05/the-jared-kushner-donald-trump-george.html

OBAMA-CLINTON-TRUMPERnomics: The Massive Transfer of Wealth to the Super Rich Ratcheted up!
The American oligarchy, steeped in criminality and parasitism, can produce only a government of war, social reaction and repression. In its blind avarice, it is creating the conditions for unprecedented social upheavals. It is hurtling toward its own revolutionary demise at the hands of the working class.
BUT WE KNOW WHERE THEY LIVE!
“The massive transfer of wealth will not go to investment, but to acquiring bigger 

diamonds; more luxurious mansions, yachts and private jets; new private

islands; more  security guards and better-protected gated  communities to

segregate the financial nobility from the masses whom they despise 

and fear.”

*

 “Our entire crony capitalist system, Democrat and Republican alike,

has become a kleptocracy approaching par with third-world hell-holes.

This is the way a great country is raided by its elite.” ---- Karen

McQuillan  AMERICAN THINKER.com

US education chief Betsy DeVos plots school privatization with venture capitalists
By Nancy Hanover
15 May 2017
On May 9, US Secretary of Education Betsy DeVos delivered the keynote address for the annual Arizona State University + Global Silicon Valley (ASU+GSV) Summit in Salt Lake City. The event took place the day before the billionaire heiress was roundly booed by the graduating class at Bethune-Cookman University.
Addressing a standing-room only audience of venture capitalists and school privatizers, DeVos dismissed the American education system as “an outdated Prussian education model.” She emphasized her desire to end government’s role in education and called for scrapping the Higher Education Act of 1965.
Apparently, the US secretary views with contempt the pioneering of free, tax-funded and public education established in the north German state in the early 1800s. The “Prussian model,” which was deeply influenced by the ideas of the Enlightenment and the French Revolution, was to become the international model for modern mass education. Minister of Education Wilhelm von Humboldt, appointed in 1809, is largely credited for this vision of education based on inculcating literacy, broad general knowledge, cosmopolitan-mindedness and academic freedom.
The system was already groundbreaking by the 1830s, featuring professional teacher training, a national curriculum, an extended school year to accommodate rural children, a basic salary for teachers, funding for school buildings and even free and mandatory kindergarten. “The Prussian approach was used for example in the Michigan Constitution of 1835, which fully embraced the Prussian system by introducing a range of primary schools, secondary schools, and the University of Michigan itself, all administered by the state and supported with tax-based funding,” according to Wikipedia.
In 1843 Horace Mann, considered the “father of the common school movement” in the US, visited Germany to study and replicate the “Prussian model.” France and Great Britain enacted compulsory schooling in the 1880s.
It is interesting to note that the “Prussian model” contrasted with a type of Calvinistic utilitarianism promoted by English and Swiss education reformers. DeVos has traced her ideological influences to Andrew Kuyper, a neo-Calvinist opponent of secular education.
DeVos is fully conscious of the scale of the social counterrevolution she wants to impose on American education. Schooling should be largely returned to the churches, according to this arch-reactionary, along with for-profit education companies.
DeVos went on to tell the friendly crowd of edu-business investors and speculators that she was for “get[ing] the federal government out of the way so you can do your job…. It’s time for us to break out of the confines of the federal government’s arcane approach to education,” she emphasized, according to the website EdSurge.
She made her usual “school choice” arguments couched in populist bromides, as in, “Those who are closest to the problem are those best equipped to solve it.” She restated her hostility to universal public education: “Our education-delivery method should be as diverse as the kids they serve, instead of our habit of forcing them into a one-size-fits-all model.” The assembled entrepreneurs were all aware these were code words for opening up the education “market” for profiteering, in addition to slotting poorer children into low-skill utilitarian jobs.
She promised to “cut the red tape” for education businesses and described the education technology industry as a “thousand flowers, and we haven’t planted the whole garden yet.”
The gathering consisted primarily of representatives from GSV Corporation, a NASDAQ-listed bank with substantial venture capital investments in education technology including JAMF Software, coursera, Chegg, Curious.com and Course Hero.
At the conclusion of her address, DeVos was asked about the pending reauthorization of the 1965 Higher Education Act, originally signed by Lyndon Johnson as part of his Great Society programs. “Why would we re-authorize an act that is [more than] 50 years old and keeps getting amended? Why don’t we start afresh?” she replied.
The notion of jettisoning the landmark education legislation must have been music to ears of GSV Capital Assets investors. The Higher Education Act of 1965—enacted under the pressure of a mass working-class struggles and the civil rights movement—opened college doors to millions of middle and working class youth for the first time in US history.
HEA provided funding for grants and scholarships, federally-backed and subsidized loans, created work-study job opportunities, provided resources for libraries and graduate programs and supported the creation of a system of community colleges nationally, which today educate nearly half of all US students at nominal cost.
The 1965 HEA was made law alongside the Voting Rights Act, the Elementary and Secondary Education Act (ESEA) and Medicare. All these reforms, won through mass struggles, have been steadily undermined, by Democrats and Republicans alike, and are now targeted for destruction by the Trump administration.
Of course, DeVos’s facile dismissal of the Higher Education Act is not surprising from an administration that seeks to turn the clock back for the working class to the 19th century and from a secretary who has expressed support for child labor.
The highly political personnel directing the Global Silicon Valley group, like DeVos, are aiming well beyond the immediate prospects of cashing in on the education market. They have advanced a document “2020 Vision: A History of the Future,” which links the business of education technology, profit potentials and national social policy.
This document makes a direct parallel between the evolution of the healthcare industry and the present position of education companies. In 1970, GSV points out, the health care industry only represented 8 percent of GDP and had 2 percent of capital markets, whereas today its holds 18 percent of GDP and 16 percent of capital markets. Likewise, GSV projects a massive growth in the education market—at least a 3 percent rise in GDP sector with more than 100 private education companies boasting a market capitalization topping $1 billion. “This represents a mind-blowing trillion dollar opportunity,” the document concludes.
Of course, the growing profitability of the health care industry was at the direct expense of the actual health of the US population, which is now reeling from the near-destruction of the employer-based health care system, the skyrocketing costs of drugs and the resultant declines in lifespans. The plundering of public education by the financial elite will now visit the same destructive policies upon children just beginning their lives.
The reactionary political thinkers behind Global Silicon Valley’s bank are not oblivious to the political crisis they are provoking. Their statement warns that the growth of CEO pay and social inequality has also meant protests like Occupy Wall Street and an “exploding population of low-income students.” For example, “2020 Vision” documents the spread of poverty throughout the US South, showing that between 2000 and 2013, the number of states in which more than 50 percent of the student population was low-income grew from four to 20.
Bluntly stating that a “growing segment of American society doesn’t believe that it is participating in the future,” they add, “As Aristotle observed, ‘Inequality is the parent of revolution’.”
With such considerations in mind no doubt, “2020 Vision” puts forward among its solutions the need for universal national service to address the millions of young people without a future.
GSV works with and promotes General Stanley McChrystal’s call for universal military service to “strengthen a national ethos” and “restore the social fabric of the United States.”
But the venture capitalists add their own entrepreneurial twist to this call for a strong dose of patriotism and obedience among the young. Reprising the words of former Chairman of the Joint Chiefs Colin Powell, GSV calls for mandatory national service “as a force multiplier” for business.
In this regard, GSV lauds Israel as a visionary “Start Up Nation.” Ignoring the war crimes and social conditions of Israel—a brutal apartheid-like regime based on the dispossession and repression of the Palestinian people and one of the most socially unequal societies in the industrialized world—GSV glorifies it as the world’s best incubator of new businesses, a positive model for the US. In fact, they ascribe the garrison state’s success in business development to the Israeli requirement for two to three years of military service.
Betsy DeVos’s political bedfellows at GSV and their “2020 Vision” are a clear warning as to US policy plans for the destruction of public education and the dragooning of another generation into growing imperialist wars.




The Employment Situation of Immigrants and Natives 
Those competing with H-2B visa holders hit the hardest

WASHINGTON (May 12, 2017) – The Bureau of Labor Statistics’ data for the first quarter of 2017 shows abysmal labor force participation, particularly for those without a college education.  A new analysis by the Center for Immigration Studies shows that the participation rate has not returned to pre-2007 recession levels, and the rate looks even worse relative to 2000. The unemployment rate has improved in recent years; but the numbers are deceiving, as the official unemployment rate includes only those who have looked for a job in the last four weeks and not those of working-age who are no longer working or looking for work.

Dr. Steven Camarota, the Center’s director of research and author of the analysis, said, “These newest employment numbers show the dismal employment picture for less-educated, low-skilled workers – the vulnerable Americans  who compete with H-2B non-agricultural guest worker visa holders for jobs like landscaper, construction worker , housekeeper, waiter, bellhop, or kitchen helper." Congress recently voted to give DHS Secretary Kelly the authority to more than double the number of H-2B visas issued.

Camarota concluded, "The latest numbers show no evidence of there being a shortage of U.S. workers for these jobs that are presently being filled by foreign workers."

View the entire report at: http://cis.org/Employment-Situation-Immigrants-Natives-First-Quarter-2017

Among Native-Born Americans:
  • The overall unemployment rate for natives in the first quarter of 2017 was 4.9 percent (6.5 million), a dramatic improvement over the peak in the first quarter of 2010 at 10.2 percent. However, the rate is still above the 4.4 percent in the same quarter in 2000.
  • The overall unemployment rate obscures the low labor force participation rate, however, especially among those without a college education.
  • There has been a long-term decline in the labor force participation rate of working-age (18 to 65) natives without a bachelor's degree. Only 69.6 percent of natives in this group were in the labor force in the first quarter of 2017; in 2007, before the recession, it was 73.8 percent, and in the first quarter of 2000 it was 76.1 percent.
  • The labor force participation rate of natives without a college degree shows no meaningful improvement in the last four years. For example, in the first quarter of 2012 it was actually slightly better than it was in the first quarter of 2017.
  • The decline in labor force participation among those without a bachelor's degree is even more profound when it is measured relative to those who are more educated.
  • In the first quarter of 2017, 69.6 percent of natives without a bachelor's degree were in the labor force, compared to 85.5 percent of those with a bachelor's degree — a 15.9 percentage-point difference. In the first quarter of 2007, the gap was 12.4 percentage points, and in the first quarter of 2000 the gap was 11.7 percentage points.
Among Immigrants:
  • Working-age immigrants without a college education also have not fared well since the recession. Unlike the labor force participation of natives, immigrants without a college education did improve their situation between 2000 and 2007. But it has not returned to 2007 levels. Also like natives, there has been no meaningful progress in the last few years.
  • In the first quarter of 2017, the labor force participation rate of immigrants (18 to 65) without a bachelor's degree was 72.1 percent, somewhat better than that of natives, but still below their rate of 73.4 percent in the first quarter of 2007.
Immigrants and Natives Not in the Labor Force:
  • In the first quarter of 2017, there were a total 50.6 million immigrants and natives ages 18 to 65 not in the labor force, up from 43.3 million in 2007 and 37.2 million in 2000.
  • Of the 50.6 million currently not in the labor force, 40.7 million (80 percent) did not have a bachelor's degree.
  • The above figures do not include the unemployed, who are considered to be part of the labor force because, although they are not working, they are looking for work. There were almost eight million unemployed immigrants and natives in the first quarter of this year; more than three-fourths of the unemployed do not have a bachelor's degree.

JOE LEGAL v LA RAZA JOSE ILLEGAL

…. which one has it good under the Dems???


“The principal beneficiaries of our current immigration policy are affluent Americans who hire immigrants at substandard wages for low-end work. Harvard economist George Borjas estimates that American workers lose $190 billion annually (DATED FIGURES) in depressed wages caused by the constant flooding of the labor market at the low-wage end.”   --- Christian Science Monitor
                                                                          
“The lifetime costs of Social Security and Medicare benefits of illegal immigrant beneficiaries of President Obama’s executive amnesty would be well over a trillion dollars, according to Heritage Foundation expert Robert Rector’s prepared testimony for a House panel obtained in advance by Breitbart News.”

AMERICA: NO LEGAL NEED APPLY

REPORT: The assault to finish off the American middle-class is NOT over


“The report noted that many illegals don't have jobs or have difficulty in landing good jobs because of local laws.”

“However, it identified several states that have begun easing employment laws so that illegals can get a job.”

THE HORDES KEEP COMING!

While the declining job market in the United States may be discouraging some would-be border crossers, a flow of illegal aliens continues unabated, with many entering the United States as drug-smuggling “mules.”


  
POVERTY

ROBERT RECTOR: Importing poverty…. WE
ALSO IMPORT ALL THEIR CRIMINALS


“The lifetime costs of Social Security and Medicare benefits of illegal immigrant beneficiaries of President Obama’s executive amnesty would be well over a trillion dollars, according to Heritage Foundation expert Robert Rector’s prepared testimony for a House panel obtained in advance by Breitbart News.”


US corporate profits up 13.9 percent on cost-cutting and low wages
By Barry Grey
9 May 2017
Former Obama administration officials joined the Trump administration and the media in hailing the April employment figures released Friday as proof that the US economy has reached “full employment” and essentially completed its “recovery” from the Great Recession.
According to the Bureau of Labor Statistics, the US economy added 211,000 private-sector non-farm jobs in April and the official jobless rate dropped to 4.4 percent, the lowest level in more than a decade.
“JOBS, JOBS, JOBS!” tweeted President Donald Trump. “Great news,” Labor Secretary Alexander Acosta said on Twitter, adding later in a statement, “The steady and sustained increase in job creation equals new paychecks for American workers and income for American families.”
Jason Furman, the chief economic adviser in the Obama administration, said, “The momentum in the job market is really impressive.” The New York Times wrote that the report showed “a labor market closing in on full capacity,” particularly in “the country’s flourishing urban centers.”
On Monday, Cleveland Federal Reserve President Loretta Mester, speaking in Chicago, said, “We have met the maximum employment part of our mandate and inflation is nearing our 2 percent goal.”
The message from the ruling elite is clear: This is as good as it gets.
To present the jobs report as proof of a healthy economy, certain aspects of the report itself had to be downplayed or ignored, including the fact that average job creation so far this year, 185,000 a month, is actually lower than in 2014 and 2015. Even more significant, the number of people not in the labor force actually rose by 162,000 last month, and the proportion of the population in the labor force fell by a tenth of a percent. At 62.8 percent, the labor force participation rate remains only marginally above a four-decade low.
While the share of prime working age Americans (25 to 54) who are employed rose in April, it remains well below the level at the peak of the last economic cycle and even further below the level in 2000. This means there are millions of working-age people who have been effectively excluded from the job market as a result of decades of factory closures and mass layoffs, a process that has intensified since the 2008 financial crash. These millions of people, living on the edge of society, are not even counted in the official unemployment rate.
Moreover, the vast bulk of the new jobs created in April were once again in the cheap-labor service sector, where many workers receive poverty-level wages. The statistic that is perhaps most revealing about what is being presented as the “new normal” for a healthy economy is the miserable year-on-year average wage increase of 2.5 percent, barely above the official inflation rate.
Even in 2006 and 2007, annual wage growth for non-managerial workers of 4 percent or more was normal. That has been cut almost in half.
On Saturday, the same day the Wall Street Journal reported the April employment figures, the newspaper featured a front-page article on US corporate profits in the first three months of 2017 that pointed to the real driving forces of the new “full employment” economy. Profits at S&P 500 companies surged an estimated 13.9 percent in the first quarter, the biggest quarterly profit gain in five years.
At the heart of the profit bonanza, the Journal explained, was a relentless and ongoing drive to cut costs by holding down wages, cutting jobs and slashing spending on new plants and equipment. US big business, the newspaper wrote, was reaping “the benefits of years of belt-tightening” under conditions of a pickup in demand.
Because of the continuing focus on slashing costs, profits rose nearly twice as fast as revenue. Spending on equipment and buildings, i.e., productive investment, rose by a mere 1.5 percent in the first quarter. Half the sectors of the US economy actually cut capital spending from a year earlier.
The Journal provided some examples. Caterpillar, the heavy machinery giant, reported a quarterly sales increase of about 4 percent, while doubling its profit, excluding restructuring costs. The company has cut its global workforce by at least 16,000 since late 2015, a reduction of roughly 10 percent. It has closed or announced the shutdown of plants in South Carolina, Florida, North Carolina, Illinois and Belgium.
The energy sector, partially recovering from the oil price collapse of previous years, saw a 31 percent rise in revenues from the year-ago period. Based on its ruthless cost-cutting over the past two years, including the elimination of over 200,000 jobs, the sector enjoyed a profit boost of 647 percent.
Exxon Mobil, whose former CEO Rex Tillerson is now Trump’s secretary of state, reported a doubling of its profits in the first quarter, while its capital expenditures dropped by 19 percent, as it “remained disciplined in its investment.”
Much of the cash being taken in by the top corporations on this entirely regressive basis is being funneled to big shareholders in the form of dividends and stock buybacks.
On Sunday, the Financial Times devoted its “The Big Read” page to an article extolling the achievements of 3G Capital, an investment fund that partnered with Warren Buffett to buy the food conglomerate Heinz in 2013 and merge it with Kraft Foods two years later. What the newspaper called “The lean and mean approach of 3G” has resulted in more than 10,000 Heinz and Kraft workers—one-fifth of the work force—being laid off and seven factories closed down.
3G’s “brutal but disciplined attack on costs” produced a 58 percent surge in profits within two years, and a profit margin of 28 percent. This compares to an average profit margin in the food industry of 16 percent.
Such is the utterly parasitic secret to the much-touted “recovery” in the US economy and job market. A combination of speculation that feeds off of the destruction of productive forces and ever greater exploitation of the working class benefits a new aristocracy by impoverishing ever broader layers of the US and world population.

AMERICA’S YOUTH STARVE

FOR EIGHT YEARS BARACK OBAMA AND HIS HAREM OF CORRUPT DEM POLS HAVE  SABOTAGED OUR BORDERS TO EASE TENS OF MILLIONS OF ILLEGALS INTO OUR JOBS, WELFARE OFFICES AND VOTING BOOTHS. 


What is left for Legals is only the tax bills for La Raza's looting!


The new reports show that in addition to “traditional” coping strategies of skipping meals and

eating cheap food, these teens and pre-teens are increasingly forced into shoplifting, stealing,

selling drugs, joining a gang, or selling their bodies for money in a struggle to eat properly.



THE DEMOCRAT PARTY: 

FUCK AMERICA’S YOUTH…. WE’VE GOT OUR ILLEGALS CLIMBING THE BORDERS, JOBS AND VOTING BOOTHS!



OBAMA-CLINTONOMICS pounds America’s youth as they build a border to border Mexican welfare state on our backs!


AMERICA’S YOUTH STARVE
                                 
…… ILLEGALS SUCK IN BILLIONS IN WELFARE… they also get our jobs! 


The new reports show that in addition to “traditional” coping strategies of skipping meals and eating cheap food, these teens and pre-teens are increasingly forced into shoplifting, stealing, selling drugs, joining a gang, or selling their bodies for money in a struggle to eat properly.

AMERICA STUDENTS STARVE:

Report on the impact of OBAMA-

CLINTONOMICS-TRUMPERNOMICS


THE  GIG JOB – In America, No Legal Need Apply

"Possibly most affected by this shift in the economy is the Millennial generation, those  aged 18-30. The report notes that more than half of those under age 25 participate in independent work, not just in the United States but throughout the European Union as well."

US Federal student loan interest rates set to rise in July

By Anthony del Olmo 
15 May 2017
On Wednesday, the Department of the Treasury released figures indicating interest rates for new federal student loans for the 2017-18 school year are set to increase by 0.69 percentage points.
Although the Department of Education has yet to officially announce the new rates, Treasury Department figures show that undergraduate Stafford loan rates will rise to 4.45 percent from 3.76 percent. Graduate Stafford loan rates will increase to 6 percent, up from 5.31 percent. Rates on PLUS loans, those for parents as well as graduate students, will increase to 7 percent, up from 6.31 percent.
The government’s interest rate increase has its roots in a 2013 provision signed into law by then President Barack Obama. In that law, the Republican-led Congress and the Obama administration coordinated in establishing how the Federal Reserve set interest rates on student loans. Moving away from a system in which Congress defined interest rates years in advance, interest rates are now tied to financial markets via 10-year Treasury notes.
Although rates had fallen slightly in the years following its implementation, the response by Wall Street to the election of President Trump has provided a significant impetus for their gradual increase.
On top of subjecting student loan rates to the volatility of the financial market, the debt burdens students will confront after they leave college are compounded by the oligarchic and militaristic aims of the Trump administration.
Since the election in November, Treasury yields have risen from 1.71 percent to 2.4 percent as financial speculators have anticipated more federal borrowing based on Trump’s campaign promises for major cuts in corporate and personal tax rates, an infrastructure spending program which will benefit corporations through massive tax write-offs, and increased military spending.
So far Trump’s budget proposal for an expansion in military spending at the expense of social services as well as the tax breaks for the wealthy indicated in the version of the American Health Care Act passed by the House confirm these reactionary promises.
The increase in federal loan rates comes several weeks after current Education Secretary Betsy DeVos reversed plans made under the Obama administration to build a new student loan servicing system by consolidating contracts with private creditors into a single vendor.
Despite the largely token measure taken by the previous administration, the move is in line with DeVos’ repeated plans to cut the federal funding and regulations overseen by the Department of Education.
Regardless, the Education Department continues to profit from its contracts with private lenders. Currently, the federal government has $800 million in contracts with nine different loan servicing companies to carry out the tasks of sending bills, collecting payments, and dealing with borrower issues. Under this setup the federal government directly benefits from the student loan crisis to the tune of about $10 billion per year.
With the increase in student loan rates, private lenders are also anticipating higher profits since private loan rates will begin to look more favorable as federal rates continue to increase. David Nelms, CEO of Discover Financial Services, said during an April 25 earnings call, “If the government backs off of that market … we would take the position to take advantage of it.”
Despite the higher rates for private loans, with average fixed rates from 6 to 12 percent and market variable rates from 4 to 10 percent, these lenders account for nearly 10 percent of all student loans, roughly $7 billion to $9 billion.
Notwithstanding their smaller presence, these companies have been known to take advantage of their clients; most private creditors also do not provide income-based repayment programs or deferment plans. Navient, for example, has been prosecuted several times for malpractice, most recently for siphoning nearly $4 billion from millions of debtors.
For private lenders, student loans have created a nearly $200 billion market for asset-backed securities, particularly following the 2008 financial crisis. Known as SLABS (Student Loans Asset-Backed Securities), these securities currently account for over one-third of the $1.4 trillion of student loan debt since their creation by Sallie Mae in 1992. As students are forced to borrow and repay more and more money, a growing student loan bubble could threaten to destabilize the economy just like the housing and dot-com bubbles.
Today, 44 million Americans, one-sixth of the population, collectively owe $1.4 trillion in student loans, which averages to roughly $32,000 per debtor. An estimated seven of every 10 students to graduate college leave in debt. Under the Obama administration, major cuts were made to public funding for higher education. Public universities compensated for this loss with a 33 percent tuition increase nationwide in the first six years of the Obama presidency.
A 2015 study by George Washington University found that millennials, youth roughly between the ages of 18 and 30, are becoming increasingly distressed by this reality. The study found that over 50 percent of millennials are concerned as to how they will repay their student loans, over 80 percent have one long-term debt, and nearly 30 percent are regularly overdrawing their checking accounts.
To compound the pressures placed on students, the likely future interest rate increases will have an impact on their monthly student loan payments and total repayment costs after graduation. Currently, interest rates are fixed for each school year and do not change throughout the life of the loan, but since most students take out loans on a semester or yearly basis, the fluctuations in interest rates per year will require recalculations of monthly payments. Assuming rates will increase each year, this will mean that monthly payments will increase as well.

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