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They used to be from banks but guaranteed by the feds. In 2010 legislation was passed allowing the feds to make student loans directly to students but many students still get loans through banks. Since most people take decades to pay off their student loans many outstanding loans are from banks.

Canuckus Deploracus Loc: North of the wall

I see...

Anything from a bank is fine...

The government should not be charging interest...

Navigator

They generally don't in socialist countries which the US is not. I personally believe the government should not be involved at all except by prohibiting itself from passing laws preventing banks from collecting interest. Perhaps that would stop people allowing their children to go to an expensive out of state college to study English or History b/c the college has a good gymnastics team. Five or six years later they have a BA, two or three hundred thousand dollars in student loan debt and are looking for a job teaching high school (since there are no jobs in gymnastics). This same thing could have been achieved with minimal student loans by two years in the local community college and the last two years at the nearest state college. The annoying thing to me is that these people make only the minimum payment while waiting years for the stupid politicians to pass laws absolving them of the debt their irresponsible actions put them in.

son of witless

Paul,

This is not as simple as your post pretends. In the Old Testament the ban on charging interest is specific to the poor. You can charge interest to foreigners, and also to the rich for productive loans. Also Jesus specifically tells stories about earning interest on money.

https://tifwe.org/what-does-the-old-testament-say-about-loans-and-interest-part-4/

PaulPisces Loc: San Francisco

Thank you for sharing this informative article.

I have to admit my meme is provocative, as many posts are on OPP.
But your response is the only one (so far) that is level-headed and contains references, which I appreciate.

I also can't imagine anyone much poorer than a student who has struggled through school only to find there are no jobs. So maybe the gist of the meme is still there.

American Vet

American Vet

Can you imagine a student obtaining student loans to get a degree in “Gender Studies” or “advanced Basket Weaving” only to find there are no jobs? Can you imagine said student perhaps having the foresight to consider “What will I be able to do with my worthless degree?”.

son of witless

I was not aware of the Old Testament stance on interest. I knew Jesus had told a parable condemning a servant entrusted with money for burying the money and not putting it to work.

Both the Old Testament and the Koran come out against Usury, particularly to the poor. As far as student debt, as a parent of two former college students I get your point. Now here is a point of mine. If you are to condemn charging interest to college students, then what about Barak Obama having the Federal Government take over the student loan program ? Barak Obama through the Federal Government became the charger of interest to College Students.

" I also can't imagine anyone much poorer than a student who has struggled through school only to find there are no jobs. "

Once again I totally agree with you. Many times I have ranted and raved about the University Industry selling useless courses to naive students and their parents.

PaulPisces Loc: San Francisco

A little research tells me that student loans directly from the government (made for select areas of study) started in 1958. Then in 1965 the federal government shifted to guaranteeing loans that were made by private institutions under the Federal Family Education Loan (FFEL) program. In fact the shift back to direct loans from the government was made in 1992 after a study commissioned by George Bush.

In every instance interest was charged by the lender, whether the government or the private institution.
So claiming that Obama is the one who started charging interest is false.

https://www.newamerica.org/education-policy/topics/higher-education-funding-and-financial-aid/federal-student-aid/federal-student-loans/federal-student-loan-history/

JFlorio Loc: Seminole Florida

Forget the interest the problem is not with the loans per se. The problem is with college being way overpriced. Easy access to student loans is the main culprit. Presidents of colleges making six and seven figures. Ridiculous. In 2019-2020, the average price of tuition and fees came to: $36,880 at private colleges. $10,440 at public colleges (in-state residents) $26,820 at public colleges (out-of-state residents). That's per year. So pay over $40,000 in tuition alone for a degree that gets you a job starting in the $30,000 to $40,000 range where there is copious amounts of competition. As long as student loans are easily available there is no incentive for colleges to charge reasonable tuition and not spend money frivolously. I like to see interest for student loans based on the students results. If you graduate perhaps 2 basis points are forgiven from the interest you pay. If loan is taken out, and you drop out the 2 basis points are added to the interest. Would cut out the number of people not cut out for college. I would also base loans on the persons choice of career. People needed in certain fields get a better rate than say a degree in community organizing.

son of witless

I reread my previous answer to you. I wanted to check and I am fairly pretty sure I did not and never said that Barak H. Obama " is the one who started charging interest ". My intention was to say that now, he is the one responsible for charging interest because he as the Federal Government took over that function. Since he no longer is in office, literally he no longer heads the government which is the collector of interest, that would be my boy Donald J. Trump.

The however is this, by changing the Student loan program, he caused problems, at least for the taxpayer. And since I try to post evidence when I run my great big mouth in contrast to a whole bunch of others, I present this article.

https://www.investors.com/politics/editorials/obama-created-student-loan-crisis-with-1-trillion-in-loans/

Navigator

When I started college in 1967 student loans were rarely taken. My tuition at the local state university was $200 (yes, that is two hundred) per semester; who needed a student loan? Loans were given directly to the student with no requirement to use it to pay tuition and the amount of the loan was not tied to the amount of tuition; lots of people I know used them to buy cars, engagement rings, musical instruments, etc. The educational establishment got wise to that pretty quick and had laws passed where the loan went directly to the school to pay tuition, fees, books etc. As a result, college tuition started to rise precipitously; that state university I attended now charges $5500 per semester for tuition, a 27.5 times increase. Government interference in the financial dealings between students and the colleges caused this. The only other thing I can think that increased nearly that much is health care and for the same reason. Health insurance became widespread in the 60s as it was a low cost benefit employers could give their employees instead of increasing their wages or vacation time. When health care providers realized insurance companies would pay their bills the cost of health care zoomed.

PaulPisces Loc: San Francisco

My apologies if I misread your intent.
But my research tells me the article you just posted above is incorrect.

"In 2010, Obama eliminated the federal guaranteed loan program, which let private lenders offer student loans at low interest rates. Now, the Department of Education is the only place to go for such loans."

The elimination of direct federal loans, as I said in my earlier response, with a substantiating reference, was begun by George Bush, and went into effect during Clinton's administration.

Interest rates for the different types of student loans for 2019-2020 range from 4.53 to 7.08%

https://studentaid.gov/understand-aid/types/loans/interest-rates

I'm having a hard time finding what interest rates were when the government was making them directly to students. But my guess is they were lower that those charged by private for-profit institutions.

son of witless

I don't know how far to go into this with you. It is getting more involved than I have the time for. I appreciate that you have made an honest effort to dispute my ideas, which is all I ever ask from anyone I converse with. I believe my former cited article to be correct. My point I think is that President Obama cost the taxpayer big money by his changes.

While I share your concern about not cheating College Students with usurious interest rates, even you must agree that these were always meant to be loans, not grants. Or in other words they were meant to be paid back. Here is another article in support of the previous one from another source.

https://money.cnn.com/2016/11/30/pf/college/obama-student-loan-cost/index.html

Marty 2020 Loc: Banana Republic of Kalifornia

You’re wasting your time on little pp.