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Scott thought the chin -- he's the president college parents of America joining us and easy welcome -- -- -- -- Good how are you good OK explain this to me just I'm not.
I don't remember that much about my student loans -- just talking about when I was in graduate school I had -- -- said at a very low rated -- process slightly higher rate.
Was one of them back by the federal government the other one not -- they both backed by the federal government super guide to different sets of of loans within one.
Well it depends I guess -- the short answer you probably had a combination.
Federal student loans that were just taken out at different times.
Meaning mandate interest interest rate differed.
From your undergraduate grad school then you probably should have consolidated those loans and you would save a lot of money and if you did.
No I did not so.
Years later I didn't appreciate the advise them.
I have yeah.
Is there is there is a positive to this story I think and -- you're taking -- the bank as the middleman as far as loans to these kids go so you're no longer.
You don't pay the extra -- I mean is this going to be savings for families at the end of today.
Not really I mean the reality was that for federal student loans students didn't pick their lender the schools did.
A certain percentage of schools approximately 25%.
Were already using the federal direct student loan program and 75% of schools were using private sector lenders to process there's the student months.
-- -- Obama administration was pushing the schools they were using the private sector program to switch to the federal program.
-- the passage of this legislation.
So many schools we're gonna switch anyway now the bill is passed so 100% of schools.
Will be using the federal program to process their loans.
So why is it's a negative for the students because it seems to me like -- deal with you're talking about interest rates.
They're going to be as low as you going to be able to get it may even lower than the private industry -- that wrong.
Well and it was a commodity product anyway it was there were two -- of parallel parallel programs.
One being processed by private sector companies and the other -- with the federal government now it's totally federalized.
What the the issue is is that there's still going to be a gap.
For most students between what they can borrow under the federal student loan program.
And what the actual cost of colleges.
And that's where the so called private loans come in in -- private loans are not being eliminated by this legislation.
The same companies that were offering federal student loans as private sector companies.
Still will want to offer students private loans to meet the gap between what they can't what schools cost and what the family can afford to -- Those companies are going to be going away and in fact but they've they've been weakened in effect by this legislation.
Because they were in a dual business they were offering federal student loans and private student loans and some of them will now be offering only private student loans and some of the weaker players won't be able to stay in the business so they will go away.
So essentially it's been nationalized the student loan industry do you think then up.
You and your Porter -- that I guess.
Well I mean it's it's I'm I'm always for something that helps.
Parents and students meet the cost of college but the reality here is that.
This bill being treated as an historic bill shows really how little the federal government can do.
To affect the cost of college and mean all this is doing for the next three years is putting 200 dollars a year more into pell grants.
I mean that's that's a drop in the bucket.
In pell grants for the neediest students.
The money actually doesn't go to their pocket it simply goes to the schools and so it simply means that the schools will have to come up with 200 dollars less.
A financial aid.
To provide to the neediest students because the money's coming from the federal government not out of their own financial aid budgets.
James Howell that readily that the apparent.
How readily available as student loans right now because they see how we talk about all the time.
He credits is not really -- -- housing you know it's really tough to get a mortgage got a great credit score.
-- -- auto loans is still not us that's not there what about for student loans right now.
But not to belabor but there's federal student loans and private -- federal student loans are are always available.
Difference between un subsidized and subsidized.
Depends on the financial condition of the family.
-- subsidize student -- allows you to defer.
The interest does not accumulate until six months after graduation.
Private student loans -- sort of like the mortgage market I mean there.
There are private student loans that are available but if the family has -- poor credit history.
Then they're going to be much more expensive -- they're going to be double digit rates for private student loans.
Now that's my family should look at plus loans.
Which are federal it's a federal product called.
Parent loan for undergraduate students and and in a little and noticed in all this I guess is that that program will be federalized as well.
And so the federal government will be the only process error of plus loans.
So I guess that's a good thing it's just me like what you say at the end of the day this whole.
You -- revamping the student loan industry is in net net zero and the president is using this as a real big PR stick going forward and it's not that it does sound like it's up and our kids all that.
-- the real -- the cost of college last outing college costs have skyrocketed over the last two decades.
A recent survey of the most selective colleges shows an average four point 4% increase for next year.
In many public universities are gonna have double digit tuition increases for next year.
So 200 dollars more going into pell grants -- is is -- barely gonna make a dent in the overall cost of college families are struggling to meet that cost.
James I got like ten seconds can we bring that cost down is -- waste why did why is cost going up so much.
State legislators are not supporting public colleges and universities and their own -- it's as simple as that.
Mean that that lack of subsidy means that the schools have to turn somewhere for more money and so they turned to the tuition payers.
And parents are willing to pay it I guess so keep going it.
You know what's important is I have three kids and their little and it probably will cost me a million dollars and as we were talking before hand if I had.
He's Superman 1938 comical at this result -- one point five million it's still wouldn't be enough.
That's the worst part of this whole thing good to see James thank -- -- Jim -- president college parents.
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