How Much Would Obama's Student Loan Proposal Save You?

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For the last few months, media outlets -- including this one -- have been warning about that if Congress didn't act by July 1, student loan interest rates were set to double. Well, now that the deadline has passed, interest rates have gone up, and the continued deadlock between Republicans in Congress and President Obama suggest that, at least for the time being, they aren't coming back down.

There's an old saying that people vote with their wallets -- and, as 2013's fall semester gets closer, voters who are in college or have children going to college may well begin to wonder whose student loan proposals will lighten their wallets the most, and which options will make them heavier.

At the moment, there are four proposals floating around Washington: Keeping the current situation, under which rates are doubling; extending the recently lapsed 50 percent rate cut; a bipartisan Senate proposal tying rates to the treasury rate; and an Obama-backed proposal tying rates to the 10-year Treasury rate. Depending on which proposal gets adopted, the interest tab on a $5,000 subsidized student loan could range from $721 to $1,904.

If you're wondering how these loan proposals would affect you, Slate has a fantastic loan calculator. Give it a peek -- and figure out which politician's plan is going to save you the most money!

Bruce Watson is DailyFinance's Savings editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.


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41 Comments

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h.hughjardon

This dumbshit ohamaswallower said this in response to someone saying that obama is using the interest from federal student loans to help fund obamacare:


troobador
Smart people are not listening to that bullshit because it is not true. Obama is trying to cut keep the low interest rates. You really are a special kind of stupid, aren't you.

But that was right after he posted this:


troobador
They garnishee wages for years, and they confiscate federal tax returns of anyone who defaults on student loans. So there are remedies. Would it interest you to know that the Federal Government makes nearly 100 Billion profit form these loans each year?
Check out the facts..... you can read, can't you?

What a complete moron.

July 03 2013 at 11:24 PM Report abuse rate up rate down Reply
setanta54s_back

For the last few months, media outlets -- including this one --

++++++++++++++++++++++++++++++++++++++++++++++++
omg........it remains a ONE STREAM MEDIYUUUH
and all under KONTROL.

July 03 2013 at 8:40 PM Report abuse rate up rate down Reply
theycallmeroy3

I wouldn't get to vested in which party's plan is the better of the two, cause they both reek . And when holiday is over July 10th, the clowns will pass something. Kick the can plan. But what the constituency should be bark raven mad about is, Congress has known about this for years. Years. And nothing has been done to address the sky-high cost of a college degree. If cost aren't contained, rate hike disputes are a joke.
However, borrowing wise, its still a good deal- if one can find a JOB.

July 03 2013 at 11:00 AM Report abuse rate up rate down Reply
2 replies to theycallmeroy3's comment
theycallmeroy3

Add, that pays enough to pay their loan.

July 03 2013 at 11:02 AM Report abuse rate up rate down Reply
setanta54s_back

when THEY end the easy money going OUT to the UNQUALIFIED,
the costs WILL DROP.

how many should never even been promoted to 9th grade are accepted into these alleged colleges and ALLEGED ACCREDITED programs,
SIGNING papers for LOANS
and they never had to do the MATH compounding interest etc etc.

so these bs schools.colleges and universities WILL GET THEIR money for at least the first quarter or half term.,and basically for nothing from THEM.......salleeeeee mae loan dept keeps BANGIN the one with that loan,
and sometimes KEEPS SENDING OUT the tuitions etc.

schools are making easy money etc.

same as the bs with the home mortgage INDUSTRY.

July 03 2013 at 7:08 PM Report abuse -1 rate up rate down Reply
Sonny

Mostly a moot point, because many of these loans will never be repaid. Confiscated "tax refunds" will pay for some, but many will go unpaid. As the Federal Govt gains more control over student loans, the repayment rate will most certainly go down. Many loans will never be collected and just add more on to the National Debt..........One step closer to oblivion.

July 03 2013 at 10:12 AM Report abuse rate up rate down Reply
1 reply to Sonny's comment
theycallmeroy3

Are you willing to step up and say only rich and poor people should be able to go to college? The rate hike is only a small part of the problem. The real one is out of control college cost, that have out paced the rate of inflation. The real hit is on the middle class.
This will be as tough one, but Obama's plan ( whatever that means) is similar to the one the House passed. Both are tied to the ten year treasury. The difference is what to do with the profit.

July 03 2013 at 10:30 AM Report abuse rate up rate down Reply
2 replies to theycallmeroy3's comment
h.hughjardon

Any chance the easy government money is driving up demand and cost?

July 03 2013 at 12:07 PM Report abuse rate up rate down
h.hughjardon

Another difference...obama plan forgives unpaid debt.

July 03 2013 at 12:07 PM Report abuse rate up rate down
Mark

the old saying 'people vote with their wallets' has morphed.

the last two elections have been decided by 'parasites voting with YOUR wallet'

July 03 2013 at 9:30 AM Report abuse +2 rate up rate down Reply
jlm9

Students should be able to borrow the necessary money to go to college..at 0% interest, providing they maintain a certain grade point average. If they fail to do so, they should be required to pay a higher interest rate to remain in school..if they do, then their loans should return to 0. The rising cost of education is bad enough..but higher interest rates will start deterring some great students..as well, students often end up in debt for most of their lives, into their 50s and 60s..which seems a bit absurd..if we want a smart country with successful young people, the govt. should offer the loans..

July 03 2013 at 9:29 AM Report abuse +1 rate up rate down Reply
1 reply to jlm9's comment
Sonny

The govt is broke, and soon our financial system may collapse. Where will all of this money come from?

July 03 2013 at 10:03 AM Report abuse rate up rate down Reply
h.hughjardon

Already put your kids through college? Can't have/don't want children..... will never have them? The statist dems don't care. They still want you to pay.

What happened to liberty in this country?

July 03 2013 at 8:39 AM Report abuse -2 rate up rate down Reply
hogwildf8

The payment on a $27,000 loan (current ave. debt upon graduation) paid over 10 years will increase $45/month. That does not seem like too much of a sacrifice to get an education, as long as the degree has marketable value. That is merely paying your fair share. Those who follow will benefit from reduced tuition when schools realize they can't over-charge students as they have been doing for the last two decades.

July 03 2013 at 5:29 AM Report abuse rate up rate down Reply
ectullis

How Much Would Obama's Student Loan Proposal Save You? It won't save me anything but it will cost us all a fortune in the future.

July 03 2013 at 1:38 AM Report abuse -1 rate up rate down Reply
1 reply to ectullis's comment
sam54ct

Not as much as the money lost from the SBA, loaning money to small business, and suffering a 50%+ failure rate of business, thus default on the loans, versus, Students who cannot have that debt discharged in bankrupcy. In addition, he's only asking for the rate to reset to what it was since Reagan.

July 03 2013 at 9:23 AM Report abuse +1 rate up rate down Reply
1 reply to sam54ct's comment
h.hughjardon

What will be repo'd on a defaulted student loan? It's unsecured.

July 03 2013 at 3:21 PM Report abuse -1 rate up rate down
setanta54s_back

uuuuuh don't THEY HAVE another article out here with the DIRECT OPPOSITE ?

rates are going UP ???

and of COURSE,
BOTH ARTICLES FAIL TO MENTION that the stewdent loans are buried inside obummer care
and HIM and the diMsprOgressives_socialists - dimOcraps CONTROL THIS AS WELL.

enjoy !

July 03 2013 at 1:09 AM Report abuse -3 rate up rate down Reply
1 reply to setanta54s_back's comment
galbraith1065

Having a few late night drinks again?

July 03 2013 at 8:28 AM Report abuse rate up rate down Reply