219 - 212

[Brentastic]

How is the end of a program that benefits a third party like the banking system on behalf of the taxpayers a bad thing when the very same type of thing like "government motors" is railed on by the same people?

Have you read any of my posts? How are the lenders/servicers benefitting? Because they are making a small profit? That's called business and like I said earlier - the profits are capped with the remaining going back to the government. Again, the students benefitted because of interest rate reductions that they don't receive from the government. Are you really naive enough to believe that this bill will somehow lower your taxes? It's a sham to get more money to pay for other debts incurred by the govt. Like I said, robbing Peter to pay Paul - that's all they're doing.

[Azazello1313]

How is the end of a program that benefits a third party like the banking system on behalf of the taxpayers a bad thing when the very same type of thing like "government motors" is railed on by the same people?

 

wait, what? I don't quite follow. are you saying I'm a hypocrite for being opposed to the government seizing a successful industry because I was opposed to them seizing a failed one?

[Brentastic]

stopping giving something to banks that allows them to make money with little to no risk to themselves is a lot different than taking something away from them. Haven't the banks benefitted from an era making money without risk long enough?

They are not giving money to 'lenders' (banks is the incorrect term) - they are giving it to students because it is a government entitlement.

[Azazello1313]

They are not giving money to 'lenders' (banks is the incorrect term) - they are giving it to students because it is a government entitlement.

 

yeah, usually when people buy stuff in the marketplace as a result of demand propped up by government policy, people like grunge and wiegie call it "successfull government stimulus spending". (think "green jobs" and the like). it only becomes an unreasonable windfall that must be stopped if they have a massively expensive bill they want passed and need to start seizing profitable industries to pay for it.

[Duchess Jack]

I always saw removing the middle man as good business.

 

I always saw the potential for 'risk' as part of business. Why should the government guarantee the loans and create a win-win situation for the lender?

[Big John]

Sure Texas, go ahead and succeed but you won't have health insurance.

What do Texas accomplishments have to do with this?

[Brentastic]

yeah, usually when people buy stuff in the marketplace as a result of demand propped up by government policy, people like grunge and wiegie call it "successfull government stimulus spending". (think "green jobs" and the like). it only becomes an unreasonable windfall that must be stopped if they have a massively expensive bill they want passed and need to start seizing profitable industries to pay for it.

Right. And what's being missed is the fact that this subsidized interest is a benefit from the government to the students. The lenders should not pay on a promise from another organization (in this case DOE). The interest still accrues so the govt must pay the lenders for this accrual - however, it's not like the lenders are keeping this money, it's being applied to the student's accrued interest in which the government elected to pay as an entitlement.

 

Some people like to believe the summary versions relayed to them in headlines and 2 paragraph articles. Others like to read the details and make theiry own conclusions.

[detlef]

that's like saying that, at the end of a trial in which you were a juror, you don't know any more about the facts of the case than you did at the beginning. after all, the people who informed you about the case were both advocates giving you an "agenda-laced" version of the facts, both of whom have far too much at stake to "give it to you straight".

 

there are many in our society who will only listen to the argument given by the plaintiff's attorney, and many who will only listen to the defense. but there are a lot who will, to the best of their intellectual capacity, listen to both sides and render an appropriate judgment.

Well, I would be if all I had to go on was the opening and closing statements of each lawyer. The difference is that, at least for the duration of the trial, it is my full-time job to listen to the witnesses as well as the attorneys, see the evidence with my own eyes, and discuss the details with a group of people who are seeing and hearing the exact same things I am.

 

This is entirely different. The debates all turn into shouting matches so there's no credible cross examination of the "witnesses". There's name calling and cheers from the raucous crowd.

[Duchess Jack]

Well, I would be if all I had to go on was the opening and closing statements of each lawyer.

there is also something called perjury with the courts. if politicians, talk radio and cable news were held to the same standard - they'd all be in jail

Edited March 22, 2010 by Duchess Jack

[WaterMan]

What do Texas accomplishments have to do with this?

 

It seems they want to accomplish alot.

 

http://forums.thehuddle.com/index.php?showtopic=316607

[CaP'N GRuNGe]

Have you read any of my posts? How are the lenders/servicers benefitting? Because they are making a small profit? That's called business and like I said earlier - the profits are capped with the remaining going back to the government. Again, the students benefitted because of interest rate reductions that they don't receive from the government. Are you really naive enough to believe that this bill will somehow lower your taxes? It's a sham to get more money to pay for other debts incurred by the govt. Like I said, robbing Peter to pay Paul - that's all they're doing.

 

All of the benefits, none of the risk. Duh.

[CaP'N GRuNGe]

wait, what? I don't quite follow. are you saying I'm a hypocrite for being opposed to the government seizing a successful industry because I was opposed to them seizing a failed one?

 

How are they "seizing" an industry by discontinuing subsidizing it through guarantees and subsidized interest?

 

Banks are still free to lend their own funds to students without sucking on the govt teet to remove all their risk and drive loans their way with subsidized interest.

[Brentastic]

All of the benefits, none of the risk. Duh.

That's one way of looking at it, although it's not completely risk free and there are a lot of compliance issues that have to be met. But another way of looking at it is that companies like mine pay for that minimal risk by paying back the DOE a large amount of our margin. Like I said, even though the rate on these loans range between 5.6% - 8.5%, we only make 0.84% of that with the remaining amount being paid back to the government. Trust me, it's not all roses as you like to think. Like I said earlier, we haven't had pay increases since 2008 and we've had to lay off almost half of our company. Obviously now with this bill being passed, companies like mine will all be eliminated in their current role. Obviously you are a fan of government acting as business? Also, I'm sure there are thousands of companies that get subsidies from the government which don't get passed on to the customers.

[Duchess Jack]

Right. And what's being missed is the fact that this subsidized interest is a benefit from the government to the students.

Is this going to change now that the government would be lending to students directly? The subsidy from the gov to the student?

[Azazello1313]

Why should the government guarantee the loans and create a win-win situation for the lender?

 

good point, so let's get rid of FDIC. and fannie mae and freddie mac, for damn sure.

 

but to actually answer your question as to why....well, because our government has decided that subsidizing higher education is important, and they decided that one of the ways they can do that is to underwrite the risk (and some of the interest) on student loans, so that students can have cheaper access to higher education. now honestly, I think that as with most government subsidies, they're mostly a pretty bad idea because they create inefficient market distortions -- and you look at how higher education costs have skyrocketed over the last few decades, the increasing government incentives over the same time period are a hugh reason why, just as they were with the housing bubble, health care inflation, and so on.

 

but, let's just say for the sake of argument that government subsidizing higher education costs is a good idea, because in a lot of ways it IS a good idea. well, the government subsidizes all kinds of stuff. they subsidize farms directly, they subsidize the real estate industry with the mortgage tax deduction and by backing fannie and freddie (among other things), they subsidize the "green energy" industry in myriad ways, they subsidize the health care industry, they subsidize having kids, donating to charity, keeping your money in banks, and so on and so on. in 2009, they passed an $800 billion bill subsidizing buying new cars, buying more houses, buying more green energy, and so on.

 

now that's not to say whether any of these policies were good ideas or not (I would again say most of them were not), but the point is....just because the government is subsidizing it is not usually a justification for, you know, seizing all of its assets and nationalizing it. although I suppose we can expect to keep seeing more and more of that.

[Brentastic]

Is this going to change now that the government would be lending to students directly? The subsidy from the gov to the student?

Not for the next school year - but they're in control now with no competition, so it wouldn't surprise me if the subsidy is discontinued at some point.

[SayItAintSoJoe]

I always saw removing the middle man as good business.

 

I always saw the potential for 'risk' as part of business. Why should the government guarantee the loans and create a win-win situation for the lender?

 

Removing the middleman is good for business as long as one of the parties involved isn't the government. Theoretically the government isn't supposed to compete with private business, although we all know that in many cases they do (i.e. the post office). Once upon a time if you wanted if you wanted to go to college and you didn't have the money, you (or more likely your parents) would have to go get a loan. This kept a lot of people from being able to go to college who were not able to qualify for these loans. The government steps in and sets up a program where they would guarantee the repayment of these loans to the banks thus making them available to a lot more people. A good idea IMO and a win, win for everyone. Flash forward 40 years and now the government wants to cut the banks out of the equation. I believe this is a bad idea because the government is taking business away from private companies.

 

When I take a basic look at how the whole process has played out it makes me worry that it could happen again and again in other industries:

 

1. private company provides important service to customer

 

2. government feels not enough people are benefitting, or have access to, important service and provides the necessary aid to people in order to take advantage of important service

 

3. government feels it could save money and provide service to customer cheaper than private company so it takes over the role of service provider

 

 

Just like with health care I'm in favor of steps 1 and 2. I think a more educated (and healthy) society benefits everyone. It's step 3 that I believe we have to be leery of.

[Azazello1313]

How are they "seizing" an industry by discontinuing subsidizing it through guarantees and subsidized interest?

 

Banks are still free to lend their own funds to students without sucking on the govt teet to remove all their risk and drive loans their way with subsidized interest.

 

again, this is how the government "competes" in the marketplace. they have the taxpayer back all of their promises and underwrite all of their risk, and then say look how wonderfully cost-efficient we are, I wonder why the private market can't compete with us?

[Brentastic]

good point, so let's get rid of FDIC. and fannie mae and freddie mac, for damn sure.

 

but to actually answer your question as to why....well, because our government has decided that subsidizing higher education is important, and they decided that one of the ways they can do that is to underwrite the risk (and some of the interest) on student loans, so that students can have cheaper access to higher education. now honestly, I think that as with most government subsidies, they're mostly a pretty bad idea because they create inefficient market distortions -- and you look at how higher education costs have skyrocketed over the last few decades, the increasing government incentives over the same time period are a hugh reason why, just as they were with the housing bubble, health care inflation, and so on.

 

but, let's just say for the sake of argument that government subsidizing higher education costs is a good idea, because in a lot of ways it IS a good idea. well, the government subsidizes all kinds of stuff. they subsidize farms directly, they subsidize the real estate industry with the mortgage tax deduction and by backing fannie and freddie (among other things), they subsidize the "green energy" industry in myriad ways, they subsidize the health care industry, they subsidize having kids, donating to charity, keeping your money in banks, and so on and so on. in 2009, they passed an $800 billion bill subsidizing buying new cars, buying more houses, buying more green energy, and so on.

 

now that's not to say whether any of these policies were good ideas or not (I would again say most of them were not), but the point is....just because the government is subsidizing it is not usually a justification for, you know, seizing all of its assets and nationalizing it. although I suppose we can expect to keep seeing more and more of that.

Good post - this clarifies my point a lot better.

[Duchess Jack]

but that is what I don't understand, Az. What exactly are they siezing. They are just taking away the middleman who is making a profit on the government's guarantees. The subsidy is for the students, not the bank - right?

 

If people want to aruge that it hsould not be in this bill - I understand that - but I don't see how they are siezing something

[Brentastic]

Removing the middleman is good for business as long as one of the parties involved isn't the government. Theoretically the government isn't supposed to compete with private business, although we all know that in many cases they do (i.e. the post office). Once upon a time if you wanted if you wanted to go to college and you didn't have the money, you (or more likely your parents) would have to go get a loan. This kept a lot of people from being able to go to college who were not able to qualify for these loans. The government steps in and sets up a program where they would guarantee the repayment of these loans to the banks thus making them available to a lot more people. A good idea IMO and a win, win for everyone. Flash forward 40 years and now the government wants to cut the banks out of the equation. I believe this is a bad idea because the government is taking business away from private companies.

 

When I take a basic look at how the whole process has played out it makes me worry that it could happen again and again in other industries:

 

1. private company provides important service to customer

 

2. government feels not enough people are benefitting, or have access to, important service and provides the necessary aid to people in order to take advantage of important service

 

3. government feels it could save money and provide service to customer cheaper than private company so it takes over the role of service provider

 

 

Just like with health care I'm in favor of steps 1 and 2. I think a more educated (and healthy) society benefits everyone. It's step 3 that I believe we have to be leery of.

Another A+ post

[CaP'N GRuNGe]

again, this is how the government "competes" in the marketplace. they have the taxpayer back all of their promises and underwrite all of their risk, and then say look how wonderfully cost-efficient we are, I wonder why the private market can't compete with us?

 

If you think the government should be in the business of promoting/subsidizing education loans at all, then it's better for the taxpayer to have the risk AND all of the reward than giving a piece to a third party lender.

[Duchess Jack]

Another A+ post

agreed. with such small margins, I don't know how there was compitition here in the first place - but they both make very level headed arguments.

[bpwallace49]

but that is what I don't understand, Az. What exactly are they siezing. They are just taking away the middleman who is making a profit on the government's guarantees. The subsidy is for the students, not the bank - right?

 

If people want to aruge that it hsould not be in this bill - I understand that - but I don't see how they are siezing something

 

I agree here . . . I dont see how eliminating a middleman that is taking a % of the profits is in anyway bad?

 

Except for Brent's job of course . . .

[BeeR]

Just what the country needs.

 

32 more million people on Medicaid.

 

woo hoo

 

Thats your government option u get to pay for or get a fine.

 

Dont you love change?

That's HOPE AND change to you mister.

 

I'm still reading, to be honest. Obviously this isn't all good or all bad. Just where I think it falls in between is hard to say. My main concern offhand is the explosion of more "free health care" which is an oxymoron of massive proportions to the point of scary.

 

I also hate riders with a freaking passion but realize it comes w/the turf.