Deducting Student Loan Interest

At Joe's Journal, he writes that the federal government should raise the amount of student loan interest that can be deducted from the current amount of $2500 to $5000 or more.

One way to mitigate this problem is allowing Borrowers to deduct the entire amount of their student loan interest.

We agree that students should be able to deduct the full amount of student loan interest paid, and we also realize that this should be a first step of many more.

If the relative repayments of a borrower are lowered through a higher tax deduction, lenders will simply make more money available, which will drive up college prices more, which will put the student ultimately in a worse position.

We think the full amount of student loan interest should be deducted, as Joe proposes. Furthermore, we think there should be a seven year cap on the repayment obligation of a student loan, whether federal or private.

Default Movie

Over at www.defaultmovie.com several young San Fransisco based filmmakers have released a trailer on their upcoming movie.



Good luck guys!

Consolidation of Student Loans

Many students have consolidated their student loans, both federal and private. The students can lock in a somewhat reasonable fixed federal rate (though it is higher than five years ago through congressional subsidy cuts).

Private loans are consolidated with variable interest rates. For now, the consolidated variable interest rates are low due to the weak economy and the Federal Reserve's attempt to "juice" the economy.

However, if investors in the US dollar ever take flight - if our dollar takes an inflationary path - these private loans will strangle the borrowers even more than now.

The macro economists are concerned with deflation right now, and this deflationary concern is keeping the variable interest rate low. Heaven help us if inflation returns.

15,000 New Student Loan Defaulters a Month

We think it is going to be much worse than 15,000 defaulters per month in a year's time.

For the most part, companies stop hiring before undertaking massive layoffs. With the daily news of lost jobs, it is doubly bad for new college graduates - they have almost no chance of finding work that can pay the bills.

“I’ve done what I’m supposed to do, and they’re holding me hostage,” says Judy Ellis

Nextstudent.com reports that the credit freeze is making it impossible for a student to come out of default status once he or she has entered that status.

And the economy has made it mighty easy to slip into the dreaded default status.