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Archive for November 2nd, 2014

The interest rates above are from July 2013, but as of November 2014, they’re still the same. Here are a few basic reasons why the government charges banks and student borrowers for loans at different rates. Also, the rate for student borrowers in the poster above doubled from 3.4 to 6.8 percent. Why?

1. College students who need student loans are typically members of the 99 percent. Rich students do not need loans.

2. Investment and commercial banks are owned by shareholders, the vast majority of which are members of the 1 percent.

3. If interest rates for banks jumped from 0.75 percent (yes, that’s less than 1 percent) to say 6.8 percent, that would cut into the already record profits of the banks, reducing their earnings, stock prices, and dividend payments. That would make the shareholding members of the 1 percent angry with the current government, and politicians wouldn’t want that to happen, because then they wouldn’t receive campaign contributions, other perks, and bribes.

4. Investment banks purchase student loans, issue bonds against the loans, and sell the bonds to rich investors, hedge funds and other financial organizations of the 1 percent.

5. The higher the interest rates paid by students, the greater the return on investment for those rich bond holders since much of the student loan payments made by members of the 99 percent go directly into the pockets of the bondholders. Some of the money goes to paying down the student loans, another portion goes toward servicing the debts, such as adjusting the books with each payment to reflect the status of the loans.

6. Doubling the interest rates of student loans increased the profits of the investment banks, hedge funds, other financial institutions of the 1 percent, and the rich investors themselves, which brings us back to point three.

7. Increasing the profits of the 1 percent makes those people happy, even if it means redistributing massive amounts of money from the 99 to the 1 percent via higher interest rates generates unhappiness among the members of the 99 percent.

8. Doubling the interest rate of student loans increased the demand for student loan backed bonds, raising the value of the bonds by increasing the return on investment, making Wall Street bankers overly happy.

9. The doubling of interest rates on student loans is a scam of the 1 percent, enacted by a remarkably corrupted government by the money of the 1 percent, especially Wall Street.

10. Much of the profits generated by student loan backed bonds are used to corrupt government even further, so that the money of the 99 percent that is being redistributed to the 1 percent via student loans is used to corrupt government even more against the interests of the 99 percent.

Conclusion: Student loans are simply a way for the 1 percent to steal money from the 99 percent and corrupt government even more than it already is.

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