Does anyone here have experience with these student loan programs? I see that their interest rates are 6.8% and 7.9%, respectively. Everyone suggests that the federal loan programs are the best but I can't imagine that there are no alternatives means. However, at a quick glance all the private loans appear to be variable interest rates in the 3.25 - 4% range.

If anyone has any experience or suggestions I'm open to advice.

6/20/2011 2:45:37 PM

double check that those private rates are not percentages above prime

6/20/2011 2:48:41 PM

I used Stafford loans but it was before 2006 when they jacked up the interest rates. I consolidated and locked in at 3.5% when graduating. 6.8 seems pretty terrible.

6/20/2011 2:49:12 PM

what was the reason behind the increase of Stafford loan rate in 2006? I too, was screwed over by it.

6/20/2011 2:55:43 PM

Basically the Bush Administration was looking for more revenue.

6/20/2011 2:58:19 PM

what do you want to do after school? i mean one of the benefits of going with federal loans are the a) consolidation programs and b) the incentives to work for the government or in the public sector or for a nonprofit or whatever after you graduate. there are a lot of payment programs and debt forgiveness programs with the federal loans that you don't find with private loans.

also

Quote :

"double check that those private rates are not percentages above prime"

6/20/2011 3:07:48 PM

^4 they are above prime but only .5%

6/20/2011 3:13:33 PM

Prime rates aren't going to be this low forever. The risk is that prime goes to 5-7% and you're paying 8+%, a realistic scenario.

6/20/2011 6:19:27 PM

i just checked to see what i could consolidate my student loans to... it would be a higher percent than what i have now.

6/20/2011 6:44:35 PM

^2 I completely agree. What makes them still attractive is that I am paying 7.9% regardless. So even if prime shot up I would really on be paying what I'll have to pay regardless. At the moment, I think I'm going to mitigate the risk and get a 1/3 of the Grad PLUS loans as private instead. That way should it sky rocket, I could pay off that loan in straight cash and have no concerns.

The only reason I don't pay that amount in cash up front is that once I start paying my loans my savings rate (outside of my 401k and my roth) would significantly dwindle and I don't want to be without that security.

6/21/2011 8:39:38 AM

its especially annoying when you think that you can finance a crappy used car for under 3%

6/21/2011 8:49:58 AM

I would support almost fully subsidized education before health care, any day.

[Edited on June 22, 2011 at 8:16 AM. Reason : qualification ]

6/22/2011 8:15:43 AM

not me, i don't encourage lending for education unless its tied to earning potential in some way. our generation is graduating with way too much debt, education related debt is going to be the next bubble that hurts the economy.

subsidizing helps a little, but its still debt that doesn't go away even through bankruptcy.

[Edited on June 22, 2011 at 8:47 AM. Reason : .]

6/22/2011 8:46:42 AM

Fully subsidizing would eliminate the debt issue. Its not lending but, rather, a tax based amenity. Again, this was support when given the alternative between universal health care and universal education.

6/22/2011 8:51:26 AM

fully subsidizing is simply taking care of interest though, not the principal. it still allows people to get into a lot of debt irrespective of what their earning potential and job markets look like. or am i misunderstanding you?

additionally, this has made education a biased market. when education costs rise, there is no feedback from supply because people can just borrow more money to pay for it. its created a cost increase that dwarfs the rising house prices that lead to that bubble.

[Edited on June 22, 2011 at 9:03 AM. Reason : .]

6/22/2011 9:02:24 AM

I believe there is a miscommunication, what I'm saying is fully paid for post-secondary education. As in there is no cost. This is why I compared it to universal health care.

[Edited on June 22, 2011 at 10:12 AM. Reason : clarity]

6/22/2011 10:11:40 AM