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I left school with my BS and about 25K in student loans, and my parents took out some loans too. I'm about to go back for my MS and expecting to add another 30-35K to that, although that assumes no scholarships which I hope isn't the case.
I'm 59 years old and I am amazed at what it takes for kids to go to college. I have 3 kids that I've paid for well over 1/2 of their college (tuition, books, living). All left undergrad with around $ 20,000 debt. I did not help the older 2 as they went on for a doctorate and a masters. My daughter's doctorate was $ 25,000 a year just for tuition. Though I helped her with all her living expenses, she graduated with total debt of over $ 90,000. Ouch!! At over 6% interest this will take her well over a decade to pay off.
Here's something I don't understand. When I graduated from college in 1977 the subsidized loan I had was locked in at 4%. Interest rates at that time were through the roof. My first mortgage in 1978 had an interest rate of 12 3/4%. Now, you get financing for your home at less than 4%, but subsidized student loans are over 6 1/2%. What's going on? I think there's actually a push by our government to intentionally strap our young people with debt that they can never dig out. I hate being a conspiracy theorist, but something about how things are now reversed makes one go hmmmmmm. Already in just the last 6 years I've read that the average wages for those in their 20's has dropped from $ 33,000 to $ 30,000. How can you pay this off and still pay for rent and other living expenses.
Here's something I don't understand. When I graduated from college in 1977 the subsidized loan I had was locked in at 4%. Interest rates at that time were through the roof. My first mortgage in 1978 had an interest rate of 12 3/4%. Now, you get financing for your home at less than 4%, but subsidized student loans are over 6 1/2%. What's going on? I think there's actually a push by our government to intentionally strap our young people with debt that they can never dig out. .
The gov't (and the public) keeps going back and forth on whether student loans should be fixed or variable. In the early-mid 00's loans were variable and rates were low. In 2006-7 rates briefly started to spike. It was in that window that Congress made the rates fixed, and set the fixed rate actually pretty close to the projection for variable rates. It's easy to forget, but the prime rate on 6/30/06 was 8.25%.
A few months later the economy collapsed and rates fell (not to mention being actively pushed down by the Fed). However, changing the rates back would have 'cost' Congress a great deal in budget scoring, so the compromise was tiered drops in just undergrad Subsidized loans from 2007-2011. Those drops were extended twice.
However, that compromise didn't impact graduate loans, undergrad unsubsidized Stafford, or parent PLUS, which were fixed and remarkably high compared to going rates. This summer Congress finally got around to looking at the whole deal from scratch. And the result is another compromise that in the long run is a mixed bag.
But you're a bit off on your data. Subsidized loans issued between 7/1/13-6/30/14 have an interest rate of 3.86% as a result of that legislation. Loans for prior years will be different, but for the past few years they were 3.4%.
Grad students didn't get a particularly great deal, but they are no longer eligible for Sub loans at all (other than Perkins).
The gov't (and the public) keeps going back and forth on whether student loans should be fixed or variable. In the early-mid 00's loans were variable and rates were low. In 2006-7 rates briefly started to spike. It was in that window that Congress made the rates fixed, and set the fixed rate actually pretty close to the projection for variable rates. It's easy to forget, but the prime rate on 6/30/06 was 8.25%.
A few months later the economy collapsed and rates fell (not to mention being actively pushed down by the Fed). However, changing the rates back would have 'cost' Congress a great deal in budget scoring, so the compromise was tiered drops in just undergrad Subsidized loans from 2007-2011. Those drops were extended twice.
However, that compromise didn't impact graduate loans, undergrad unsubsidized Stafford, or parent PLUS, which were fixed and remarkably high compared to going rates. This summer Congress finally got around to looking at the whole deal from scratch. And the result is another compromise that in the long run is a mixed bag.
But you're a bit off on your data. Subsidized loans issued between 7/1/13-6/30/14 have an interest rate of 3.86% as a result of that legislation. Loans for prior years will be different, but for the past few years they were 3.4%.
Grad students didn't get a particularly great deal, but they are no longer eligible for Sub loans at all (other than Perkins).
No, my data is accurate as related to my kid's college loans, all taken out prior to 7/13 which brings up another point. Why is it that all those strapped with loans prior to this 1 1/2 year breather stuck at a higher rate while those fortunate enough by nothing other than lucky timing getting rates from 3.4% to 3.86%? How is this fair? Also, why can't congress and the white house take a little journey back in history and see how back in the 70's programs helping college students with low interest loans in relation to the general interest rate environment worked?
I graduated with about $17k in federal student loans, which wasn't bad, considering my college tuition was about $25k a year, sticker price (not including room and board). The vast majority of my costs was paid for via grants and scholarships.
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