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Of course not; I have held a number of crappy jobs; it feeds into my victim mentality. I believe you get no victim cred by choosing not to work, or by choosing to do culture of poverty things like crime and drugs.
This seems to be implying you are merely yanking our collective chain.
My experience has been different, I have refinanced car loans, personal loans, etc. with the same lender and had no problem doing any refinance I have ever attempted.... Rates change, I like to take advantage of that when I can.
It is my opinion that student loans should be able to be refinanced with the fed... They do work for us (or they are supposed to) and assisting students who are bettering themselves (and the country) should be given a break when possible. These loans are also treated differently which makes their risk much lower than any other type of credit (you can never escape one), the lower interest rate is justified IMO.
Student loans carry a HIGHER risk to the lender compared to other traditional loans, because there is no collateral asset other than your future wages. They cannot repossess your knowledge. They can, however, garnish your wages and aggressively go after you. This takes a lot of money and time. There was an op-ed in the NYT from a writer that had defaulted on loans over 30 years ago. He is still being pursued because he's a deadbeat and there's no other way to recover the money. Student loan debt cannot, under most circumstances, be discharged in bankruptcy. The only way to get rid of the debt is to either pay it off or DIE.
The rules in the federal Stafford loan program exist to protect taxpayers, not students. This is why it impossible to refinance to a lower rate under the new rules (since 2006). Even before then, you only had one shot to consolidate. Once you converted your adjustable rate notes to a fixed consolidation loan, those disbursements could not be consolidated again (except using the weighted method, which I mentioned before).
Student loans carry a HIGHER risk to the lender compared to other traditional loans, because there is no collateral asset other than your future wages. They cannot repossess your knowledge. They can, however, garnish your wages and aggressively go after you. Student loan debt cannot, under most circumstances, be discharged in bankruptcy. The only way to get rid of the debt is to either pay it off or DIE.
The rules in the federal Stafford loan program exist to protect taxpayers, not students. This is why it impossible to refinance to a lower rate under the new rules (since 2006). Even before then, you only had one shot to consolidate. Once you converted your adjustable rate notes to a fixed consolidation loan, those disbursements could not be consolidated again (except using the weighted method, which I mentioned before).
You stated that student loans carry a higher risk, yet then followed that up with the reason that they are actually a lower risk. You can never discharge a student loan, they are a much LOWER risk than any other form of unsecured debt. You are not lowering the protection to the tax payer by allowing a student to take advantage of a lower interest rate, and IMO federal student loans should not be revenue generation for the gov't.
You stated that student loans carry a higher risk, yet then followed that up with the reason that they are actually a lower risk. You can never discharge a student loan, they are a much LOWER risk than any other form of unsecured debt. You are not lowering the protection to the tax payer by allowing a student to take advantage of a lower interest rate, and IMO federal student loans should not be revenue generation for the gov't.
They are not lower risk when it takes a ton of money and time to recover the defaulted debt. At least in a mortgage, you can foreclose on the house and sell it.
http://www.nytimes.com/2015/06/07/op...oans.html?_r=0
I really despise this guy, because he makes excuses about why he shouldn't have to pay back his loans. Being a NYT published author, he could certainly repay his loans. But this is an example of why student loans are high risk. There is nothing a lender can do to get repayed from deadbeats like this, unless they spend a lot of time and money going after them. Most of the time, they just sell it off to a collection agency at pennies on the dollar.
Forgive me if I missed some details about your student loan history, as I skimmed the 10 pages of responses. However, I did not see anyone share a specific reason for your higher interest rate, especially if you finished school in the last 10 years.
If you have federal Stafford loans, the government changed the loan disbursement rules sometime around 2005/6. Prior to that, all loans were disbursed with adjustable interest rates that floated to a new interest rate every year. If you consolidated those loans, they would be converted to a fixed interest rate at whatever the rate was that year. For instance, I consolidated my loans around 2004 at 3%. I consolidated again (had several new loans for education after 2004 that had floating interest rates) in 2008 to 2.5%.
The unlucky ones who went to school after (somewhere around) 2005/6 ended up getting disbursements under the new rules, which were at higher interest rates that were FIXED for the life of the loan. Now, if you did a consolidation, the rate of your consolidated loan would just be the weighted average rate of all of your loans COMBINED. It was a pretty crappy deal for students who missed the awesome variable interest rates during all the economic turmoil of that decade, but Congress wanted this change because low interest student loans were more costly to tax payers.
There is no workaround for this and you cannot consolidate loans like a mortgage (unless you can find a private lender or you use a HELOC to pay off high interest rate student loans, although there may be rules regulating this). Those interest rates are fixed FOREVER.
These are old loans and all borrowers got 7% loans at the time. Because government student loans have different rules than private other loans, I assumed the 7% interest rate was just one of the 'features' built into them.
Student loans carry a HIGHER risk to the lender compared to other traditional loans, because there is no collateral asset other than your future wages. They cannot repossess your knowledge. They can, however, garnish your wages and aggressively go after you. This takes a lot of money and time. There was an op-ed in the NYT from a writer that had defaulted on loans over 30 years ago. He is still being pursued because he's a deadbeat and there's no other way to recover the money. Student loan debt cannot, under most circumstances, be discharged in bankruptcy. The only way to get rid of the debt is to either pay it off or DIE.
The rules in the federal Stafford loan program exist to protect taxpayers, not students. This is why it impossible to refinance to a lower rate under the new rules (since 2006). Even before then, you only had one shot to consolidate. Once you converted your adjustable rate notes to a fixed consolidation loan, those disbursements could not be consolidated again (except using the weighted method, which I mentioned before).
Higher risk? The loans are guaranteed by the US govt!
The value of the education vs. the associated costs is what students today need to consider. Too many kids are concerned with being a Clemson Tiger or FSU Seminole than a student! Lots of kids from NY/NJ suburbs want to go to school in Flariduh despite the tuition being multiples higher (out of state tuition) and they quickly sign up for a lifetime of debt.
To me big sports schools like FSU are a joke, they are pumping out 30,000 grads a year just like you so how does that make you standout to a prospective employer at interview time?
Higher risk? The loans are guaranteed by the US govt!
The fact they are guaranteed has nothing to do with the risk to taxpayers. The value/risk of a educational note is tied to the likelihood of repayment and relative interest rate. The rules in place (as previously discussed ad nauseum) exist to protect taxpayers from default. This is why student loan debt is VERY DIFFERENT than other types of consumer debt.
These are old loans and all borrowers got 7% loans at the time. Because government student loans have different rules than private other loans, I assumed the 7% interest rate was just one of the 'features' built into them.
as well as some employers pay the student loans as part of the hiring bonus... I got the last year of college reimbursed by staying for 2 years at my first job (private hospital). 2nd job encouraged people to take classes (around $1k/year was free money for classes/books/learning material). Current job pays tuition if degree helps career development.
Not to mention all the scholarships and grants out there for students...
Its not like there weren't any options to attend college and not have a high debt load, not knowing about them isn't an excuse... Just like you can't commit crimes and claim you didn't know the law, knowing the law is assumed... And planning to attend college means that the students should have done their research on knowing how to pay for it since they know colleges cost money... and hoping for a good job isn't "making" plans either... making plans means you have actionable plans that get results, and not wishy washy dreams of a better life.
I hate when government changes the rules in the middle of the game. I signed up for the same interest rate as other borrowers, not a rate 2-3 times as high.
The government doesn't make up the rules of economics. Interest rates change with business cycles. Had you wanted a lower rate, you should have waited for a low interest period (like the one we've been in for the past few years). Interest rates impact all sorts of loans including car loans, mortgages and personal loans.
SoFi is expanding their market somewhat, but it's important to note that part of why they can compete is bad federal policy, and the other reason is that they consider pool risk very carefully.
SoFi's main audience is graduate/professional/medical-degree holders. When they first started, it was even the creme of that subset - Stanford business, Harvard law, etc. Now that they have a solid foundation they're slowly expanding to a broader range of schools, but still seem to be picking their borrowers very carefully, and again, by refinancing only people who are out of school they've bypassed the risk a student won't finish their degree, and can usually see actual income on the table.
People oversimplify what interest rates represent, but stated ("nominal" if one prefers) are set to cover:
1) Cost of capital, including TVM/inflationary loss
2) Risk
3) Profit margin
So for the sake of simplicity (overly simple, but useful for illustration I think), if you're a lender and it costs you 2.5% to borrow the money you're going to lend, you anticipate 1% bad debt loss, and you want to make 2.5% profit, your target rate is 6%.
SoFi's market edge was being able to reduce the prospect of bad debt by picking borrowers that already had degrees in hand from top-name schools and often 6 figures salaries already on the table.
Contrast that to federal policy, which for the past 8 years has, at least from a finance perspective, had that risk valuation entirely backwards. We charge grad students more in fees/interest than undergrads, even though in general there's less risk in that pool. There are multiple political reasons why this is the case, but it's problematic.
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