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Those who do that, become easy prey to the banks, and the loan administrators.. someone should do a study on the "kickback" programs within the Student Loan system.
Remember, the Banks still borrow OUR PUBLIC MONEY AT "0%" Interest. There is no reason for them to gouge students.
The Federal Money Loaned to Banks, should be allotted to HUD and Dept. of Education, and let them process and manage and dispense student loans.. Then all Interest Earned, will go back to the public, not the banks.
Interest on loans just seems silly to me. I mean, it's funded by the government, screw the banks. I can see maybe a 1% interest rate or something, but the 7% I'm paying is frustratingly high.
Interest on loans just seems silly to me. I mean, it's funded by the government, screw the banks. I can see maybe a 1% interest rate or something, but the 7% I'm paying is frustratingly high.
Students between 2007-2013 (which you presumably are based on the rate you quote) got hosed by a confluence of factors. The shift from the old variable rate structure was approved by Congress at a moment in time when variable rates were quickly pushing up to 7% anyway. The year Stafford loans were set at 6.8%, the applicable variable rate would have been 7.2%. So during that brief window in time the bill was being approved, student advocates didn't fuss because the shift looked like a pretty good deal for students.
The tanking of the economy pretty much immediately after put downward pressure on gov't revenues, and upward pressure on many gov't expenditures targeted at low income populations. When your low income population suddenly swells, spending goes up. And a decent deal pretty quickly turned into a crap deal after the fact.
They certainly should have reverted to the old variable structure back then, but it was deemed 'too expensive' so students bore the brunt of that cost shift. The changes they've made since then to improve affordability have been focused largely on new borrowers and undergrads. The latest deal this past summer is a slight short-term improvement for current grads, but will likely hose them more in the long run.
FWIW, if we ever return to a normal interest rate/inflationary environment, 7% likely won't seem that bad (whether the Fed will allow inflation to normalize under any circumstance is another question - they currently seem pretty tied to a pro-banking low rate environment at all costs).
You perceive it as bad for a variety of reasons - one is that it's higher than mortgages which are still near all-time lows, but would likely jump above 7% in a more typical rate environment. You probably also know people in the cohort right before yours who locked in loan rates at 3-4% on the same damn loans. That's not going to change, but it's quite possible within a few years we'll have borrowers taking the same loans at 7-10%, and that'll cheer you up.
And lastly, you know that the fed's cost of capital is somewhere in the 1-2% range. So the spread you're paying vs. cost of capital is high. And quite arguably unfairly so. But again, that will likely change within a few years, unless of course the Fed forever holds its course of stomping out any potential sign of inflation despite the negative impacts current policy carries.
You perceive it as bad for a variety of reasons - one is that it's higher than mortgages which are still near all-time lows, but would likely jump above 7% in a more typical rate environment.
Mortgages are secured. Student loans are unsecured. I would expect that student loan rates, like all unsecured rates, would be higher than mortgages.
Mortgages are secured. Student loans are unsecured. I would expect that student loan rates, like all unsecured rates, would be higher than mortgages.
Sometimes that will be true, and sometimes it won't. Both follow the market to an extent, but student loan rates are prescribed by law as a function of Treasury rates plus a set margin. Plus they're capped.
In any case, the prior poster is sitting on an existing loan with a fixed rate. Future fluctuations in rates don't actually impact his/her rate, but will subjectively perceive how 'fair' the rate on that loan is compared to what everyone else is paying.
Sometimes that will be true, and sometimes it won't. Both follow the market to an extent, but student loan rates are prescribed by law as a function of Treasury rates plus a set margin. Plus they're capped.
In any case, the prior poster is sitting on an existing loan with a fixed rate. Future fluctuations in rates don't actually impact his/her rate, but will subjectively perceive how 'fair' the rate on that loan is compared to what everyone else is paying.
Are you disputing that secured rates are generally lower than unsecured rates? Seriously?
Rates on loans are what they are. You agree to the terms when you borrow. If the terms are "unfair" a person should not sign the loan papers. You can't deem terms of an existing loan unfair simply because rates went down over a certain period of time.
Are you disputing that secured rates are generally lower than unsecured rates? Seriously?
Rates on loans are what they are. You agree to the terms when you borrow. If the terms are "unfair" a person should not sign the loan papers. You can't deem terms of an existing loan unfair simply because rates went down over a certain period of time.
I guess I missed where that was stated, seemed pretty clear to me. I am not sure why you are so confused.
I guess I missed where that was stated, seemed pretty clear to me. I am not sure why you are so confused.
Post 195 States:
Quote:
Originally Posted by Momma_bear
Mortgages are secured. Student loans are unsecured. I would expect that student loan rates, like all unsecured rates, would be higher than mortgages.
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