What rate is your student loan?

[b4freedom]

Do you ever feel like getting a loan is sort of like buying an airline ticket? You know that everyone is traveling to the same location, but you also know that everyone paid a different price for the same trip.

So, what is your student loan rate? Do you want to pay it off quickly?

My wife (and therefor I) pay 2.25% over 20 years. We are in no hurry to pay it off.

[mariec99]

My rate is 5 3/8%. I do want to pay it off quickly because I can't deduct a penny of the interest from my taxes.

[jodi]

DH's and my loans were consolidated at about 4.4% several years ago. He has new loans since returning to school that we just consolidated at 4.7% before the rates went up in July (or else they would have been 6-7%).

[pearlieq]

Mine is at 3.25 over a 10 year term. DH's are at 4.125% on a 30 year term.

I must say, OP, I've got interest rate envy!

[TinyFish]

Ours are in the 5-6 range. Now I REALLY have student loan rate envy. Of course, that's an improvment from when we first got them when they were 8% (and a good rate for the time!). Wish I could refi them.

[lillyb]

Envy here, too! Consolidated mine at 5.35%.

[Broken Arrow]

Originally Posted by mariec99

My rate is 5 3/8%. I do want to pay it off quickly because I can't deduct a penny of the interest from my taxes.

I could've sworn that you could. Perhaps you mean that you don't qualify for the deductions?

[pearlieq]

Originally Posted by Broken Arrow

I could've sworn that you could. Perhaps you mean that you don't qualify for the deductions?

I'm sure that's what she meant. You have to be under an income limit to be able to deduct the interest. Sadly, I can't deduct mine either.

[TinyFish]

The income limit is fairly low as I recall. I mean low considering if you have a degree you probably have a professional job. Oh well, I suppose I have to pay my fair share since I'm fortunate enough to have the education and the job.

Hmmm...starting to feel the itch to pay down these loans again, but I think I'd better wait until we've a few more things done on the house!

In happy news, ignorance is still way more expensive and carries a higher premium than education.

-TinyFish

[ruthie]

8% and 8.25% ... stupid private loans

[parafly]

I consolidated in June 2005 at 2.8%. One of the best decisions I've ever made dealing with loans.

[mariec99]

The income limit is fairly low as I recall. I mean low considering if you have a degree you probably have a professional job.

It is a really low limit in my opinion. I haev contacted my congress people to suggest that raising the limit would be a great thing to do. I haven't received any responses though.

[greedy4chips]

First off you were loaned money at a fairly ridiculously low rate for a person with virtually no income and no guarantee of future earnings. On top of that the payments don't start until you are out of school for 6 months so you had that money interest free for up to 4 years (some more).

On the other hand...The government invested in your future so you could repay them thru additional income taxes and thus your interest rate should be no more 3% or the rate of inflation.

If I had it my way every kid would take one year off between highschool and college and work 80-90 hrs per week to pay for school! The jobs they would get and the hours worked would give them the drive to succeed in school! I watched too many friends including myself not take college seriously and after many years of hard work I went back to college and have A's in 14 of 15 classes with a 1 credit B in 3 semesters. Needless to say 18 years of real life gets your priorities straight when it comes to studying!

[lisajane]

Too bad you aren't in Canada, they have a kidsfutures program where you save and collect upcs/receipts. You can even use it towards your own student loans, maybe some of you are from canada.

I only learned about this recently. I wonder if I can collect enough KF upcs to pay for my entire edu-ma-ca-tion

[Broken Arrow]

Originally Posted by greedy4chips

I watched too many friends including myself not take college seriously and after many years of hard work I went back to college and have A's in 14 of 15 classes with a 1 credit B in 3 semesters. Needless to say 18 years of real life gets your priorities straight when it comes to studying!

Amen!

[mariec99]

If I had it my way every kid would take one year off between highschool and college and work 80-90 hrs per week to pay for school! The jobs they would get and the hours worked would give them the drive to succeed in school! I watched too many friends including myself not take college seriously and after many years of hard work I went back to college and have A's in 14 of 15 classes with a 1 credit B in 3 semesters. Needless to say 18 years of real life gets your priorities straight when it comes to studying!

I was driven and had my priorities straight right out of HS. I worked during HS and college and got excellent grades. Not every kid needs a dose of reality. Some already have it. Student loans are not fun -- but at least it allowed me to have the same access to education as rich kids without being a year behind them (as your idea would have caused). The kids I saw not taking college seriously were the ones who already had cars, condos bought by Daddy, plenty of spending money, beautiful clothes, etc. There was no reason for them to try. I, on the other hand, was a little sick of being poor.

If someone had told me as a kid that I would have to work for a year so that I would "take education seriously," I would have had some harsh words for them.

ETA: Edited to sound less angry.

[greedy4chips]

Originally Posted by mariec99

I was driven and had my priorities straight right out of HS. I worked during HS and college and got excellent grades.

I guess what I meant was the govt loans money to lots of students who go to school and don't really take it seriously.

Perhaps my blanket statement should have been smaller!

Congrats btw on your grades and success.

I was never even given a bag of groceries when I went to school the first time. I worked my butt off too to pay for school, since I could not get any loans at that time.

This time though I could have had school paid for by loans and we make $80k per year...go figure!

[mariec99]

I guess what I meant was the govt loans money to lots of students who go to school and don't really take it seriously.

Perhaps my blanket statement should have been smaller!

Point taken. Thanks for clarifying.

[TinyFish]

Whoa, I guess my qualifying statement touched off some controversy.

What I was trying to say is that the limit is low, relative to professional salaries, not that it is low in relation to, say, average salaries. So, relatively few people who have been professionally employed for long will qualify.

Oh, and I did say I was content to pay my fair share! After all, not being able to deduct your student loan interest due to income is generally one of those 'good problems to have'.

I think most of the people I know who got loans used them wisely and worked hard in school. On the other hand, I see a lot of parents today who are set on giving their kids a 'free ride' to college, often sacraficing their retirement. I think this is unecessary, based on my own experience. Sure, student loans are the pits, and we all would like better and better rates and more favorable tax breaks, but they are generally not undoable and you can get hardship deferrals and things, which is very nice and more than fair. Plus look at all the motivation they provide!

An Israeli professor-friend of mine expressed shock when I told him I was going right from graduation to a job. He said that most young people elsewhere 'take some time off' to travel and things. I told him I had these big loans to pay and he remarked 'This must be why Americans work so hard when they are young, I'd always wondered about that.'

Oh, and I don't think anyone gave me any groceries. I recall we got some kinda box of samples of things, donated by companies that wanted to snare us. I think there were CCard apps in there too! The most memorable thing in the box was a power bar, which remains the nastiest thing I have ever voluntarily put in my mouth!

-TinyFish

[TinyFish]

It would be interesting to compare default rates for student loans with other types. I haven't found much, but so far it looks like the government is getting a decent deal.

The most recent numbers on default rates for student loans is 4.5% (an all-time low)

Here are some numbers from. I think, 2004, quoted from MSN:
"Consumer Action’s yearly survey of the credit-card scene looked at 146 cards from 47 issuers. The group found default rates as high as 35% (Merrick Bank). Runners-up for the highest default rates are Citibank and Providian at 29.99%. The lowest default rate is 12% (Arkansas National Bank)."

-TinyFish