college loan private student
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July 1 deadline for students to consolidate loan debts
Consolidate now. That's the short fix and the best advice for graduates who owe money on student loans. They need to lock in the lowest possible rates before July 1, when rates for the popular Stafford loan will jump to 6. 54 percent.
The more complicated fix: The nation should re-examine its system for how students borrow money for college. The system wastes money, and the Office of Management and Budget has the numbers to prove it.
Student loans made through private lenders cost the federal government 10 times more than direct loans provided by the Education Department, an OMB report released last year found. Some students borrow directly from the government, but many borrow guaranteed student loans through private lenders such as Sallie Mae. For every $ 100 spent on student loans, the government spent only 84 cents for direct loans, compared to about $ 12 for government-guaranteed loans from private lenders, the study found.
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Student loan interest rate increase packs a mean punch
Emporia College students and graduates experienced a steep interest-rate hike on Stafford loans. Rates increased from 5.3 percent to 7.14 percent on old loans, and from 5.3 percent to 6.8 percent on new loans. These rates are now fixed instead of variable, but students said they are not excited to be pushed deeper into debt.
“It sounds like a little difference, and a lot of people really don't think about it," Blair Falldine, student, said. “But when you punch out the numbers, it's like ‘Oh my God!' I think it's ridiculous, I think it's just ridiculous." Falldine is set to begin her last year at Emporia State University, and she is not happy about paying a higher loan interest rate. “It's a lot to think about, the amount of loans" Falldine said. “I will have massed, by the end of college, [enough loans to buy] a cheap house." Rising debt not only impacts the private lives of students, but could also impact what jobs they take.