<p>How can my private loan interest rate be lower than my federal loan rate? As of right now, my private loan rate is 7% and starting tomorrow it will be 6%. Why are federal loans rates so high? Even some credit cards are 7%...even 0% for 12-24 months! I think this is ridiculous. Federal loans rate should be no higher than 4% maybe even 3%. With the cost of education going higher and higher, students are forced to take on more debt. And they wonder why more people are defaulting every year...</p>
<p>Is your private loan rate variable? If so, it is low right now because the prime rate is low. When that rises, so will your rate. That is how people got into trouble on mortgages.</p>
<p>In addition, federal loans have terms that are generally much better than private loans. You don’t have to repay until after you finish school - and then you get a deferment period & lots of opportunities to manage your payments in ways that might suit your personal situation. You can consolidate, as well. And best of all, your rate will not rise - or go up if you miss a payment/are late with a payment.</p>
<p>As for defaulting, students are borrowing more than they can realistically afford to repay. They need to realize what they are really going to owe, because it has to be repaid. That’s what happens with a loan. There are more affordable options for many students - many times, they choose a college that is more expensive than others they could attend. That is a choice, and the cost of that choice is the student’s responsibility.</p>
<p>I do agree with everything you are saying. I personally chose a garbage public school (where I learned nothing) to save money…but it got me into a grad school program that I like so I can’t complain.</p>
<p>My private loans are tied to the prime rate and get all the benefits a federal loan does…consolidation, deferment, etc (at least mine do). I also have a few federal loans that are variable which are 3.61% right now. I have no idea how they calculate the federal loan rate and would really like to know how they get the figure.</p>
<p>I guess I have a problem with the economy being so *****ty and looking at the past percentage rates. I can’t believe the government is only lowering the percentage rate .08% from last year and then slowly but surely lowering it again for the next 3 years to 3.4% and then raising it again after that.</p>
<p>I also forgot to mention that graduate students get no break either. Their loans are 8.5% or 7.9% depending on where you get your GRAD Plus loan. And they get no break for stafford loans like undergraduates will in the next 3 years.</p>
<p>Don’t forget how the government basically closed down all the lenders that gave out great incentives to get your interest rate down to at least 5.5%. They only want you to consolidate with THEM. I was planning on consolidating this year and my percentage rate would have been 5.5% after 24 months of payment, but the government changed the rules.</p>
<p>I think the government needs to reevaluate their student loan system just like everything else that is broken around here.</p>
<p>The gov’t isn’t responsible to make your college dreams come true. You are in a grad program, hopefully in an area that will provide a job when you graduate. If so the loans will be manageable, if not you need to reconsider your chosen field of study.</p>
<p>I see most people are missing my point…I NEVER said the government should be responsible or not responsible for paying for my (or anyone else’s for that matter) education. I said the INTEREST rates on student loans should not be so high in this broken economy whether your in undergraduate or graduate school.</p>
<p>FYI my field is in IT. I would like to work for the federal government (for you) so I need a master’s to get ahead. I would make next to nothing compared to the corporate world. Plus, the government cut out the great loan repayment program they had too.</p>
<p>Are you kidding? I’d be in heaven if I could land a government job! Guaranteed raises, step-up pay for longevity, top notch benefits, and pensions that won’t be pulled out from under you after 30 years of service … you must have a skewed view of what most people in the private sector actually earn.</p>
<p>Maybe I do, since I’ve never worked in private industry and neither has my parents. Where I’m from it’s not that hard to land a state job, but federal is another ball game. All my internships have been with my local government. But I guess it would depend on what you do too in private industry.</p>
<p>I know in IT they don’t get paid as much in the government as people in the private sector (but then again private sector employees work WAY more hours too). With a bachelor’s degree in computer science for the federal government it is mid $30k, but private industry is almost double that.</p>
<p>It’s always a good idea to look at longterm opportunities for advancement, job security, and pay raises. Sometimes what looks good on the surface isn’t really best. I don’t know a lot about IT, to be honest. I know that the big money is there, of course - I don’t know what the typical pay is, though. However, I know that for many positions, a government job can be really good in the long run.</p>
<p>kelsmom, in many areas, Federal pay is below what the private sector pays; that’s why it’s very difficult for the Federal government to hold onto scientists, computer professionals, attorneys, and so on. The “guaranteed raises” (which are the “step-up pay for longevity”) might keep one even with inflation… or, as recently, might not.</p>
<p>I have to admit that my experience is based on salaries in the midwest. I am totally unfamiliar with how things work in other areas where government jobs are plentiful. However, I can say that I know what an automotive engineer made in Baltimore (when there was an auto plant there) and what an engineer with the same experience made with the goverment in that same area. It was more in the goverment job. As you can see, I am most familiar with manufacturing … which apparently is a dying piece of American history.</p>
<p>My loans are structured the same way too. Its pretty ridiculous but I guess there is not to much we can do about it.</p>