<p>Story over the wires yesterday about a bill put forth by Elizabeth Warren (D-MA) allowing students loans to be refinanced to the current undergrad rate of 3.86%:</p>
<p><a href="http://www.upi.com/Top_News/US/2014/05/06/Elizabeth-Warren-pushes-student-loan-refinancing-bill/8531399390769/">http://www.upi.com/Top_News/US/2014/05/06/Elizabeth-Warren-pushes-student-loan-refinancing-bill/8531399390769/</a></p>
<p>Not talking about the bill's chance of passage, but I have not seen any info as to whether Parent PLUS loans, with rates over the last ten years ranging from 6.8% to 7.9%, would be included as well in this bill.</p>
<p>It stands to reason. For those of us who have PLUS loans at those high rates, and either would or could not do a home equity loan to lessen the rate, this would be welcome news indeed. We have been paying them off as we can, but it certainly will take a few more years, and if the interest rate can be cut in half, that's thousands in 'government juice' that need not be paid.</p>
<p>No. PLUS loans are not in the same category. They cannot currently be consolidated. Ranging from ‘6.8% to 7.9%’ is not a big range and is the current range for these loans.</p>
<p>When they reset the rates a few years ago because the temporary reduction was about to expire, they had to agree that the rate would adjust with the prime. Each loan is at a set rate, but that rate can flex. PLUS loans are currently at 6.8%, so even if there was a consolidation rate, it would be at least 6.8% (but there isn’t).</p>
<p>I realize they’re not in the same category, but PLUS loans ARE Federal loans, they are every bit as crucial to the well-being of the economy as Student Loans, and they’ve been way too high from the git-go. The Government can do whatever the heck it wants–we’ve seen that. But my ears perked up yesterday with Sen. Warren’s proposed bill announcement.</p>
<p>Yes, we did consolidate once some time back, but like you said it was still at 6.8%, so the remedy was negligible. Other folks who got these PLUS loans with little credit (it was amazing at the time how little info you had to provide) will end up defaulting without some assistance. And I know these loans cannot be absolved in bankruptcy. But I knew going in what the rates were, so it will be what it will be, and they’ll get paid off eventually. </p>
<p>You have to remember that the Stafford rate was at 6.8%, and it was only through a temporary relief that the rate went down to 3.4% (half) for a limited time. When that temporary relief was about to expire, everyone was screaming that the government was doubling the loan rate when it was really just returning to the rate it had been. Congress passed relief for a short time (a series of 1 year laws), but then finally passed a bill tying the rate to the fed or prime rate. The PLUS loans were never part of this temporary relief. Other student loan rates (Pell) are higher. The PLUS rate is not high at all.</p>
<p>The same thing was done with the FICA tax rate (a 2% reduction for 2 years) and people were not happy when it returned to 6.2%. People think the mortgage rate going to 4%+ is horrible, when historically rates have always been above 6%. My first home loan rate was 7.25%, at one time my sister’s was above 12%!</p>
<p>I have to chuckle about the parent plus loans. I contacted Wells Fargo, since we inherited that bank with a checking account and debit card for the family. All the ATM’s and banking at her school are involved with Wells Fargo so now have a new family member whether we wanted them or not. I called them for a “variable interest loan”, something to add toward the Stafford loans and help with cash flow. WF after covering our financials indicated that since we are part of the family, a variable interest of only 6.75% can be had, we are making do in other ways.</p>
<p>Hey, go ahead and chuckle, but at the time, I figured that PLUS loans were safer than what a LOT of people were doing, which was taking out home equity loans to finance their kids’ college educations. And this was 2005, when times were good. Now in retrospect, even with the high rates I’m pretty happy with that choice, seeing that a lot of the equity has vanished. Never thought it was a good idea to conjoin the two.</p>
<p>And twoinanddone, MY first home loan was 13.5% (1982 so that dates me!), which they said was a ‘blended’ rate of 11-something and 17.25%! Amazing. Of course, I remember my first investment–the Kemper Money Market Fund–earning almost 18% in 1980. So yes, I should look at 6 and 7% rates with less of a stink-eye. :)</p>
<p>I have high interest student loan rates (8-9%) that Sallie Mae refused to sell to buyers who would give me lower rates. Reason 7854 I hate Sallie Mae. </p>