I've heard a blip about this on the news this morning. So the Stafford interest rate is dropping some 3% on July 1? However, this only applies to loans taken out prior to July 1 2006? can anyone expand?
Stafford and plus loans taken out before that date that are NOT consolidated will drop by 3 points on July 1st. For most stafford loans this will make their rate 4.21%. If you've consolidated you're going to have the interest rate you have now forever. There are very very few variable rate consolidations out there, I think I've only seen 2 in my job. current rates for new loans will be 6.0 for subsidized staffords and 6.8 for unsubsidized ones.
Hi, all. Those are important clarifications you have made, tgirlnh. Driveloader, please note that the 6% APR for subsidized Stafford Loans is only true for undergraduates; all of your Stafford Loans as a graduate student will reflect a fixed 6.8% interest rate. The interest rate for your PLUS will be fixed at 7.9% if it is a Direct PLUS, or 8.5% if it is a FFEL PLUS.
I do not mean to disparage private educational loans as they do have their place, but it is critical to note that the credit market for these loans is very poor right now. This means that you would probably at best qualify for interest rates that are competitive with the federal programs. Further, most private loan lenders do not offer many of the benefits offered by the federal programs. For instance, if you must defer repayment of the loans, the interest on your subsidized federal loan would be paid while in deferment; this is not the case for private loans. Private loans are also often not deferable if you return to school. Further, as morbid as it may sound, if you should unfortunately pass away, your federal loans will be forgiven. Your private loans will not and will become the responsibility of your next of kin.
So if I have a loan that was prior to 2006 and was not consolidated w/ my other loans I can consolidate this one for the lower interest rate. Current rate on this unconsolidated loan is around 5% and my other consolidated loans are 4.25%
Gabbismommy are you talking about a perkins loan? That is different and will always be 5%, I don't know of any variable stafford loans at 5% right now. You could consolidate, if you can find someone to consolidate right now. No, chances are the 6.8 interest rate will remain, the government would have changed it by now. Maybe next year.
Just a clarification on FinAidOfficer's post above.
Private loans do not become the responsibility of your next of kin if you die. Private loans, just like any unsecured loan, do become the responsibility of your ESTATE if you die. That means that the private loan company can try to collect from the assets in your estate at the time you die--house, bank accounts, etc.
However, if you have a co-signer, the private loans will become the responsibility of your co-signer if you die. My grandmother is my co-signer, but I have life insurance with my mom as the beneficiary. If I die, the private loan company can't go after the life insurance money (true in most states), but they could go after my grandmother. I've set it up with my mom so that the private loan company will get paid out of that life insurance money specifically so that they will not go after grandma.
Additionally, if someone takes out a loan in their name to pay for your school, which you intend to pay, the loan remains in their name when you die and they are responsible for the repayment.
You cannot volunteer other people to be responsible for your student loan debts. The only way that happens is if they sign off on it, either by taking out the loan or by co-signing.
If you die with private student loans in your name only, and your assets don't cover the debt, the private loans are usually forgiven. Though (on these boards) there have been cases where they go after the family, and have even gotten some payment just to stop the harassment, this is an unethical business practice. These boards have shown cases where the family member has to go through (a lengthy) dispute process to get the SL/CA accounts removed, but where they did not have anything to do with the loan, they are successful.