Reply to involuntary collections of student loans

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]What is the interest rate on government student loans? Think government borrowing rate is about 4.5%. Is interest on student loans much higher and if so why?[/quote]

Current rates, which are set by Congress:

Undergraduate Students:
Direct Subsidized Loans: 6.53% (for those demonstrating financial need). 
Direct Unsubsidized Loans: 6.53% (no financial need requirement).

Graduate or Professional Students:
Direct Unsubsidized Loans: 8.08%.

Parents and Graduate/Professional Students:
Direct PLUS Loans: 9.08%.

These rates are fixed for the life of the loan. They cannot be refinanced with the federal government. You can refinance with a private lender, but you lose all the protections of federal student loans (eg, PSLF program, income based repayments, etc.)[/quote]

Why is the rate for undergrads 50% higher than the government’s cost of borrowing? is this meant to cover admin cost and defaults?[/quote]

Yep. And those of us actually making payments have to pay for those in forbearance, public service loan forgiveness, income based repayment, etc.

There should be a law that if you are borrowing for college, you must attend either an instate public college or if you attend out of state or private college, that college must certify they will not charge you more than instate tuition if you are a student borrowing for college. Period. And I don’t think grad school loans should even be eligible for income based repayment. No one should borrow for grad school to go into a low paying job. Exceptions can be made for doctors during residency only. That’s it. [/quote].

A lot of teachers need grad school for certification. Some states (including VA) don’t offer bachelor’s degrees in education at state colleges. [/quote]

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