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One of the bigger problems with student debt is the horrible interest rates students are saddled with. Right now inflation is hovering around 1%, but yet my fia
by gfodor 14y ago
One of the bigger problems with student debt is the horrible interest rates students are saddled with. Right now inflation is hovering around 1%, but yet my fiance is saddled with 150k of medical school loans at 7%. At least if student loans could be refinanced easily or had some regulations to pin their interest rates at or below inflation in certain conditions, students could tread water for a few years until their job prospects improved. Or, especially if rates could be lowered below inflation over time, the loan could naturally decrease in value as the likelihood of repayment goes down.
All-in-all the psychological pressures on the young that build after college due to compounding interest on loans seems to be just as scary for the future of our country than the absolute amount of the debt itself.
- michielvoo 14y agoIn the Netherlands, interest on government provided student loans is pegged to the average interest on government bonds with terms between 3 and 5 years. It is calculated each year, and then fixed for 5 years. * This year the interest is 1.39%, and it's my 6th year, so the current low interest situation rates benefits me. My brother on the other hand is stuck with 4.17% until his next 5 year period starts in 2013. * Table of interest rates over the last 20 years: http://www.ib-groep.nl/particulieren/studieschuld/rentepercentages_leningen_na_1_1_1992.asp http://www.ib-groep.nl/particulieren/studieschuld/renteperce...
- dman 14y agoI think we need to move the risk management away from the students and back to the banks. Let students default under bankruptcy, let banks charge what they want for the loans. Student defaults will keep the loans close to their fair risk adjusted value.
- Evbn 14y agoA doctor or his fiance can't get a $150K loan at 5%?