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Author Topic: Will the Fed rate cuts affect interest rates on student loans?  (Read 2239 times)

lawduuude

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Will the Fed rate cuts affect interest rates on student loans?
« on: January 31, 2008, 09:28:54 AM »
I hope so.  Does anyone know how closely the two are related, if at all? 

$Bill

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Re: Will the Fed rate cuts affect interest rates on student loans?
« Reply #1 on: February 04, 2008, 01:52:31 PM »
My SOs interest on her loans has dropped, unfortunately she already consolidated at a fixed rate a couple years ago.  I dont think it would have any effect aside from initial interest payments, unless you consolidated your UG loans and any other debt at a fixed rate after the next rate cut the Fed is sure to give in the upcoming months.  May be a smart move if you do it immediately after the next cut.

edit:  my gf uses primarily private loans.

hbb

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Re: Will the Fed rate cuts affect interest rates on student loans?
« Reply #2 on: February 08, 2008, 09:12:40 PM »
The interest rate on Federal student loans is fixed. However, if you were for some reason planning to finance your legal education with a HELOC, the recent rate cuts are good news.

billymahogany

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Re: Will the Fed rate cuts affect interest rates on student loans?
« Reply #3 on: February 23, 2008, 06:17:41 PM »
My rate dropped.  My loan has a variable rate that cannot go above 8.5% I believe. 
In:  UF, Tulane, FSU($), Miami($$$), Stetson, Oregon($)
Out: Washington and Lee
W/L: Arizona
Decision: UF c/o 2011!

Just_Chexin

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Re: Will the Fed rate cuts affect interest rates on student loans?
« Reply #4 on: March 09, 2008, 10:41:20 PM »
I also had a question on how the Fed rate cuts affect loan interest amounts.

With another 50 basis-point cut expected later this month, it seems like rates just keep dropping. I know Stafford is fixed at around 6.8% and GradPLUS is set at 8.5%. Because of the plummeting interest rates, might private loan interest amounts actually be LESS during these strange economic times? What would be the pro or con of taking these loans on instead if the rates truly were lower? Just curious if anyone can provide insight with this topic.

Just_Chexin

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Re: Will the Fed rate cuts affect interest rates on student loans?
« Reply #5 on: March 09, 2008, 11:13:29 PM »
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Don't forget to add in the fact that some Stafford and all Perkins loans are subsidized...

I thought the whole Pell Grant/Perkins thing wasn't open to graduate students. I seem to remember when filling out my FAFSA that it said I wasn't eligible based upon that fact that I would be a graduate student in 2008.

However, on looking under the term "Perkins" on FinAid.org it states, "the Perkins Loan allows students to borrow up to $3,000/year (5 year max) for undergraduate school and $5,000/year for graduate school (6 year max)." So now I'm more confused. Grrr - they sure don't make this whole financial aid process easy! Hopefully after 3 years of law school I'll be able to understand these rules and sub-rules?  :)

pulvillus

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Re: Will the Fed rate cuts affect interest rates on student loans?
« Reply #6 on: March 09, 2008, 11:23:26 PM »
Federal loans will continue do be your best option, especially since private lenders don't pass on the reduced rates to consumers and business. Banks and creditors carelessly speculated with bad credit and lost the gamble. Now they use the cheap money, which the fed provided to prop the economy, to recover from their missteps. Bottom line, we won't see much of the rate cuts and neither will the economy, which means no help in the job market.

hbb

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Re: Will the Fed rate cuts affect interest rates on student loans?
« Reply #7 on: March 14, 2008, 10:30:40 PM »
To clarify what may seem to be conflicting reports of dropping interest rates on student loans in this thread, Stafford loans disbursed before July 1 2006 have a variable rate that cannot exceed 8.25%. Stafford loans disbursed on or after this date are fixed at 6.8%.

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Because of the plummeting interest rates, might private loan interest amounts actually be LESS during these strange economic times? What would be the pro or con of taking these loans on instead if the rates truly were lower? Just curious if anyone can provide insight with this topic.

Even in a situation where private loans had significant economic advantages to federal loans, it would be difficult to justify taking on more private debt than absolutely necessary. Private loans would not be eligible for the income based repayment or loan repayment assistance plans supported by the CCRA (College Cost Reduction Act).

If I knew for certain I would land a well paying job with a firm that would allow me to pay off my student loans in a reasonable amount of time, taking the lowest cost loan option would be an easy choice. However, my ability to land such a job is far from certain. What if I end up working in public interest? The savings represented by the LRAP would far outweigh the savings of any lower interest rate I could reasonably expect to find.