Worried about possiblity of rising interest rates?!?!

[rm5400]

Although all these rates look really good right now, is anyone else worried that the rates may go up?  Is there any way to lock a rate in besides federal consolidation loans which aren't accesible until after you graduate?

You don't have to look back far to see LIBOR rates (what access grp and THE are tied to) to see higher rates.  In July 2000 they were 6.715% and in Sept 89 it was 9.125% as opposed to the 2.92% of today.  To make an example if the effective average interst rate on your loan went from 6% to 10% (ie LIBOR jump of 4%) it would cost you an extra $25,000 on the life of a $100,000 loan!  That would be bad!

Mortgages have fixed rates why don't student loans?

[J D]

First, not all mortgages have fixed rates.  Second, for those that do, the rationale is that mortgages (unlike student loans) are secured by collateral.  In other words, if you default on the mortgage, the creditor gets the real estate against the equity of which you have borrowed.  That makes a mortgage less risky, from the creditor's point of view, than a student loan.

But I feel your anxiety.  I am also kind of worried about the prospect of rising rates.  Especially since I'll be borrowing about $87,000 over the course of three years!   

[Trel]

Expect LIBOR rates to rise.  There's just no way in hell they'll stay as low as they have been since 2000/2001.  When I decided to take out loans I did it expecting LIBOR + premium for the loan or prime rates + premium to go back to a more normal 8-9% overall.  These past few years have been the first time in over 50 yrs that rates have been so low.  I'd definately suggest everyone assume you're going to pay 8%-10% interest on your loans, and if it's lower, count yourself lucky.

[rm5400]

First, not all mortgages have fixed rates.  Second, for those that do, the rationale is that mortgages (unlike student loans) are secured by collateral.  In other words, if you default on the mortgage, the creditor gets the real estate against the equity of which you have borrowed.  That makes a mortgage less risky, from the creditor's point of view, than a student loan.

But I feel your anxiety.  I am also kind of worried about the prospect of rising rates.  Especially since I'll be borrowing about $87,000 over the course of three years!   

I didn't mean all mortgages, but I know you can select higher but fixed rates.  I don't think its to do with the collateral though, that's visible in the interest rate, I think the reason mortgage lenders do this is to gamble that they can make more money while interest rates are lower than your fixed rate.  I think its like health or fire insurance, they take a calculated gamble that the *&^% won't hit the fan and they'll still make money.

I just read on Midjeep's post about a website, that essentially we only have to risk it until graduation then we can consolidate and get a fixed rate.  It sounds like with oil prices where they are, the rates won't be skyrocketing in the near future.  that's an oversimplification but last time rates were high was when Alan Greenspan tried to put the brakes on the economy back in 2000 to cool off the economy to prevent inflation.  With oil high, the economy will be (allegedly) automatically restrained and rate hikes will be unneccesary in my understanding. (granted stag-flation and high interest rates of the 70's were a direct result of super high oil prices but I think that was an anomaly.)