Before you decide to go to college, you need to make sure that you can afford the college loans that are currently available. The only way to do this is to compare the current student loan rates with the rates that you can afford to pay later on in life. Many news pundits are quick to mention that the current student loan rates are much higher than historically normal, and that the price of college has increased tenfold over the past couple of decades. The fact is that current student loan rates can differ from state to state, as well as several other factors that may be important to consider.
What Are The Current Student Loan Rates From Major Banks?
Major banks are still a pretty common place to get your student loans, and the current student loan rates will vary from bank to bank, as well as with the location. Discover, often known as the major credit card company, currently offers student loans with APR’s as low as 2% or 3%. Most companies are unlikely to say their current student loan rates because of the wide range that they can be from. Giving loan rates that are lower than what you may qualify for will leave borrowers feeling gypped, and it’s generally considered to be a bad practice among bankers.
There is a major caveat when borrowing from a private company. Most banks will have variable rates for their student loans, which means that 2% interest rate won’t stay 2% for too long. Wells Fargo offers fixed rate student loans, but they currently can have interest rates that can be anywhere from 7.75% to slightly over 14%, depending on your credit history. That’s a very steep interest rate, and most of the people who take high interest student loans default on them because the payment is just that difficult to do on a monthly basis.
What Are The Current Student Loan Rates From Government Sources?
The vast majority of students who attend four year colleges will apply for loans that are government-backed. Currently, the student loan rates associated with government loans can vary depending on yur financial situation, the amount that you owe, and more. Loans that are government subsidized will usually be around 3.4%, while unsubsidized loans will end up having an APR of around 6.8% this year. These are currently considered to be very reasonable rates for any student loan.
The current student loan rates from government lenders will change from year to year, so if you see a low rate for 2011, don’t be shocked if it gets a little bit higher in 2012. Still, they tend to be more stable than loans from credit card companies, major banks, and others. Though the student loan rates government organizations might offer are low, it’s important to remember that these often come with harsher penalties for defaults.
Current Student Loan Rates: Banks Vs. Government Loans
Most students who decide to take out a college loan opt for government subsidized loans. This is because they tend to have slightly lower rates, and also are much more predictable than private lender (bank) loans. The majority of government student loans are fixed, and current student loan rates for subsidized government loans are spectacularly low. With the current low rates that students can receive from government sources, it’s easy to see why a lot of them view it as a safe option.
Still, bank loans have their perks, too. Bank loans tend to have variable rates, which means that they are more unpredictable. A notable exception to this rule is Wells Fargo, which offers current student loan rates that are fixed. Student loans are easier to get from banks, and it’s a lot easier to apply en masse for bank loans instead of government-funded loans. If you are willing to risk your current student loan rates getting a little bit higher than you’re used to, bank loans can be a good option to look into in terms of convenience.
What Will Affect The Current Student Loan Rates I Received?
The current student loan rates are a result of many different things. One of the most important factors is the economic environment that the US is currently experiencing. Different laws will change the current student loan rates for that year, along with the rates for the next couple of years as well. You can’t really change the economic environment, but you can change the major things that can help get you a lower than average student loan rate.
Student loans are still loans. The same things will influence the rates that you receive as the rates that you’ll receive for credit cards, home loans, and car loans. Your FICO score, also known as your credit score, is what will make a huge difference. Understandably, most students who are freshmen in college don’t have too much credit to their names. If you are young, there are several options that can help you get a lower student loan rate.
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Take a break for a year or two and start working. Get a credit card, and pay it off month after month. The more credit history you have, the better off you will be when you learn the current student loan rates that are being offered.
Are you one of the foolish students who maxed out their credit cards, took out a bunch of loans, and wrecked their credit before they even reached college age? Start negotiating with your credit card companies and lenders, and ask for a “pay for deletion deal.” If you can pay off minor transgressions, you will get a higher credit score.
Discuss your matter with a non profit credit counselor (also read about debt counselor help). They might be able to provide valuable advice which will lead you to a higher FICO score, and lower loan rates. Moreover, you’ll learn a lot that will help you lead a responsible life during your four years at uni.
Do your best to qualify for a subsidized student loan instead of a non-subsidized one. Having government backing lowers your loan rate almost instantly.
Enroll the help of a parent or other relative with a stable credit score to gain a co-signer on your student loans. A co-signer will lower your loan rates, no matter what the current student loan rates may be.
The Future Of Our Current Student Loan Rates
The future of current student loan rates is quickly becoming uncertain. Though the rates for student loans have been declining over the past several years, economic turmoil has caused financial analysts to wonder and worry about the future of student loan rates. Several major factors might raise student loan rates in the future.
Many students are defaulting on their loans because their monthly payments are too high to afford post graduation. There’s currently a 46% student loan default rate in the US.
Rumors of the education bubble being the next to burst are causing people who invest in banks that offer student loans to have concern.
26% of students now say that college isn’t worth it.
The United States also was downgraded, which means that loan rates, as well as credit card interest rates in the country are expected to rise.
Because of the current problems that the student loan industry is facing, there is currently a big push for education cost reform. The current laws in place do not really allow people to default on their student loans. Even bankruptcy and filing Chapter 11 will not give you loan forgiveness when it comes to student loans. This can cause chronic problems when it comes to your credit score, and can also cause wage garnishing to occur.
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The current problems that students are facing with their loans also has another trend happening more frequently. People are actually researching and trying to figure out whether college is even a good idea for them anymore. They are treating it like an investment, and this is actually a very good idea in these tough economic times. Taking a break and deciding whether you should even attend school is a good idea if you can’t afford to pay your loans on time.
Going to college is quickly becoming a more financially difficult task, but it is still doable with a little bit of foresight. It’s crucial to learn all of the different options you have while you browse current student loan rates, and it’s also extremely important to learn about the laws that will affect you if you do end up defaulting on your student loans. Many grads are now experiencing the terrible struggle that comes with defaulting student loans, financial turmoil, and the after effects of not making an educated decision when it came to their student loans. Don’t let this happen to you.
