Re:U.S. Student Debt in ‘Serious Delinquency’ Tops $166B
by robmaister on Sunday February 17, 2019 @07:04PM
(#19187720)
My federal loans from a few years ago ranged from 3.25% to 6.7%. My fiance had to stay an extra semester, which means she had to get a private loan for it. ~9% fixed.
My school wouldn't give anyone extra aid even if you went in in person and asked (the only case I know about is a student's mother passing away halfway through undergrad) and you'd get a little less every semester because tuition kept going up.
Top schools tend to be more generous despite the higher sticker price. My sister graduated from one with around 1/4 of the debt that I did. 2 years was with the same FAFSA for both of us.
I think as others said, many students aren’t doing the ROI calculations.
For me, the government loans are 3.75% which is totally reasonable IMO. One could easily outpace this with an ETF fund.
The private loans are more expensive at 6% and up but the lower end is still totally reasonable.
The real issue is that people taking these loans lack the financial skills to pay them back. A friend who is out of school for 10 years has a near six figure loan debt that he refuses to pay down despite earning six figures. Learning to budget and live frugally is a required skill to escape the debt that many don’t have.
I also know very few that have visited financial aid to get a second look at their scholarships / grants. I went every semester and walked out with something. A friend walked out with $14k extra in financial aid from one meeting. Those in the worst positions financially also get vastly more aid. I had some savings going in but still paid a fraction of the tuition sticker price.
In all, the experience worked out well in my favor with a paid research position and other breaks along the way, but given any other situation I would recommend going the state school route which is often a tenth of the cost.