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Student loans (boring thread)

post #1 of 14
1/12/10 at 7:23pm
Thread Starter 
Sorry for the boring thread, but I'm assuming there's other students on this forum who know how this financial stuff works... I'm just trying to find out if there is a way to get my federal student loans interest rate down. I called up the feds and they said they can "consolidate" it for me, but all that does is combine the different types of loans to make paperwork easier, it doesn't do a net reduction in the rate.

My rates average out to like 7% for $120,000 (law school). Apparently interest rates are really low now for other things, so my friend laughed at me for having such a horrendous rate. The thought I had was this: why doesn't a bank just pay the feds the $120,000k right away for me, and then I can pay the bank back at a lower rate?
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post #2 of 14
1/12/10 at 7:26pm
No private institution is going to give you an unsecured line of credit that is lower than the federal student loan interest rate. That is, unless your name is Chris Dodd.
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post #3 of 14
1/12/10 at 7:35pm
I wonder what proportion of the average graduate's yearly income is covered by student debt. Remaining for me is about one-third, I would say. But a first year law grad with $120k... jeez.
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post #4 of 14
1/12/10 at 7:39pm
yessss another finance nerd thread i love these
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post #5 of 14
1/12/10 at 7:41pm
boring thread is boring.
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post #6 of 14
1/12/10 at 7:44pm
Quote:
Originally Posted by Svenn View Post
why doesn't a bank just pay the feds the $120,000k right away for me, and then I can pay the bank back at a lower rate?

Because the banks don't like you.
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post #7 of 14
1/12/10 at 8:56pm
Thread Starter 
Quote:
Originally Posted by dah328 View Post
No private institution is going to give you an unsecured line of credit that is lower than the federal student loan interest rate. That is, unless your name is Chris Dodd.
Can my parents or somebody secure it with their home or something? It just seems like such an easy way for the bank to profit- I don't know what the statistics are but I assume lawyers are fairly reliable in paying back their loans?
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post #8 of 14
1/12/10 at 9:00pm
Quote:
Originally Posted by Svenn View Post
Can my parents or somebody secure it with their home or something? It just seems like such an easy way for the bank to profit- I don't know what the statistics are but I assume lawyers are fairly reliable in paying back their loans?
Yes, you could do it with a home equity loan or the like but you would lose out on any favorable tax treatment that is available for the payback of interest on federal student loans. You'd have to crunch the numbers to see which way was the cheapest for you.

And I doubt very many banks would be too keen to take your future expected earnings (or pretty much any other attorney's) as collateral on a loan.
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post #9 of 14
1/12/10 at 9:24pm
Thread Starter 
Quote:
Originally Posted by dah328 View Post
Yes, you could do it with a home equity loan or the like but you would lose out on any favorable tax treatment that is available for the payback of interest on federal student loans. You'd have to crunch the numbers to see which way was the cheapest for you.

And I doubt very many banks would be too keen to take your future expected earnings (or pretty much any other attorney's) as collateral on a loan.
I meant could my parents offer their home as the collateral in one way or another for my loan (I know it's asking a lot of them, but this is the difference between paying $1000 a month for the next 25 years vs $500 a month, and I'm likely to inherit the home anyway). What do you mean about tax benefits? I didn't know tax was involved, I thought I just had to send a check off to the loan people every month. I'm probably in over my head here
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post #10 of 14
1/12/10 at 9:39pm
You can claim some deductions on the interest paid on certain types of student loans although that deductions phases out at $70k of income. If your income is above that, there is obviously no advantage to keeping your student loans. See the following link for specific details: http://www.irs.gov/taxtopics/tc456.html
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post #11 of 14
6/24/10 at 1:55am
I am reviving this thread as an attempt to get some advice/insight/answers.


I hope to return to college this fall. I have about 9k in student loan debt currently. My parents were helping me out w/ my loan payments initially; but at a certain point I took them over, I was foolishly delinquent on a handful of payments. Will this affect my ability to get new loans?

I am going to fill out a fafsa, but could it be advantageous to take out a private loan instead of one from Nelnet, etc?

I am going to talk to a financial advisor of course. It is just hard because you hear all kinds of things many true, many urban myths.

Anyways, there are folks here who know much more about financing things, in particular education.

-rF
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post #12 of 14
6/24/10 at 11:01am
I just ran a amort schedule on your loan, 15-16K per year or so to retire that girl in 10 years, how did you get the note extended to 25?
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post #13 of 14
6/24/10 at 11:10am
Best thing to do .. if your parents have rockstar credit, go with your parents to their bank, and talk with an advisor. They will be able to give you your options, and the various interest rates at those options. Also, best to calculate what all the options will cost you in the end.

As for private loans .. they are a great way to build up credit. So, if you plan on having very little debt and pay it off very quickly, such that a higher interest rate isn't much concern .. then yes, private loans do have benefits.
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post #14 of 14
6/24/10 at 11:36am
Also, doctors and lawyers are famous for not paying back their student loans and allowing them to become delinquent.
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