Overheard A Student Today Make A Comment That Their Loans Had 12% Interest Rate. ??????

[TheMastersNemesis]

Was in a waiting area at Kaiser when heard a student make that comment. That rate sounds awful high. i wonder what rates are on these loans. And it sounds like they are amortized like a home loan with all the interest up front. So most of early payments go to interests.

I remember my 1st payment when I bought my house that out of my $330 payment only $4 went to principal. I did not reach 50/50 until 15 years in.

[samnsara]

1. i think mine was 3% that was '77

[MichMary]

2. Student loans

are unsecured. The interest rate is higher because if the borrower defaults, there is nothing for the lender to recover.

12% seems high, but our home loan (1983) was 12.75%, refinance to 10%, and the next house was 7%.

In the '80s we had a car loan that was 16.75%. Ridiculous. We were stupid to pay that much.

[Freddie]

3. My sons student loans

He graduated in 15 - vary from 3% to 6.5%. These are all Stafford federal loans. I’m sure private bank loans are higher.

[mythology]

5. Those are clearly private student loans

The current federally subsidized rates are between 5.8 and 6.8 percent.

[kimbutgar]

4. My husbands nephew wanted us to co-sign on a student loan for $65,000 to attend flight school

The interest rate was 11%. I put my foot down and said no. He was upset with me and his sister was mad I didn’t want to put our credit and finances n jeopardy. Finally my husband realized that our credit would take the hit if his 22 year nephew missed payments. The loan could have ballooned to over $100,000 though the kinder Wells Fargo bank. I had a stafford student loan when I went back to school to get my teaching credential the rate was 3.75% in 2001. It took me 3 years but I got my credential and paid off the loan within 7 years. This flight school loan was up front and if he flunked out we’d be on the hook for the entire $65,000. It almost broke up my marriage until my husband came to his senses.