Joe Szczepaniak pays a 3.5 percent interest rate on the mortgage for his house in a Chicago suburb. His car loan is 1.79 percent. The federal education loans he took out to send his four sons to college? They’re all above 7 percent.
Oftentimes, the decision to take If you are paying back Federal Student Loans (or about to), you may wonder why your interest rate is higher than rates for new Cars and Homes. At 7 percent, the rates are a few percentage points higher than those types of loans. That amounts to hundreds more in interest payments over the life of the loan. Why?
In the article written by Bloomberg Businessweek, the reason why interest rates are so high is because those rates are set by Congress, not the market. If you’re having trouble making payments, there are a few options you can take to help you:
- Because taking out a student loan is usually the first major financial decision a young adult takes, The Consumer Financial Protection Bureau (http://www.consumerfinance.gov/)has created a section titled “Repay Student Debt” as a part of the “Know before you Owe” Project. The site can help you estimate your education costs, as well as help you understand College Financing. Click here to go to the page.
- The Federal Student Aid Office has a number of links to explore, related to paying back loans and programs that may forgive your loans. (Repay Your Loans | Federal Student Aid)
- Because Federal Loans rates are set by Congress, a way to make your voice heard about Federal Student Loans is to Call your Representative. Use the “Find Your Representative” Page from the U.S. House of Representatives to find your elected congresswoman/man and the “U.S. Senate” Page to find your Senator. Their contact information will be listed for you to write or call them.
While this may not seem entirely Career Related, don’t forget, that a missed payment or default will negatively affect your credit score. Because a majority of Employers check an applicant’s Credit Score, a negative score could affect your chances of getting the job. It’s best to make sure you have spoken to your lenders to work out a repayment plan, rather than have a missed payment affect your ability to get a job.