Is 6.8% the norm for student loans?
Hi,
I’m considering going back to school to get my BS in Business Management, and then a MS in Construction Management. My tuition costs for the undergrad degree will come out to about $30k. The tuition for the graduate degree is about $43k.
Based on my current income, I should be able to pay half of it myself. I’m going to need a loan for the rest, but I was wondering if there are any student loans out there with a lower interest rate than 6.8%. I have no debt and a credit score of 750.
That interest rate seems a bit high to me. I remember reading/hearing from other students claiming to get low interest student loans for about 2.5%. Is it possible?
Also, what is the typical loan term for these types of loans? 10 years? 15 years?
Any help would be greatly appreciated.
Yes, 6.8% is the federal interest rate. My credit score is the same but since everyone and their dog qualifies for most federal loans, it is independant of your credit score. I used to have federal loans in the 5 percentile but they changed about the time that the first wave of ARM mortgage loans began to default. The federal government changed the normal rate to 6.8% just as I was consolidating.
Most if not all federal loans come from Direct Loans (Federal Govt) FSA which gives a variety of options from 10 to 25 years. If you intend to pay off your student loan quickly and have discipline, go ahead and do the extended option (25 years) since you can put more money on the principle. If you need discipline, choose 10 to 15 years. What you should be MOST concerned with is if you can get a subsidized or unsubsidized loan which determines if interest is accumulating while you are at school (which you don’t want).
On a side note, you have two years to reap the benefits of the Bush Tax Cuts with the Hope and Lifetime earning credit as well as student loan interest. You gain 1/5th of your tuition (even paid through loans) as a tax credit. They expire 2010 and with little hope of getting them extended.
