CHARLOTTE. Beware if you’re going to go to college this fall – federal student loan rates have just gone up by about a full percent. It may not sound like a big deal, but over the course of the loan term it can reach several thousand.
Below, Action 9’s Jason Stoogenke explains how much you will pay and what anyone else with student debt still needs to know.
HOW MUCH DOES THE FEDERAL STUDENT LOAN RATE INCREASE?
Rates rose from 2.75% to 3.73% for students and from 5.3% to 6.28% for Direct PLUS loans for graduate students and parents.
1% REALLY A LOT?
The interest rates on student loans were really low. So, historically speaking, it is not that frustrating, but 1% can accumulate over the life of the loan.
HOW MUCH 1% IS REALLY?
According to the federal student help site, the maximum amount a student can borrow each year is $ 12,500. So if four years of school costs $ 50,000 – let’s say you have 10 years to recoup that money. If it’s 1% higher, you’re talking about $ 4,000 more (or about $ 30 per month).
HOW CAN YOU OFFSET IT?
Mark Henry of Alloy Wealth Ballantyne advises calculating all college tuition in advance, not just tuition and living expenses. Don’t forget about books, pay, transportation, etc. He says you might even consider a local college for a year or two to get you out of your mainstream for less money.
“You really have to go into this with your eyes wide open and ask, ‘Can we do this, how much debt am I going to take and how am I going to pay off the debt? “Because you don’t want to make the problem worse, drop out of school, finally get your first job and all that, and you have so much debt that you can’t even enjoy what you’ve worked so hard for,” he said. Jason Stoogenke, act 9.
YOU SAID FEDERAL, RIGHT?
Yes. None of this applies to private student loans.
WHAT IF I ALREADY HAVE A CREDIT?
This only applies to new borrowers. If you already have a loan at a certain interest rate, don’t worry, it doesn’t change anything.
TALKING ABOUT ALREADY HAVING A LOAN, WHAT IF I PREFER PANDEMIC DEFINITION?
The government has said that you can defer your student loan payments without any fines until September 30th.
(SEE BELOW: How the Incentive Package Affects Federal Student Loans)
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