Federal Student Loan interest rates projected to spike in July and continue to rise until 2018-2019

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mcrobbit

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Link to related article: http://www.vox.com/2014/4/15/5614304/heres-why-your-student-loans-are-about-to-get-more-expensive

Actual CBO report (The last page shows interest rate projections per year): http://www.cbo.gov/sites/default/files/cbofiles/attachments/44198-2014-04-StudentLoan.pdf

It seems like we're victims of multiple bait and switch student loan reforms by the federal government.

I'm sick of students being treated like a piggy bank for Washington.

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Feels like stocks... They keep rising, and medical students keep on taking them out, than one day salaries of physicians and surgeons will plummet and we'll be stuck with humongous amounts of debt. Capitalism at its finest.. Student loan interest rates should be stabilized by the government.
 
This is just the beginning. As long as people keep applying, interest on loans will continue to jack up. Those of you weighing multiple acceptances right now, do the practical thing and go wherever offers you the most financial aid. Prestige is great, but you can't use it to put a down payment on a home.
 
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Link to related article: http://www.vox.com/2014/4/15/5614304/heres-why-your-student-loans-are-about-to-get-more-expensive

Actual CBO report (The last page shows interest rate projections per year): http://www.cbo.gov/sites/default/files/cbofiles/attachments/44198-2014-04-StudentLoan.pdf

It seems like we're victims of multiple bait and switch student loan reforms by the federal government.

I'm sick of being treated like a piggy bank for Washington's wastefulness.

We knew this was coming ever since the new student loan bill was passed that tied the interest rate to the 10-year treasury interest rate. At least next year it will still be cheaper to borrow than before the bill was passed.
 
This is just the beginning. As long as people keep applying, interest on loans will continue to jack up. Those of you weighing multiple acceptances right now, do the practical thing and go wherever offers you the most financial aid. Prestige is great, but you can't use it to put a down payment on a home.

You realize student loan interest rate has nothing to do with how many people applying for it right? It's tied to treasury yield, which is tied to mostly the fed fund rate and whether the market is in bull phase or bear phase.
 
We knew this was coming ever since the new student loan bill was passed that tied the interest rate to the 10-year treasury interest rate. At least next year it will still be cheaper to borrow than before the bill was passed.

Next year will still be below 6.8% for grad/professional staffords and 7.8% for Grad Plus (so still cheaper than what the bill was supposed to prevent, which is fine). Every year after that will be higher though, and considerably so. For a bill that was supposed to prevent higher interest rates, it was remarkably short sighted.

I don't think there will actually be real relief from the increases until 2016-2017, when undergraduate interest rates reach their summer 2013 levels. That means that graduate/professional students will have to experience a couple years of unfairly high (I think the pre-summer 2013 6.8 and 7.8% fixed interest rate is high enough to counteract risk, and tbh I think it should be lower) interest rates until the federal government notices there is a problem with their formula.
 
Next year will still be below 6.8% for grad/professional staffords and 7.8% for Grad Plus (so still cheaper than what the bill was supposed to prevent, which is fine). Every year after that will be higher though, and considerably so. For a bill that was supposed to prevent higher interest rates, it was remarkably short sighted.

I don't think there will actually be real relief from the increases until 2016-2017, when undergraduate interest rates reach their summer 2013 levels. That means that graduate/professional students will have to experience a couple years of unfairly high (I think the pre-summer 2013 6.8 and 7.8% fixed interest rate is high enough to counteract risk, and tbh I think it should be lower) interest rates until the federal government notices there is a problem with their formula.

Well... no private bank can offer anything better either. A bank can either stash their money in 10 year note and get whatever the rate with virtually no risk, or loan it to us for 3.6% more maximum (since anything higher they will get beat out by the feds), we're not a great investment for them lol.

EDIT: I do think it's disgusting that fed gov is trying to make money off of us.
 
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They continue to do this and all the smart people will not pursue medicine and go for more lucrative careers. The end result would be mediocre doctors -> bad healthcare for patients
 
This may work in favor of a proposal in the works with the AMA to establish low-rate private loans for medical students. If that option is viable, a lot of money could be saved through private loans at a low-rate. (The idea is that medical students are highly unlikely to default on student loan debt as we have near-100% completion and employment rates, making us very low-risk and making the outrageous student loan interest rates, well, outrageous -- for medical students, anyway.)
 
They continue to do this and all the smart people will not pursue medicine and go for more lucrative careers. The end result would be mediocre doctors -> bad healthcare for patients

With the number of applications increasing each year and the applicant pool being more competitive than ever, I really doubt that.

Besides, what career out there is lucrative and attainable by undergrads?
 
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