Loan management with current rates

[AlbertConstable]

As you probably know, the fed interest rate is approaching 0%. While the rate that a consumer can actually borrow at is a good deal higher, I read about some people refinancing their mortgages at 4.5% or so.

The majority of my debt is in the form of subsidized or unsubsidized stafford loans and mostly post-2006 (fixed at 6.8% or thereabouts). I'll be graduating in May 2009.

Is there any way to refinance to take advantage of the historically low interest rates?

I'm going to speak with my FinAid office soon but wanted to get some of your ideas as well.

Thanks.

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[Habeed]

I don't see how. Most loans are backed by collateral : even mortgages are backed by the house itself. Non collateralized loans are based on credit and employment history, and on paper you won't have enough income to support a large loan for $100k or more. Plus, with no collateral the banks will have to charge a MUCH higher interest rate than even for mortgages, because this is a riskier loan.

Private student loans are different, but they can only be made on upcoming school expenses, not past ones.

 

[AlbertConstable]

That's what I suspected but I figured there might be a chance to benefit from the new rates. Thanks for the reply.

If anyone has any other thoughts on the topic, I'd be happy to hear about it.

 

[abbaroodle]

I just posted a reply on another, similar thread. But you should definately contact your senator and congressional reps. If we dont let those who make the rules know how this effects us and our future patients, we can never expect to see any change in the future.

Also, I urge you to contact Senators Kennedy and Brown and Representative George Miller who have worked hard to keep higher eduction accessible with stafford loans and do their best to fight for students. Obviously I wish loans would be cheaper and replaced with scholarship, but e-mailing those who mke the decisions is the best way to have any glimmer of hope for better loan terms.

 

[econdr]

If you are talking about getting an adjustable rate loan to take advantage of the currently low rates in adjustables, I'd strongly urge you not to. In 4 years the fed funds rate and rates on mortgages will be much much higher. Once we get out of this recession, there will probably be runaway inflation.

As most economists put it, in 2009, the era of low rates is over. So fixed at 6.8% is actually a really good deal, imo.