Loan Rates--Going Up or Down?

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
Glimmer1991

Glimmer1991

Full Member
10+ Year Member
Joined
May 5, 2012
Messages
3,494
Reaction score
1,308
Points
5,266
Location
NC
  1. Dental Student
Members do not see this ad.
I know this is just speculation... but, for the people who know more about finances than me--are the Direct and Direct PLUS loan interest rates expected to go up, down, or stay basically the same? Or do we not really know?

For this who might not be aware: "In accordance with Bipartisan Student Loan Certainty Act of 2013, for new loans disbursed on/after July 1, 2013, the method for annually determining the fixed interest rate will be the lesser of a rate based on the high yield of the 10-year Treasury note (“T-Bill”) auctioned at the final auction held prior to the June 1 preceding the July 1 of the year for which the rate will be effective, plus a statutory add-on... to be adjusted annually each July 1st."

I know we'll find out soon, but I'd at least like to know what to expect. Thanks! 🙂
 
*sigh*

As I suspected. Thank you!
 
At what point does a fixed-rate, private loan like this become a better option?

https://www.discover.com/student-loans/health-professions-loans.html

If the Direct Loans will be 6.64% next year and this Discover loan is 6.74%, there isn't much different to begin with. However, once you enter repayment, you can get a 0.25% interest rate decrease with Discover if you enroll in auto-payments. (You can also get a 1% cash reward applied toward your principal if you have good grades, which is kind of cute... Haha! 🙂 )
 
Last edited:
I'm not entirely sure why you are concerned considering your relatively low projected loan balance combined with dual income household (and FELS, had to look this up lol). You'd be able to pay off your loans EASILY within a few years.

As for private loans, you'd have to run the math on them and see if you come out ahead (IF you do, it won't be by much). I'm sure you know they aren't recommended due to the lack of similar benefits/options of federal Direct loans.

You can also get the interest rate reduction through direct debit on federal loans.
 
Last edited:
What about the variable rate discover, 3.25% ? i wonder much they changed in the last 10-15 years. I remember reading that someone here took a chance on them and it worked out since he payed them off in less than five years.
 
sjv said:
I'm not entirely sure why you are concerned considering your relatively low projected loan balance combined with dual income household (and FELS, had to look this up lol). You'd be able to pay off your loans EASILY within a few years.

As for private loans, you'd have to run the math on them and see if you come out ahead (IF you do, it won't be by much). I'm sure you know they aren't recommended due to the lack of similar benefits/options of federal Direct loans.

You can also get the interest rate reduction through direct debit on federal loans.
Click to expand...

I'm not terribly concerned for myself--just spreading the knowledge for everyone. 🙂

I didn't know you could get a rate deduction for the federal loan via direct debit. Cool. 👍
 
Faux said:
What about the variable rate discover, 3.25% ? i wonder much they changed in the last 10-15 years. I remember reading that someone here took a chance on them and it worked out since he payed them off in less than five years.
Click to expand...

Also a good question, especially for people who won't be taking out very much in loans and plan to get them paid off within 5 years after graduation. I'm not sure how risky a variable rate loan really is.
 
Glimmer1991 said:
Also a good question, especially for people who won't be taking out very much in loans and plan to get them paid off within 5 years after graduation. I'm not sure how risky a variable rate loan really is.
Click to expand...


Due to the 2008 recession, interest rates over the past 4 years have been historically low. If the economy improves, interest rates will most likely rise over time, making variable interest rate student loans less favorable when compared to fixed rate student loans. In the current economy, fixed rate student loans tend to have a higher interest rate, which means you might end up paying more interest over the long term

https://studentloanhero.com/featured/10-questions-to-ask-before-refinancing-your-student-loans/

Maybe go 50/50 in regards to loans? Couple of points in interest rate really adds up when we're talking about +100k in debt.
 
Last edited:
The only loan rates I'm worried about are practice loans.
 
Illfavor said:
The only loan rates I'm worried about are practice loans.
Click to expand...

You're more worried about the dischargable loans?

OP, for the average student taking out loans for med, dent, whatever, I wouldn't recommend private loans, regardless of how good the deal seems to be.
 
TheWeeIceMan said:
You're more worried about the dischargable loans?

OP, for the average student taking out loans for med, dent, whatever, I wouldn't recommend private loans, regardless of how good the deal seems to be.
Click to expand...
I'm more worried about starting a practice/buying a practice than paying back student loans.
 
For the year beginning in July, graduate Stafford loan rates will rise to 6.21 percent from 5.41 percent in 2013-2014. PLUS loans for graduate students or for parents paying their undergraduate children’s college costs will increase to 7.21 percent from 6.41 percent. Inflation in the U.S. rose at a 1.5 percent pace in the 12 months through March.

http://www.bloomberg.com/news/2014-...est-rates-rise-for-2014-2015-school-year.html
 
Theres no way I can take advantage of subsidized loans? I didn't even use them during undergrad.
 
Faux said:
Theres no way I can take advantage of subsidized loans? I didn't even use them during undergrad.
Click to expand...

Your school may award you the Health Professions Student Loan (HPSL) if funding is available and if you meet the criteria. Interest rate is 5% and subsidized while in school plus one year grace period.
 
sjv said:
For the year beginning in July, graduate Stafford loan rates will rise to 6.21 percent from 5.41 percent in 2013-2014. PLUS loans for graduate students or for parents paying their undergraduate children’s college costs will increase to 7.21 percent from 6.41 percent. Inflation in the U.S. rose at a 1.5 percent pace in the 12 months through March.

http://www.bloomberg.com/news/2014-...est-rates-rise-for-2014-2015-school-year.html
Click to expand...

so if i'm reading this right, and i'd like to think i am, for the 2014-2015 academic year, the vig on our loans will be 6.21%

is that what i'm reading?
 
Ferneezy said:
so if i'm reading this right, and i'd like to think i am, for the 2014-2015 academic year, the vig on our loans will be 6.21%

is that what i'm reading?
Click to expand...

Yes, the rate is tied to treasury note and the note went up this year so interest rates go up as a result.
 
sjv said:
Yes, the rate is tied to treasury note and the note went up this year so interest rates go up as a result.
Click to expand...

unsure-larry-david_zps9ab21851.gif
 
Basically, interest rates goes up when the economy is doing well and goes down when the economy stinks.

The last recession was 2008 and the DOW is at an all time high.

Anyone care to guess what's going to happen to the economy ;D? It's pretty obvious, what goes up, must come down..

TLDR: i predict interest rates going up and reaching a maximal point and then going straight down during the years 2014-2018

Source: Rose, Peter S. 1994. Money and Capital Markets, Irwin, Boston

Just for anyone skeptical of my financial analysis =)
 
Last edited:
ktran17 said:
Basically, interest rates goes up when the economy is doing well and goes down when the economy stinks.

The last recession was 2008 and the DOW is at an all time high.

Anyone care to guess what's going to happen to the economy ;D? It's pretty obvious, what goes up, must come down..

TLDR: i predict interest rates going up and reaching a maximal point and then going straight down during the years 2014-2018

Source: Rose, Peter S. 1994. Money and Capital Markets, Irwin, Boston

Just for anyone skeptical of my financial analysis =)
Click to expand...

You are the first person I've heard that thinks interest rates will go not just down, but straight down. Personally, I wouldn't call the economy good and I doubt that we will be seeing a decrease in interest rates anytime soon.

Edit: Just realized that you predict interest rates to go straight down in the exact years that you will be in dental school. I applaud the optimism.🙂
 
It's all artificial and cannot be predicted, unless you are the one pulling the strings. I do know that the rates can't go much lower than they were the last few years on 10 year treasury bonds.

Side note, I would never consider private loans over public at this point your career; unless you were saving 2.5%+ in interest. The biggest reason is that there are finally enough people up in arms about student loan debt that generous consolidation of public loans is a real possibility. That, and IBR😉
 
True, I might be a bit optimistic and my predictions are based on fundamental financial principles. There is a chance that it can go the other way because of artificial manipulations. Historically, the economy cycles every 4-7 years and I believe we are long overdue for a recession. During periods of recession, interest rates normally are lowered. However, I do acknowledge that student loans do not operate the same ways as traditional bank loans. So who knows =P!

The economy actually is pretty good relative to the bottom point of 2008.. (not good compared to historical economy peaks of the u.s though..)

Regardless, I already have investments to offset the interest rates of my student loans.

Just to clarify, I think for students in my year, we will average out to approximately 6.8%.

Here's what I see happening, the rates will jump during d1 and the market will crash soon after. Next, rates will be temporarily lowered because people will freak out and by the time we reach d4 the economy will start getting back in shape. By the time we leave dental school, it will average out to 6.8% (maybe a bit higher)..
 
Last edited:
We will all be starving dentists.
 
Starving dentists, starving physicians, starving airline pilots, starving nurses, starving lawyers, starving stock brokers (yeah, even they're complaining these days), to go along with the more traditional starving teachers, starving police officers, and starving fire fighters. I guess we'll just have to barter and trade at some point. 😉
 
You'd be able to pay off your loans EASILY within a few years.
5ce12.jpg
 
Greeeaaaaaaaat... but as we expected.
 
Well as long as our wealth continues to concentrate in the upper strata of incomes, I'm sure we'll all be just fine.
 
Illfavor said:
Well as long as our wealth continues to concentrate in the upper strata of incomes, I'm sure we'll all be just fine.
Click to expand...

'Cept what if you payin' 500k, doe?
 
I'm personally waiting for the student loan bubble to burst. Unfortunately it probably won't be in our time of schooling, but the effects of sky high debt will soon be felt. Pretty soon student loans won't be guaranteed to just anyone. If only that burst had already occurred...
 
ok, I'm really stupid, but what's the difference between the direct loan and parent loans? I looked it up but still really confused, is it on our parents, so if we happened to die, it will fall on them? Can someone please dumb it down for me?
 
FlossFloss said:
ok, I'm really stupid, but what's the difference between the direct loan and parent loans? I looked it up but still really confused, is it on our parents, so if we happened to die, it will fall on them? Can someone please dumb it down for me?
Click to expand...

Parent PLUS loans are for undergraduate students since the financial burden is on the parents to pay for undergraduate education. For any professional school, the financial burden is on you so you would receive Direct/Direct PLUS loans in your financial aid package.
 
You must log in or register to reply here.

Similar threads

S
Loan Repayment Simulator
Replies
12
Views
1K
SigmaFS
S
H
Pre-Dent: Loan Question
2
Replies
75
Views
6K
Mr.Smile12
Mr.Smile12
Pablo Sanchez
Loan Rates for 2024 Hit Highest Rate In Over A Decade
Replies
15
Views
3K
D1Bound
D1Bound
Mr.Smile12
Federal Loan Calculator spreadsheet
Replies
0
Views
830
Mr.Smile12
Mr.Smile12
MarkED20d
Masters or SMP?
Replies
5
Views
1K
macsak
M
Top Bottom