Does anyone out there think that we will see any kind of decrease in Stafford Loan Interest Rates? It seems a little silly to be borrowing money at 6.8% right now, but that is what this "free market" government has set us up for.

I am a medical student, so I will be borrowing approximately $200k before it is all over. Like many, I was shocked when the government decided to lock rates instead of letting the markets work, but I guess that is what you get when your government is owned by lobbyists.

I'm just hoping that the rates will be lowered, but I'm guessing that they will stay at 6.8%.

Link

Summary:
If this bill is passed by both the House and the Senate, interest rates on the subsidized Stafford will be cut from 6.8% to 3.4% beginning this July. These rate cuts will be phased in over the course of five years. So, this year, the interest rate will be cut from 6.8 percent to 6.12 percent.

In 2008 the rate will go from 6.12 to 5.44%. These small cuts will continue until 2011 when the rate will go from 4.08 percent to 3.4%. So borrowers who take out subsidized Stafford loans starting in July 2011 will benefit from these cuts the most.

P9142 said:
Unfortunately this bill doesn't help out medical students much at all (I know, boohoo why do people making $300k a year need help with loans.)

Because they have to go to school for 12 years after high school, accruing interest the entire time (unless they are a minority or extremely poor) and then make $150k instead of the imaginary $300k number you produced and are $500k in debt.

From the article is seems only new loans will receive those rates. I wouldn't think it would affect those who are already locked in. Hopefully I'm wrong because even though I'm <5%, I'd certainly love to be <4%

P9142 said:yanks0114 said:Link

Summary:
If this bill is passed by both the House and the Senate, interest rates on the subsidized Stafford will be cut from 6.8% to 3.4% beginning this July. These rate cuts will be phased in over the course of five years. So, this year, the interest rate will be cut from 6.8 percent to 6.12 percent.

In 2008 the rate will go from 6.12 to 5.44%. These small cuts will continue until 2011 when the rate will go from 4.08 percent to 3.4%. So borrowers who take out subsidized Stafford loans starting in July 2011 will benefit from these cuts the most.

Unfortunately this bill doesn't help out medical students much at all (I know, boohoo why do people making $300k a year need help with loans.) Anyways this bill only works for subsidized Staffords which is a tiny fraction of what we borrow. Most of our loans are unsubsidized. I don't understand why they won't just let the market set the rates.

Between 300-500K in loans, and insurance companies and politicians trying to nickel and dime us to death they wonder why no one wants to go into primary care!

All in all this proposed rate cut for "subsidized stafford" loans is a pathetic attempt at looking like you are doing something without doing anything.

1) The subsidized loans are at 0% interest until 6 months after you graduate, so this does nothing to change anything while you are in school. ($8500 per year for grads)

2) The bulk of your loans are unsubsizded ($12,000) a year for grads and are charging you 6.8% interest WHILE you are in school and this rate will not be reduced ever with this legislation. I don't think the crappy grad plus loan is changing rates either (still at 7.9% with 4% origination fees).

3) When you graduate, only the smaller portion of your total loans (unsubsidized only) will be a lower rate. However, this lower rate is not applied retroactively, only to new loans; so if you've already graduated with subsidized staffords at 6.8%, you will not benefit at all.

4) To add insult to injury, once you do slave yourself through graduate school, get into 100's of thousands of debt, the government won't even let you deduct your student loan interest from your taxes b/c you make over $55k or so. This is ridiculous. Do they really think grad students would get themselves in 300K of debt for a job that will pay under $55k?

It sounds to me like this interest rate structure is discouraging upper education, and is completely BS. I've said it before, but I think it is ridiculous that I could get a crappy Ford for 1.9% interest for life, but I have to pay 6.8% interest on my law degree. Then again, my law degree won't start to rust after 7 years.

yanks0114 said:Link

Summary:
If this bill is passed by both the House and the Senate, interest rates on the subsidized Stafford will be cut from 6.8% to 3.4% beginning this July. These rate cuts will be phased in over the course of five years. So, this year, the interest rate will be cut from 6.8 percent to 6.12 percent.

In 2008 the rate will go from 6.12 to 5.44%. These small cuts will continue until 2011 when the rate will go from 4.08 percent to 3.4%. So borrowers who take out subsidized Stafford loans starting in July 2011 will benefit from these cuts the most.

This bill won't effect the OP. The stafford subsidized rate cuts are only for undergraduate students. OP is a medical student.

Source
" Title II - Student Loan Benefits, Terms, and Conditions
Section 201 -
Phases-in cuts in the interest rate charged undergraduate student borrowers under the Federal Family Education Loan (FFEL) and Direct Loan (DL) programs, thereby reducing such rate from 6.8% in July 2006 to 3.4% in July 2011. "

It is odd that graduate/professional students have to pay x2 current rates.

madcowdisease said:MikeR397 said:

2) The bulk of your loans are unsubsizded ($12,000) a year for grads and are charging you 6.8% interest WHILE you are in school and this rate will not be reduced ever with this legislation. I don't think the crappy grad plus loan is changing rates either (still at 7.9% with 4% origination fees).

GradPLUS is 8.5%.

I'm finishing my first year of graduate school with roughly $40,000 in debt. And the worst part is, I'm only getting started...

Ah, the sacrifices we make for education.Grad Plus is an atrocious rate. Stafford is reasonable, sorta, but Grad Plus is out of control.

MikeR397 said:6.8% is terrible when the fed funds rate is surely headed to 3%, if not lower. If people can refinance thier mortgages, why can't we refinanace our student loans? Consolidation won't really do anything if all your loans are at 6.8% to begin with, nor will it help much if most of your loans are 6.8% while only a little bit is ~4%. It is a weighted average calculation.

The main problem with getting anything done is that the loan companies are lobbying juggernauts. Furthermore, Congress can pass small do nothing bills like the one quoted above, and the lemmings will think that they are doing something to help students out because this issue is complicated by unsub/sub. Thankfully, I go to a state school so I don't have to deal with GradPLUS, or I would be even more pissed off. To all of those who are going to $70k/year private medical schools, do you have any plans on ways to lower your rates somehow after graduation, or are you just planning on saying, "Thank you sir may I have another?"

I'm kind of unsure how this may pertain to my situation. I graduated last June and have only Stafford loans. I chose not to consolidate because the rates were no better than if I left them alone and I felt like the rates would be coming down in the future anyways. What I am not sure of is since I am now in repayment - does this legislation about rates coming down impact my rates or am I stuck at the 6.8% that I was at. I've searched online for a while and have not really found anything useful to help answer this question.