When you look at overall student loan interest rates, you see that they’re not radically different from what they were last week, and the week before, as the spring winds on…
About half a year after the colossal repayment deadline, borrowers are tackling these financial responsibilities as well as they can. So what are they looking at in terms of new debt?
Student Loan Interest Rates Right Now
You can find interest rates starting around 5% right now, going as high as 8% to 9% in general. Of course, you can find rates above that, too!
That’s not a radical departure.
“At the March 20, 2024, Federal Reserve meeting there were no changes to the benchmark interest rates for the fifth meeting in a row, leaving them at 5.25-5.5 percent,” wrote Heidi Rivera at Aol.com last month. And the lower end still stays around that mark.
So those, again, are not radically high or low markers, at least week to week, but they do have ramifications for your debt as a whole. And they are higher, in general, than in years before, since the Federal Reserve has finally started to raise base rates above practically zero. That will make it more difficult to finance anything – a house, a car, or a college tuition.
The Scope of Student Loan Debt and Interest Rates
Suppose for example you have $50,000 in debt, and your minimum payment is $250 a month. You’re already locked in for 200 months – a big chunk of your life – but if you look at a student loan calculator, with around eight percent, you’re also going to tack on more than 50 more months (or 4 to 5 years) of making those payments.
Now, suppose you’re in for around $150,000: with the same time frame, you’re looking at nearly $1000 a month in a similar scenario, and that long of a repayment plan. It seems daunting, to say the least. In many cases, it seems well-nigh impossible.
That’s why people are getting nervous and having trouble paying their bills. It’s just not affordable for many borrowers! When you have to pay 30% or more of your take-home pay on student loans, what’s left over for your budget, your extras, your retirement plan?
The Real Costs
This is particularly hard for people who used student loans to cover room and board, which is an additional amount of money. You’re not likely to get out of college with $50,000 in debt. It’s more likely to be double or triple that, which is, for many, where your monthly payments become unaffordable. Of course, that has to do with people’s incomes, but even higher wage earners often still find it hard to pay.
But even for people who only paid for tuition, the problem becomes considerable.
Reducing Your Student Loan Burden
Now, there are a ton of people online writing about how to lower your costs by making extra payments. That’s something that many cash-strapped borrowers, by the way, might scoff at. But also, there are far fewer people writing about how to take on bad actors in the industry.
At this blog, we offer a lot of resources for student loan borrowers. We try to help people understand the challenges of the industry and what they face when they try to pay back loans over time. Student loans are different from other categories of lending and that’s important to know as well. We want you, as a student and as a graduate, to have the tools that you need to succeed, and a good understanding of what you’re up against in repaying student debt. Take a look and get involved!
