| Student
loan debt is soaring! The reason is simple. Just
sign for the loan and you're caught in what this author calls the "student
loan trap."
The
truth is, accepting one of those easy to get Stafford Loans
can be your worst nightmare.
Every
Stafford Loan has a three to four percent origination fee
deducted from the disbursement of your student loan funds,
just for the privilege of borrowing. That's on top of
the finance charges. A typical $10,000 Stafford Loan
can cost you an extra 400 bucks!
Students
continuing through graduate school may borrow up to $138,500.
Pharmacy, medical or Vet students can rack up as much as $189,125
in student loan debt. Once a three to four percent fee is
added to the top, you'll end up paying way more than you ever
borrowed.
Remember, it's
your financial future that's at stake!
The figures in the example below are based on a "subsidized"
Stafford Loan. If the loan is unsubsidized, the total cost
and payments will be even greater. Interest on unsubsidized
loans must be paid quarterly or added to the total cost of
the loan at graduation. Stafford and PLUS interest rates change
every July 1st.
TOTAL
INTEREST & FEES FOR SUBSIDIZED
STAFFORD
LOAN INCLUDING ORIGINATION FEES |
| Plan |
Loan |
Interest* |
Mo. Pmts. |
Actual Payback |
Percentile ‡ |
| 10 yr. |
$10,000 |
6.80% |
$115 |
$14,200 |
42% |
| 15 yr. |
$10,000 |
6.80% |
$89 |
$16,420 |
64% |
| 20 yr. |
$10,000 |
6.80% |
$76 |
$18,640 |
86% |
| 10 yr. |
$15,000 |
6.80% |
$173 |
$21,360 |
42% |
| 15 yr. |
$15,000 |
6.80% |
$134 |
$24,720 |
64% |
| 20 yr. |
$15,000 |
6.80% |
$114 |
$27,960 |
86% |
*
Rates change annually. Maximum allowable is 8.25% plus origination fee.
‡Payback and percentile figures rounded and includes 4% origination fee.
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