| Student
loan debt is soaring!
The reason is simple. Just
sign the loan documents and you're caught in what this author calls the "student
loan trap."
Accepting one of those easy-to-get Stafford Loans
can be your worst nightmare.
Every
Stafford has a 3 - 4% origination fee
tacked onto your student loan
just for the privilege of borrowing. That's on top of
the finance charges.
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!
There are two kinds of Stafford Loans: Subsidized and Unsubsidized. A subsidized loan means that you qualified for Uncle Sam to pay the interest on the loan until you graduate.
UPDATE: The figures in the example below are based on unsubsidized" Stafford Loans, which means you either have to pay interest once a quarter or allow it to accrue and be added to your student loan when you graduate!
Stafford and PLUS interest rates change
every July 1st.
TOTAL
INTEREST & FEES FOR UNSUBSIDIZED
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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