NY times: Private Loans Deepen a Crisis in Student Loan Debt - Welcome to our world…

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The new york times article published on 6/10/2007 written by Diana Jean Schemo discusses the crisis of private loans on student debt load. The biggest issue that this article brings up is what happens to the students that do not pay attention to the importance of understanding loans. Some of these students get shafted at interest on loans that can reach 20 percent! This is not much better than a credit card.

Lesson to be learned? First federal loans are capped at 8.25 percent so you don’t need to worry too much that stafford loans will be rediculously high if you don’t consolidate. However, if your loans are variable and you think rates are going to go up, then it makes sense to do so. The big issue thus as it applies to you and I is the private loans. Almost half of the 13 thousand dollars that I have in accrued interest is from private loans. This is because the interest rate for private loans for me run around 8%. This is a great deal if you compare it to the rates of the college students in the article.

If you are going to pay off your loans, tackle the private loans first.

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