Read the Fineprint
Posted by Liset Villalta on Apr 1, 2007 - 5:12:00 PM
School loans are the type of money that students don’t really think about until they graduate. Loans are a blessing in many ways, but are a curse in others. Having recently graduated from college, I never imagined that I would be so stressed out about paying back my loans or that I would get many calls from lenders trying to consolidate my loan. I still remember going down to the Financial Aid department, asking for monetary help to buy my books. The money came as quickly as I asked for it. I had no idea what I was in for. Five years later, I graduated and was in my grace period with the option to consolidate. I had six months before I began repayment. Living the busy life of a girl right out of college, the deadline to lock in my grace period rates vanished from my memory. By the time I called the people at Direct Loans, I was no longer eligible for my low rate. I now had a loan with a rate of 7.1%. Variable rates are rates that change as the government rates change. A fixed rate means that the interest stays at the rate in which you received it. When I signed the loan papers, I had a 2.3% variable rate. Since then, the rate has gone up to 7% and forecasted to continue to rise. This rate is determined by the 91 Day T-Bill Rate. I researched many loan companies looking for one who would offer me a livable rate. Companies like Sallie Mae and Citibank offer you a 1% drop after 36 months of on-time payments and .25% drop for signing up for direct debit. Most of the other lenders were similar to this. You can pay $200 to $300 dollars a month for 25 years. At this rate, you will end up paying double what you borrowed. The most valuable lesson I learned coming out of college was that reading the fine print will save you thousands of dollars.
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