The NYT shows the results of 6 college student’s applications for loans. Want to go to NYU with a G.P.A. of 3.75 and a FICO of 652? That’ll be as high as 13.25%, please. [NYT]
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Welcome to my life of repayment. I should also note that its nothing short of impossible to find a student loan or refi at a static rate. Most of these loans now feature pre-payment penalties too. 9% of my monthly overpayment gets tacked back on…perpetual debt is a great trap.
@hustler: huh? it’s my understanding that pre-payment penalities on education loans are prohibited. source: my ed loan consolidation company.
@forever_knight: This only applies to federal loans. Most private loans do not charge this, until you request the first deferment and subsequently agree to whatever options you must take.
None of these loans or rejections seemed to be out-of-order. The yale student with a 750 FICO deserves a loan at < 10%. Clearly he was able to plan for his future and build his credit score.
Theose students applying with <600 FICOs should consider themselves lucky to get any loan (without a cosigner). 10-15%+ APR is not unrealistic for a sub-prime borrower or one with little credit history.
Does nobody find it ridiculous that people have to borrow so much money and at such high interest rates to get an education? What does it say about our values as a society? I think that it’s not a good indicator of how we care for our fellow citizens.
These rates do seem kinda ridiculous… then again, I’m from Canada… I got my first year’s loan at 5.5% with a cosigner at one of the private banks. I didn’t qualify for federal loans which have even lower rates… but with rate hikes it’s still only at 7.75 now.
Not sure how it’d work, but maybe you should consider applying for loans from Canadian banks… now that the dollar’s just about at par you could probably get away with a bargain on rates.
I noted that the three “major” colleges applied to (Merrimack, Yale and NYU) were where the student’s loan approved, but the “other” colleges (massage school, online college, public school in the South) all saw their students denied.
It’s likely that lenders use the matriculating college as an indicator of how likely the loan is to be paid back…and you’ll make more money with a diploma from Yale, NYU, or a good private school like the ‘Mack than you will with your sheepskin from the Utah School of Massage Therapy.
Perhaps this is the first lesson in finance for the college bound?