Sunday, June 21, 2009

High Interest Private Loans for Students

I always have problems watching PBS when they discuss loans because I always thought it to be unbelievably stupid for anyone to get a loan more than 8 percent. It's always strange that people keep balances on their credit card at 18% till I wised up about bankruptcy. A light bulb went up on my head and I was like I get it now.

However NOW on PBS was doing a story on High Interest Student Loans. How student loans are not protected by bankruptcy and a person's interest caused their loan to be multiplied 5 times. Fortunately my parents thought me well because when I was in college doing loans like the federal loans (stafford). My memory might be bad because it was 8 percent back then because they did not have fixed rates. My loan rate was a a few percent of the prime rate so it was not cheap by any means. The current rate for stafford loan is much cheaper than what I was had to pay after college.

Either way I thought it was absurd there is no law in the books to prevent a student loan from doubling the original loan or at least tripling because these are educational loans. Maybe it's the socialist in me but education is far too important to be destroyed by it in the form of debt.

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