Student Loans…still one of the best deals out there.
Ours is a culture that believes in debt. Not that debt is fun. It’s actually a drag. But if there truly is such a thing as “good debt”, perhaps student loans fall into that category. Student loans are the vehicles that drive us toward our academic goals of becoming doctors, lawyers, pharmacists and beauticians.
But some hold negative views of student loans. They attribute student loan terms as being predatory, unfair and expensive. Student loans, particularly in this strained financial climate, are mixed in with the dregs of sub-prime mortgages and or usurious credit card terms. For example, I recently applied for a department store credit card, after the clerk offered me an additional 10% off the earrings I was buying for my wife. The catch was I had to open a store charge card. I completed the application, got my discount, and felt pretty okay about my negotiation savvy: My plan was to pay off the balance once I got the first statement.
I had a chance to glance over the written terms of the pending charge account a copy of which the sales clerk graciously handed me, along with my new earrings purchase. The interest rate was to be a whopping 22% and would go higher if I ever became delinquent. Days later when I tried to make an inquiry by phone, the number that was listed on the paperwork was constantly busy. It was a brief but unnerving experience up until the day I paid off that card.
Student loans on the other hand are a different animal. The government authorizes at least one agency in about every state in the union to act as a sort of overseer for the federal loan program. They’re called Guaranty Agencies. Unlike credit card companies, companies known as loan servicers keep track of student loan during and after enrollment, these companies send important notices months in advance as to when loan payments are due, and advise students of options which allow loan payments to deferred or forborne in the event financial difficulties arise.
Without question, one size does not fit all when it comes to student loan terms, many terms are outrageous, particularly, private student loan products, which often bridge the gap between what the government provides in funding and what a student may still need to finance her semester at Yogi Bear University.
So when it comes to debt, consumers: beware, before you sign on any dotted line. There are good deals out there, student loans included.