FinanceSpectrum.com Advises Family on Student Loan Basics after July 1st Hike
New York, NY (PRWEB) July 02, 2013 -- FinanceSpectrum.com financial advice website today issued their criticism of the lack of action by Congress and the Obama administration in reaching a plan to keep new Stafford loan interest rates from doubling. FinanceSpectrum.com offered guidance to those who will be taking out new loans on ways to hopefully reduce the amount of loans needed.
According to Mallory Sofastaii in a July 1st PBS NewsHour article, Monday July 1st is the deadline for a massive increase in new Stafford student loan interest rates. Sofastaii reported that Congress did not take action to prevent the hike in rates, causing them to double virtually overnight from 3.4% to 6.8% today. Sofastaii stated that Congress faced the same issue last summer and chose to postpone the increase for a year, but this year lawmakers left town without agreeing upon any long-term solution.
In a March 26th Huffington Post article, Jennifer De Paul said that there are reports of parents who opted to take out life insurance policies on their college-grad children due to the amount of student loan debt the kids owed. The parents co-signed on the loans meaning they would be responsible for the remainder of the loan were anything to ever happen to their son or daughter. FinanceSpectrum.com is quoted as saying, “I am well versed on things like family and senior life insurance but purchasing life insurance for college goers solely because of loans is a new one for me.”
FinanceSpectrum.com expressed disappointment in the lack of action to avoid the student loan interest hikes. FinanceSpectrum.com is quoted as saying, “The point of subsidized Stafford loans is that they are supposed to be low-interest and given to students who have a financial need. An interest rate of 6.8% is hardly considered ‘low.’ I can’t help but feel that Congress is okay with having these college students foot the bill for a federal deficit. My prediction is that a good deal of these kids will end up defaulting on their loans down the road, and that’s just bad news for all of us. I wish Congress and the Obama administration would give this more thought and attention and come to an agreement for a plan to fix the situation.”
FinanceSpectrum.com offered advice to families of college students on how to avoid taking out so much in loans. FinanceSpectrum.com suggested that college students could attend a community college for the first year or two, and then transfer to a state or university school to finish up their degree and get the seal of the “name” school on their diploma. Another recommendation of theirs was not to take out the full-approved loan amount. FinanceSpectrum.com is quoted as saying, “Many times, families or students will get approved for more money than they asked to borrow. And many times, these families will think that the cushion of extra money would be nice, and accept the greater amount. If you can, it’s wise to avoid this. It’s only more money for your kids to pay back in the long run, with more interest. If these students can hold down a job or even two during the summer to save up for the school year, I think it will be a much better outcome than going into debt for pocket money.”
The above-mentioned PBS article stated that on July 10th the Senate will vote on a proposal that would extend the original interest rate, at 3.4%, for one more year until July of 2014.
About FinanceSpectrum.com:
FinanceSpectrum.com is an online financial advice column that provides tips, recommendations, and financial education to consumers of all walks of life. FinanceSpectrum.com reports on a vast range of topics including debt, budgeting, investing, student loans, and saving for retirement.
http://financespectrum.com, Finance Spectrum, 3479030160, [email protected]
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