If you’re someone who is paying off a student loan, added interest is a terrible thing. They make the things we buy with credit more expensive. Of course, the banks love it. And when the rates increase, it’s hardly noticeable. At first.
You may not realize when the rates increase. It happens slowly, but before you realize it, the rates have doubled. The same thing happened the James Park, a 42-year-old scientist.
Paying on his $38,000 student loan, Park rarely noticed anything different. His loan increased monthly in fairly small increments. After three years had passed, he saw that the overall interest doubled. He started out paying 2.4% and recently found it was 4.3%.
Tackling the Student Loan Problem
All over the country, people are suffering under the heavy burden of their student loans. While the current economic climate is improving, it allows for interest rates to soar. When times are bad, the government can lower the rates to help people get by. They even offer student loan forgiveness to those who qualify.
The last thing anyone wants to do is pay more money over the life of their student loans. If you’re struggling, there are several options at your disposal. The first is having a firm understanding of what your interest rate does and why you have it. Only then can you go through the process of fixing it.
Understanding Your Interest Rate
You might think that the federal government is typically in charge of the student loan rate, but that’s not always the case. If you’ve received a private student loan, it most likely comes from a rate that is tied to something called Libor. Libor refers to the London Interbank Offered Rate. As the rates go up or down, that’s typically what most students receive that year.
See also: http://financialhelpers.com/student-loan-debt-is-hurting-the-economy/
For this reason, students receiving a loan this year will have a higher rate than if they got one last year, and so on. There are other variables as well, such as your credit score, history, and whether you have a co-signer.
The problem is, most college students get a student loan with zero credit to their name. Rates are often high and take as long as a decade to pay back. This only adds fuel to the epidemic already raging when interest rates climb higher.
How to Fix the Student Loan Problem
One of the first things you should do if dealing with student debt is calling Financial Helpers. Our team of experts handles this type of situation every single day. The government offers several student loan forgiveness programs for people who qualify. Most borrowers have little knowledge of their options, so calling the number below is important to find out.
Because your rate is often tied into your credit score, that gives you some options as well. When Park first got his student loan, he had little income and no credit. Once he graduated and found employment, made on-time payments, his score improved. Park was able to refinance his loan and get a lower, fixed rate.
A fixed rate means you’ll pay that single rate, no matter how the interest changes. Refinancing your loan can help you get a much better rate. If your credit score improved, that means you’re more trustworthy to a creditor. That equals to lower overall payments.
Student loan forgiveness, refinancing, and getting a fixed rate all possible. You don’t need to suffer any longer. Call Financial Helpers today to see your options.
