As a current college student with student loans, this article in today’s New York Times (front page, left column in the paper edition) bout the private lenders’ lobbying efforts caught my eye and deserves a post.
Quotes like the following from Sallie Mae spokesman that assert the private companies are the better option (than a government coordinated program) for students to receive college loans are what triggered me to write this. “The private sector program has better prices, better product selection, better service, and better technology” (Glatner 2007).
Are you kidding me ?! At least for me, flat out, the Direct Loan and Perkins Program (both run indirectly by the US Dept. of Education) is the better option for me than my private loans. I have both the Perkins and Direct Loans, with those rates (If I remember correctly) are at 6.75%. Citibank (which was one of the companies suggested by my small liberal arts college), has me at a 9.25% rate for one of my loans (for freshman year) and for this (sophomore) year, I looked around and found a better deal, MI-Loan, with 8.00% a year. All of these rates are fixed, if I remember correctly.
Yes, a better deal is not solely determined by the interest rates, but there’s a couple other things that I remember about the govt v. private loans. With the government loans, any interest that would have compounded while I was in school is gone, f I make my first 12[?] payments on time. For the Citibank program, there is an incentive for making your first [x amount] of payments on time, I remember it wasn’t as good as the govt loan one. Plus, if I were go into the Peace Corps or Teach for America [probably wouldn’t], some of the govt loans are repaid.
If this article is indicative of anything, the lobbyists’ ability to influence the student loan structure and inaction from lawmakers and colleges leaves me to wonder: ‘what am I, a college student, is supposed to do ?!’
If you think there’s other options for me and/or better private loan programs out there, please call me ignorant and point them out to me. I would love any advice and I thank you in advance for it.
Signing off, to do homework and enjoy spring weather.
Jonathan D. Glater and Karen W. Arenson, “Lenders Sought Edge Against U.S. in Student Loans,” The New York Times, East Coast Edition, A1, A21, April 15, 2007, http://www.nytimes.com/2007/04/15/education/15direct.html (accessed April 15, 2007).