If it’s 0% interest that’s paid by the government?
Presumably you mean subsidized student loans. Why do you think they are looked down upon?
People always told me if you can avoid any type of debt do so. And I heard that the payment process is a great hassle with the government as oppose to private loans.
If you can avoid debt, you should. Federal or private. I’m not sure why they feel federal loans are more of a hassle than private though. I’ve never heard that one.
Also, I just want to clarify that that 0% on subsidized loans is only while you’re in school.
The repayment process for federal student loans is simple. You just send your payment in every month. Who told you they’re a hassle and what do they think is so difficult about them?
There is a limit to the amount of federally funded student loans you can take as a student…it’s $27,000 in total for four years of undergrad.
In terms of repayment, the process is very simple…plus there are a variety of repayment options that are not available at all for private loans (e.g. income based repayment). In addition, you don’t pay on these federally funded loans until 6 months after you leave college. Often, private loans do not have this grace period.
Thank you guys, and my old HS counselor told me this, due to different collection agencies who try to collect the debt from you.
Collection agencies? You pay your loan every month, you never deal with a collection agency. It couldn’t be more straightforward.
Private lenders will use collection agencies too, if you don’t make your loan payments.
If you need to borrow for college, federal loans are a good way to go. There are flexible repayment terms tied to your income, so that when you are first starting out in your career, you can opt for a lower payment to allow you to actually be able to pay your payment amount. It’s always best to pay as much as you can, as quickly as you can, to pay the least amount in the long term. However, having flexibility when you need it is a good thing. Keeping borrowing to a minimum is always smart, but federal loans can make college possible for many who would otherwise not be able to afford it.
Why are they looked down on? Because you have to pay them back. Depending on your early post college jobs, you may not have that extra $. And while you can lower the payment plan, interest continues to grow.
If you want an eye opener, find one of the online calculators that tells you, at the end of your ten years, how much interest you’ve paid. Mind blowing. You have to be very careful about loans.
Private loans need to be paid back too. And the repayment plans are far less flexible than the federally funded loan repayment plans.
With respect to college students considering student loans, it does not look like government loans are looked down upon.
However, in the political arena, some politicians blame government loans for the rising cost of college. Seems exaggerated to say that the $5,500 to $7,500 federal direct loan is the reason that some private colleges cost $70,000 per year, though.
Parent Plus loans maybe. Still a government loan, but only limited by the COA.
Parent Plus loans are not student loans…they are parent loans.
The argument about student loans allowing spending on higher cost education makes more sense for professional school (e.g. medical, dental, law), especially in situations like medical school where a “successful” applicant typically has one admission offer (take it or leave it, no possibility of choosing among multiple offers for the lower cost one).
I was replying to the comment about politicians believing that government loans are driving up the cost of college. Parent plus loans are government loans and I totally believe they are contributing the the rising cost.