I was fortunate enough to finish my undergraduate degree without any student loan debt. That could have saved me from the hassles of getting cash advance for paying student loan. However, I then made the unfortunate decision to go to law school. Except at the time it was not an unfortunate decision. It was 2007, new lawyers were pulling down $160,000 per year and law school was most definitely in vogue. It was the golden ticket. Add to that the fact that I was going to have my law school paid for by my generous parents. So, I turned down a 90% scholarship at an unranked law school to go to the best school that accepted me.
Then, in 2008 the rug was pulled out from under me. (And everyone else). See, I had told myself and pretty much everyone I’d never have gone to law school if I had to pay for it myself. So perhaps I was naive and spoiled, but nonetheless I understood that I didn’t want student loans. Unfortunately, by the time I had to sign up for the loans I was halfway through law school. I thought about dropping out and maybe going back when I could pay for it. But that would be a real easy conversation in an interview in early 2009. So I bit the bullet and hoped it would all work out fine.
I had a job when I graduated at a small firm that I worked at during law school. I have since moved on to a new job in private wealth management. I love the fact that I have a great work-life balance and don’t have to bill hours. But I am a little upset that I don’t need the law degree for what I do. Anyway, my real gripe is not with the loans, but the interest rate. I am actually in pretty good financial shape for someone with just under $76,000 in student loans. I am looking to buy a house or condo. And that’s where my issue with student loans emerges.
You see, I was pre-qualified for a mortgage for a Fannie Mae HomePath property of approximately $250,000 with as little as 3% down and no mortgage insurance for 40 (not 30) years at a fixed rate of 3.5%. 40 year money for 3.5%! If you know anything about the history of interest rates, you know that’s incredible. I just checked the 30 year US Treasury Yield and it was 3.16%. So basically, I can get a mortgage for very close to what the United States Government can borrow at.
But the student loans? Can I refinance them at a lower rate? No. Can I replace the federal student loans with a private one at a lower rate? No. Can I consolidate them and lower the rate? No. I am stuck at a weighted average of roughly 7.6%. I had an 800+ credit score when I applied for the mortgage and I can’t do better than 7.6% on the student loans. I’ve done everything right financially and I am stuck with a high rate. I can only guess that the government relies on people like me-people who will pay to keep their credit worthiness up- to subsidize all those that will not be able to pay. That’s unfair and wrong. Every other loan I’ve ever heard of can be refinanced. Even if there were a 10,000 penalty, I’d take that refinance if I could get a market rate.