My son has huge student loans from law school, Direct Loan and Grad Plus. He went to school during that window of time between when students were allowed to consolidate their variable rate loans at less than 3% and the lower fixed rates available now. Unfortunately his rates are 6.9 and 8.6. He is in IBR but his window on that is the less favorable term of 15% of income for 25 yrs, then loan forgiveness but taxes on the forgiven amount which could be huge. My question is this: how come there is never any discussion of aid for the students who started their college loans in 2005 and the few years after. They are the ones not being helped. The final blow is that the government only allows $2500 of the interest paid each year to be deducted. The whole amount should be deductible. The government is making a nice profit on these loans. What other investment would yield them such high interest! Are you aware of any legislation on this?
SAVAGE SAYS: I have written many times about this issue, and I agree completely. It is insane that the government gets to borrow on Treasury bills paying only one-half of one percent, but charges students 6.8 percent to borrow for an education! Sen. Richard Durbin of Illinois has also been outspoken on this issue — and I would suggest you contact his office, to add your voice to the growing chorus claiming this is unfair!