Tuesday, October 31, 2006
This time, Michelle Singletary gets it right.
I've given Michelle Singletary some grief in the past over her stance on student loan debt.

But her most recent article is a clear-eyed look at the struggle students face in trying to pay for an education, particularly in the loan market.

(As Free Money Finance points out, most parents aren't saving enough for college. And outside scholarships generally reduce need-based aid dollar for dollar. So loans are probably going to be part of all but the most well-off students' aid packages.)

She makes the VERY salient point that with static Stafford loan caps (although some year-by-year limits are increasing for dependent undergraduates, the overall limit is $23K, the same as in 1992), and increasing tuition, students are frequently turning to private lenders to make up the gap. And private lending obviously doesn't have the same rates or subsidies for in-school interest that federal loans do.

The only quibble that I have is that her quote of 7 to 9 percent on private loans still sounds lower than what I've seen. With LIBOR at 5.37% and PRIME at 8.25%, plenty of private loans are going for 10 to 12 percent, or more.

Other than that, the only change I'd make to this article would involve parents of potential college students to start this conversation FAR before senior year.



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