kappycaft1 wrote:When you take out loans, is their interest rate "fixed" at the rate at which you borrowed them? For example, if someone took out unsubsidized loans at 5.4% and then the economy got better the following year and caused the interest to increase, would that mean that only any future loans would accrue interest at the new rate, or would the existing loans also change (like a variable loan) to the new rate as well?
This is what I'm trying to figure out as well. Most people are telling me it's fixed at the rate from when you took it out, but I'm still not completely sure.
Also, I find it kind of hilarious (in a sadistic sort of way) that the interest will likely be lowest when students have the least amount of debt, and then higher when they have to take on more debt. Good jerb government.
If interest hits the caps and stays there, few professional students will be able to ever pay those off. I was helping my roommate do calculations for med school as he was unsure if he'd be able to get IS tuition. For med students, if they pay OOS/private tuition rates, don't have a really short residency and have ~10% interest, those loans aren't getting paid off. Luckily most can go work for a nonprofit hospital and get PSLF combined with PAYE. But the more ludicrous they make these loan rates, the more likely no one will even bother trying to pay them off and just go for forgiveness programs, in which case everyone treats it as monopoly money and just takes out maximum loans and lives it up (since IBR/PAYE makes loan amount irrelevant). No way that's helping our student debt issue.