Where can I find a *fixed interest* student loan?

[Free4Life11]

Wells Fargo is killing me with their student loan interest. They have raised my interest rate every quarter and I am now paying more than 10.5% interest!

That's worse than some credit cards.

Does anyone know of any companies that offer fixed interest student loans? Or at least loans with low-interest rates.

I'm already maxed out with my Stafford/Perkins loans, all I really need is about a $2000 or so loan to cover the difference for next year.

 

[Lynn CC]

Did you try www.collegeboard.com
Under that parents section they have all kinds of loan options for students and parents, and they have calculators there to help you out. I think they would know the lowest rates available. Good that your consolidating now before they go up in July. Good Luck!

 

[scarlett873]

I will direct DH here to this thread when he gets home...he's in the student loan industry...hopefully he can help!

 

[rhett972]

Wells Fargo is killing me with their student loan interest. They have raised my interest rate every quarter and I am now paying more than 10.5% interest!

That's worse than some credit cards.

Does anyone know of any companies that offer fixed interest student loans? Or at least loans with low-interest rates.

I'm already maxed out with my Stafford/Perkins loans, all I really need is about a $2000 or so loan to cover the difference for next year.

Hello Free,
Are you looking for a Federal Stafford/PLUS loan or a Alternative Private loan?
Just an fyi for you, the interest rate on federal loans is set by the government and is variable, changing each july 1 based on the Tbill. Currently they are around 6.5% which is a very good rate considering they are unsecured debt requiring no credit history.
If you are a graduate student, congress just passed a law that allows you to get a PLUS loan (similiar to what parents get for their children) except you can use it for yourself. This is a very new and very exciting development.
If you need a private loan, unfortunately this is determined by your credit and most of the lenders are pretty similar. Private student loans are very high risk loans so 10% is actually very reasonable compared to other similar types of credit.
Talk to your school about the issues you are facing with Wells. Chances are, they have other relationships they can leverage for you to get you a better rate or qualify you for another loan program. If you have additional questions, please send me an email and I'll try to help if I can.

 

[Free4Life11]

I'm already maxed out on Stafford, so I need an alternative loan. I'm an undergrad. I'll only need about $2000 in an alternative private loan. Guess I am SOL.

Someone mentioned something about "MyRichUncle.com" anyone know anything about them??

 

[rhett972]

I'm already maxed out on Stafford, so I need an alternative loan. I'm an undergrad. I'll only need about $2000 in an alternative private loan. Guess I am SOL.

Someone mentioned something about "MyRichUncle.com" anyone know anything about them??

There are a lot of small startups out there trying to grab a piece of the private student loan pie. I know the name of Myrichuncle but do not have any experience with them per se. Loan servicing is a very tricky thing since you may have the loan for 10-30 years in some cases. I would recommend sticking with a well-known lender who isn't known for selling your loan to the first buyer, leaving you with 20 minute customer service hold time or terrible accounting practices. This doesn't mean smaller lenders aren't good.. but private loans aren't easy to manage, especially for smaller operations.
My recommendations (in no particular order): Wachovia, Nelnet, Citibank, Sallie Mae, Wells Fargo..
Again, i would recommend talking to your school's financial aid office.. they often have reserve resources they can allocate in certain circumstances.

Not to sound condescending but it may be worth looking at your budget to make sure that you are attending a school that you can afford. Depending on where you are at in the process, additional funds may simply perpetuate a bigger recurring problem for you. Just an idea.

Hope this helps.

 

[Free4Life11]

One more thing, which is usually cheaper, the prime rate or the LIBOR rate? I am looking at loans and most say the interest rate is one of those two plus a certain percentage.

Bank of America seems to have much more reasonable interest rates based on the LIBOR. I just checked and it would be less than 7% interest.

I wonder if I could take out as much as the school allows me to, based on the budget for the year, and then use the excess to pay off my Wells Fargo Loans -- is that legal?

 

[rhett972]

I'm already maxed out on Stafford, so I need an alternative loan. I'm an undergrad. I'll only need about $2000 in an alternative private loan. Guess I am SOL.

Someone mentioned something about "MyRichUncle.com" anyone know anything about them??

One more thing..
Congress also increased the maximum borrowing limit for freshman and sophomore students. Dependent freshman are now entitled to 3500, sophomores are entitled to 4500. Non-dependent students are now entitled to 7500 and 8500 respectively. This is an additional $1000. Perhaps with a little financial finaggling and maybe a spare job on the weekends, you might be able to pay for college without incurring additional debt?

I'll post if any more ideas come to mind.

 

[rhett972]

One more thing, which is usually cheaper, the prime rate or the LIBOR rate? I am looking at loans and most say the interest rate is one of those two plus a certain percentage.

Bank of America seems to have much more reasonable interest rates based on the LIBOR. I just checked and it would be less than 7% interest.

I wonder if I could take out as much as the school allows me to, based on the budget for the year, and then use the excess to pay off my Wells Fargo Loans -- is that legal?

First, what is legal - there is no law that says you cannot pay off a higher interest debt with student loan funds. Assuming you have reserved enough of your student loan funds to pay for all of your educational expenses, it might be an excellent idea to do this. Technically, it isn't allowed but you asked about "legally" and that is something very different. One thing to be aware of, however: Should you run into dire financial straits.. a bankruptcy can eliminate your Wells private loan debt... Paying down this debt with federal student loans means that you lose this opportunity by exchanging a dischargeable debt with a non-dischargeable one. Not a big issue but one to keep in mind.

In regards to rate calculation, you'll find there is no difference in LIBOR versus Prime (at least from your perspective - I know some finance gurus who would argue this point until they died though). The rate will be adjusted no matter which is used (Prime vs LIBOR) so that the risk is statistically accounted for in the same way. Ultimately, you'll pay the same in the long run.

Be very very careful about comparing interest rates.. they are only a small part of the story. Look at the repayment incentives, origination fees, document fees, and guarantee fees. Some lenders have rules about retroactively increasing your fees if you miss a payment or consolidate with another lender..

I know you want to find the best deal and I respect this (being in the finance business myself) but I would urge you to try to first find a lender you know and trust. Talk to your fellow students and other friends and family. A few basis points here and there is no comparison to poor service and "questionable" lending practices. This is a long term business relationship, don't let desperation force you into a choice that you might regret later.

 

[Free4Life11]

Thanks for your advice. These loans are confusing stuff. I thought it was Wells Fargo that was raising the rate on me but the loan is based on the PRIME I guess. Guess I have to thank the the feds for raising the rate