The truth about my student loans

A Tale of Two Loans: When I went to college, I took out a small amount of student loans. And the interest rate was quite low: a variable rate of 1.75%, which today stands at 2.35%. When I went to graduate school, my loan rate, despite the 2008 financial collapse: 6.8%.

The mortgage rate on my house is half that.

When I drive down to Portland, I always chuckle (without the humor) at the sign offering boat loans for under 2.5% APR.

People always say that those two loans are so cheap because they’re backed by something tangible — the bank can always repossess the house or the boat. But not that education.

But guess what?

The federal government guaranteed every student loan that I took out. This means they promised private student loan companies that if I defaulted, the loan company would be fully reimbursed. In other words, the loan company took less risk on my student loans than another did on my house.

So why am I paying twice as much in interest for a student loan?

image credit: flickr/lightbrigading (fun fact: this is my grad alma mater)

Chelsea Avirett

About Chelsea Avirett

Chelsea is the founder of Spyglass Tutoring, a Humanities enrichment tutoring service located in Rockland, ME. She has taught English literature to middle school and college students and is also certified (in the state of Georgia) to teach gifted education. She also holds a Ph.D. in English literature from the University of Wisconsin-Madison. She and her husband moved to Midcoast Maine in 2013 and love the excitement and vibrancy of the area’s creative economy.