Private College Student Loan

Variable interest on student private loan?

I borrowed $20,000 in a private loan for college. My estimated payment currently are $246 for the next 20 years (238 payments) which is almost $60,000 I have to pay back in the end. So they are charging me almost $40,000 dollars to borrow $20,000. Does this sound logical? I am hoping they made a mistake with my payment plan. BTW, I have almost 28,000 in federal loans too so my payments are looking to be like $500 dollars a month. How do they expect people to live with these high student loan payments?

Public Comments

1. When you ask how do "they" expect people to live with high student loan payments, I'm not sure who you mean by "they". The only "they" that expects you to live with such high student loan payments is "YOU", because you are the one who made the financial decision to borrow this amount of money. Sometimes students lose track of the implications of their borrowing - when put in a different context, they see it entirely differently. Suppose I wanted to buy a new car - and suppose I was somehow qualified to borrow enough to buy a brand new $370,000 Lamborghini Murcielago. I don't know about you, but the first thing that I would do is figure out whether I'd ever be able to afford to make the monthly payments on that car loan. I'm thinking - hey - with my income - I'd be lucky to afford the payments on a $32,000 Acura, so I'd make my buying decision based on my ability to repay the loan. For some reason, students who decide to borrow tens of thousands of dollars because "that's how much their school happens to cost" don't see that situation in the same light. There is no "THEY" that expects you to be able to manage outrageously high monthly loan payments, there is only the YOU that keeps borrowing, despite the fact that the debt obligation is climbing through the roof. You really do have to shop for a school the way you shop for a car - if you're borrowing to afford it - you have to borrow with an eye towards what you can afford to repay. Should anyone feel sorry for the Lamborghini borrower with the $25,000 a month car payment? No, because he knew what he was getting himself into when he borrowed that amount of money. The same thing applies to students who borrow for college. There is a known cost - which has to be disclosed to you up front - for borrowing money - and when you borrow it, you sign papers acknowledging that you understand those costs and that you agree to repay them. If you choose to borrow a huge amount of money to achieve your dream of gaining an education in ___ from ___ university, then you made a conscious choice, and it will eventually come time that you have to keep the promises that you made to repay those loans. Borrowing $20,000 for 20 years at 14% interest pretty much approximates what you're being asked to repay. If your loan had those terms, you would pay a $248.70 a month for 241 months, and a total of almost $59,700. Needless to say, 14% is a high interest rate, but again, the rate was disclosed to you (or at least the variable rate formula) at the time you agreed to borrow the money. Here's something to keep in mind when you're facing this scary bill - if you pay more than the minimum required amount each month, you will be able to pay the loan down considerably faster, and save thousands of dollars in interest. For example - if you paid $300 a month, rather than $248.70, you would make only 130 payments (111 less payments!), and pay back only $39,000, rather than $60,000. More (good?) news - if your government loans are Staffords, your payment should be closer to $320 a month than $500. Don't get me wrong, I have every sympathy for the challenge that you're going to face in trying to make $568 a month (or more) in loan payments - I mean - geez - that's 20% of a $34,000 salary, which is really going to hurt, but I'm still not getting that you have a real beef with anyone other than yourself. This is what you have to figure out BEFORE you start signing those loan documents, not when it's getting close to graduating, and the lenders start sending you some preliminary estimates of your bill. Do yourself a favor - don't fall too quickly for the siren song of consolidation. Consolidation may allow you to cut your monthly payment, but you will do so at the expense of considerably more payments and a heck of a lot more interest. If you think the idea of paying back $60,000 when you borrowed $20,000 is extreme, how would you feel about paying back $80,000 or $100,000 on that original $20,000 loan? A consolidation loan could do that to you. Best of luck to you - and I mean that.