Refinancing my mortgage is easy: How about my student loans?
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The average interest on a 30-year, fixed-rate mortgage right now is just over 3.5 percent. For most outstanding federal student loans?
“The vast majority of it is actually over 6.8 percent,” says Tobin Van Ostern, deputy director of Campus Progress, a liberal policy group. “So it’s many times higher than most other loans that are out there right now.”
This week the group launched a campaign urging the federal government to let student loan borrowers refinance at lower rates.
There’s a reason mortgages and car loans are cheaper, says Mark Kantrowitz, publisher of the financial aid website finaid.org. The loans are secured by collateral. If you don’t pay, the lender can take your car.
“If you default on a federal education loan, they can’t repossess your education,” he says.
Campus Progress says cutting interest rates to 5 percent would put about $14 billion in borrowers’ pockets this year alone — money they would pour back into the economy.
The federal government, though, would lose billions in revenue.
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