It’s one of the most special and exciting times in a young person’s life. The decision of what to study and at what university or other higher learning institution to study it. So many decisions that will have a great impact on the rest of your life.

But like any major decision can come grave consequences. When most students decide on their school of choice, they often don’t consider the financial implications. A student loan for most families makes the most sense. Families often bet on the very uncertain fact that after graduating, the young adult will have a clear career path in mind, get a job right away and quickly eliminate those student loan interests and outstanding debt.

Not so fast.

The reality is that student loan debt in the United States is growing at a record pace. Since 2009, student loans have increased for the average family by over 25%. Last year, 65% of college grads borrowed student loans to the tune of over $30,000 per person.

“You have to be aware of exactly what you’re getting with a private student loan,” explains Chantel Grant, a debt lawsuit expert at the GM Law Firm in Boca Raton, Florida. “It’s important to understand the terms of conditions of a student loan to know what the interest rates are, what they could become and when they will aggressively become due.”

Student Loan Debt Lawsuits

What many students don’t take into consideration is the fluctuating interest rates of the loan. There’s also the very possible reality that upon graduation there won’t be an immediate high-paying job. In that scenario, the student will have to tough out his financial course by paying current bills as well as the past student loan debt bills while not earning an income commensurate with those debts.

With so much uncertainty, many graduating students suddenly feel like Sissiphus endlessly pushing that big rock up a steep hill that will never see the summit. 

Generally speaking, a graduate has a six-month grace period upon finishing school, before he or she will have to start paying off the student loan. In the experience of GM Law Firm’s successful student loan cases, if a student graduates holding roughly $100,000 in debt, if paid in increments with accruing interest, by the time that loan is paid off, the student will have paid nearly $300,000. 

And that’s the “good news” for those who are actually able to pay off the loan at some point. All too often as the student loan interest continues to fester, the new graduate is also faced with new debts from other aspects of life – from surging credit cards, mortgages, property taxes and health or life insurance.

This is where mounting debt from different angles can suddenly place a person in a deep predicament and even a chance of a debt lawsuit. If that becomes the case, hiring an experienced consumer advocate law firm can help you understand your rights in defense of aggressive debt collectors or legal entities. 

How To Factor Student Loan Interest Rates

It’s important to know what you’re facing when you take out a student loan. There are many variables and factors that are weighed into how much you will owe and in what time frame. The school you choose presents one factor. Other variables include your age, marital status and even the length of time you intend to spend at the school before graduating.

You can plug many of these variables into a student loan interest calculator to show exactly what you’re up against. In the simplest terms, there are two types of student loans:

  • Subsidized loans
  • Unsubsidized loans

Accruing interest will vary with either of these loans. With an unsubsidized loan, interest begins adding up on the very moment that money lands in your bank account. Whereas, with a subsidized loan you don’t have to pay on the loan until you graduate (even though interest is accruing in the background during your time in school).

When you do start paying off the loan, all payments will attack the interest first and only after that interest has been satisfied will payments start going against the actual loan principle. The more you pay, the quicker the interest dissolves and the principle starts falling right behind it.

On the other hand, if you can’t afford to pay any more than minimum each month, that interest can continue to swell and in some cases, legal experts have seen graduates taking decades to even get to the principle part of the payoff.

Current Student Loan Interest Rates

Interest rates are always in flux, but the current student loan interest rate sits at 4.53% for undergrad loans and over 6% for unsubsidized graduate loans. So in the case of the average undergrad loan, the graduate will have to pay nearly $42,000 in both interest and principle over the course of a 10-year period. Those monthly payments would then be just about $350 if  the borrower is able to meet that minimum every month for the entire 120-month period. 

Falling behind even a little obviously extends the life and interest value on that loan. The GM Law Firm is one consumer protection agency that helps students find ways to fight debt and protect against predatory lenders. In this way, a student can create payment plans that will avoid any legal unhappy endings. 

In addition, if a person carries several student loans, these could be consolidated to better focus on one payment plan and one interest rate. 

No matter the case, every student should enter the wonderful world of higher education with excitement and gusto. The key thing when it comes to borrowing money to pay for that education is asking the questions, doing the research and even consulting with financial planners or legal professionals to make sure you make the smartest choice for today and tomorrow.