Are you billed a “secret price”For your student loans? A new report says ‘yes’.
Here’s what you need to know.
Do your student loans include a “secret price?” “
A new report of the Student Borrower Protection Center says that if you have student loans, you may be paying a “secret price” in the form of higher rates for other credit products – including credit cards, mortgages, and loans. auto loans – just because you might have student loans. The report says you are not alone because millions of student loan borrowers are also paying this “secret price”. Student loans have been accused of delaying important decisions for many borrowers, such as saving for retirement, buy a house or start a family. Now, is it possible that student loan borrowers are also being charged more money to build a better financial life? In the wake of the COVID-19 pandemic and with more than 36 million unemployed, this puts additional pressure on student loan borrowers who already face significant financial pressures.
What is the “secret price” of student debt?
The secret price for student loans can go up to $ 29,495 for other credit products.
The authors analyzed credit data for three types of borrowers with different amounts of student loan debt. The authors calculated the total cost that each borrower paid for credit card debt, mortgage debt, and car loan debt based on the amount of student debt the borrower had:
- Low student debt: $ 13,452 more
- High student debt: $ 29,495 more
- Moderate student debt: $ 29,066 more
The authors say these additional costs will be exacerbated during and after COVID-19, especially for the most vulnerable student loan borrowers.
What is the “secret price” of auto loans?
The secret price of auto loans can be as high as $ 3,289.
The report shows that student loan borrowers with high student debt pay $ 3,289 more for auto loans. The authors call this a “secret price” or a premium charged to borrowers with student loans. Even a borrower with a moderate amount of student debt would pay $ 1,301 more for a car loan.
What is the “secret price” of mortgages?
The secret price of mortgages can reach $ 25,348.
The report shows that student loan borrowers with high debt pay $ 25,348 more for a mortgage. Even a borrower with moderate student debt would pay $ 9,929 more for a mortgage.
What is the “secret price” of credit cards?
The secret price of credit cards can go up to $ 428.
The report shows that student borrowers with high debt pay $ 428 more for credit card debt. Even a borrower with a moderate amount of student debt would pay $ 241 more for credit card debt.
Total Secret Price of Student Loans
The latest statistics on student loan debt show that there are 45 million borrowers who collectively owe $ 1.6 trillion. Student debt is now the second highest form of consumer debt. The authors argue that the real cost of student loans is more than previously understood, especially for borrowers looking for other financial products. If this is true, it means that student loan borrowers not only pay money for their student loans, but also pay more for credit cards, mortgages, and auto loans. Why else is this happening? Part of the reason may be the debt-to-income ratio – or the amount of monthly debt payments owed as a percentage of monthly income. A borrower who has a higher debt-to-income ratio usually pays a higher interest rate for any financial product because that borrower owes more debt and is considered to have a higher risk of default.
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