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The Simple Dollar

Interest rates on student loans: when things get fishy

Interest rates can change when consolidating private and subsidized loans. Be sure to have the consolidation and the interest rates documented. See question No.3 of the Reader Mailbag.

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Q2: Food business
I made excellent deviled eggs. In fact I always make deviled eggs for every office birthday party or office pot lucks. I have been given so many wonderful compliments and people always request that I make and bring my creation at every office event.

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I have often thought about starting my own business making deviled eggs. Here is where it gets sticky, eggs aren’t like cookies or other baked goods that can be left out for hours. Any suggestions or ideas how I could in fact get my business off the ground?
- Debbie

Getting into a food-oriented business is almost always difficult, since there are always a lot of laws and regulations dealing with food handling and food serving.

My best suggestion for you would be to find someone who is in a food-oriented business in your area that you wouldn’t be competing with and might be cooperating with. For example, are there any caterers in your area who might subcontract deviled egg preparation to you?

Meet with these people. Find out what kind of regulations they have in your area. Get an idea of what you’d need to do to start your own deviled egg business. You might find, though, that it would be easier to just work with an already-existing catering or food preparation business.

Q3: Student loan question
I graduated in November and they absorbed all of my loans which were prior to this they were about 25% subsidized and 75% private. This was done as a function of our health care bill. In the process of being switched to all federal loans my interest rate was increased. Upon completion of my degree I consolidated and this is where it gets ugly. First I was lied to about the due dates/terms of my loan – consolidated in March still do not have a loan packet with full disclosure of all terms. Now I have found out that on my loans consolidated and handled by the US department of education that I am not allowed to make additional loan payments towards my principal balance all payments scheduled or not will go towards interest which is at 6%. My loans of $57,000.00 approx are set to I believe (recalling from memory) be at total cost of $154,000.00 and the US department of education is not giving any option to cut that down. Interest is compounded daily.

What do I do to get out of this situation?
- Courtney

Something is very wrong here, and I would probably contact legal help. You should not have ever been involved in a loan consolidation that didn’t provide documentation of the consolidation. That, right there, is a giant red flag. Another giant red flag is a federal loan consolidation that doesn’t allow you to pre-pay.

I do not know the specifics of your situation, but I see several very confusing and borderline suspicious elements in what you describe. It sounds like you may have consolidated through a shady business.

If you have a family lawyer, I would gather up your documentation and get an appointment to see if there’s anything awry here.

Q4: Difficult car choice
After losing a high paying job and readjusting to a salary that is lower, I am still looking for ways to reduce my expenses so that I will stop living in a way that does not allow me to save because I don’t have enough income to cover all of my expenses. One of these expenses is the vehicle I drive, a truck. It was a good deal when I bought it 2+ years ago, but now the gas mileage creates a big expense. It is paid low enough to have a positive difference between what I owe and what Kelly Blue Book says it is worth. Should I try to sell it (can you sell a car you owe money on?) and buy a car that gets better gas mileage? Maybe a used car, but I will have to finance because I don’t have money saved to buy another vehicle. My fear is that even if I sold it, used the difference to put down on a car that gets better mileage, I might not be in a much different position with another car payment. What do you think?
- Ann