Americans have racked up over $1.48 trillion in student loan debt.

The average student loan debt among the class of 2017 was $39,400, up 6% from the previous year.

The situation isn’t great, but in certain cities, it’s been revealed this situation is even more serious. A recently released study compared student loan debt to mortgage debt among borrowers that had both across America’s 50 largest metro areas. In six of these areas, the balance on student loans was actually higher than the mortgage debt load people were taking on to pay for homes.

With that much debt out there, it makes sense that you would want to pay as little interest as possible. If you have high balances, it can make a lot of sense to try to consolidate those debts at a low rate. Since mortgages typically offer some of the lowest rates you can get for any loan, you can take a look at paying off your student loans by using your existing home equity to get cash out. This article will take a look at the problem and how debt consolidation could help.

Breaking Down Student Loans

There are several different types of student loans you can have, and the type determines the rate you can get as well as the amount of debt you end up accumulating.

The federal government offers a couple of different types of student loans: subsidized and unsubsidized. Both loans share the same fixed rates, but on subsidized loans, the federal government pays the interest while you’re in college. Although you’re not required to make a payment on any of your student loans through the federal government until after you graduate, if you get an unsubsidized loan, the interest builds over time. If you don’t make the interest payments while you’re in college, they’re added to your principal balance when it comes time to repay the loan, so the debt can build faster.

Some students also turn to private student loans. There are a couple of reasons for this. Qualifications for federal student loans are need-based and come with an expected parental contribution based on household income. Based on a parent’s perceived ability to pay, the amount of federal student aid may be reduced if it’s not cut off altogether. However, because parents may be unwilling or unable to make that contribution, students may have to turn elsewhere.

There may also be limits on the number of direct federal student loans someone can get. Every situation is different.

If you turn to private student loans, you might be able to find fixed rates anywhere between the low 5% range all the way to almost 15%. You can get slightly lower starting variable rates, but these will fluctuate with the market.

How we can help

Our loan application can be found here or you can call us at 314-329-7314 to speak with one of our loan officers.

Posted by: Carlson Mortgage – a St. Louis mortgage broker providing home loans in the state of Missouri. We are routinely ranked as a #1 mortgage broker in Missouri on Yelp, Google and Zillow. We can be reached at (314) 329-7314 seven days a week. Let us be your source for some of the lowest mortgage interest rates in St. Louis on first-time home buyer, conventional, FHA, Veterans (VA), Jumbo and condominium (condo) financing. Since 2004, we’ve been providing home loans and mortgage services in St. Louis that are tailored individually to your unique needs and to your financial situation. Our loan officers speak English, Spanish and Russian. Call us today to inquire about home loan interest rates, to get pre-approved for a purchase or a refinance mortgage, or if you have any general mortgage lending questions.