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American Morning
Minding Your Business: Student Loan Lockdown
Aired June 30, 2003 - 08:50 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RENAY SAN MIGUEL, CNN ANCHOR: If you think lower interest rates will mean cheaper student loans, you may want to study the fine print.
Andy Serwer is "Minding Your Business," and he joins us now.
You mean somebody is going to miss out on all of these bargain basement interest rates?
ANDY SERWER, "FORTUNE" MAGAZINE: Yes, this is really startling news to me, you guys. And I think that's partly because I graduated from college about 75 years ago. Listen to the cough. I'm not going to call you on it, Heidi.
Anyway, student loans, this is some fine print, as you say, Renay. This is really interesting. You know, everyone is talking about refinancing, obviously a huge boom in that as far as houses go. Student loan rates are falling to a record low 3.4 percent. Everyone is talking about consolidating loans.
The bad news is, if you've already consolidated loans, forget it. You're locked in. That's the fine print. Because once you've consolidated your loans, you can't then again refinance, because you're set for the life of the loan.
Some really startling numbers today in "USA Today," $100 billion consolidated since 1998. This is just how the average undergraduate has got about $16,000 and a graduate has got about $23,000 in student loans, big money for people just leaving school. But listen to this. Half the people who have consolidated since 1998 are over 6 percent, and 10 percent of the people who consolidated are over 8 percent.
HEIDI COLLINS, CNN ANCHOR: That is huge. So, who benefits from this? Who's making the money?
SERWER: Well, Sallie Mae, remember them?
COLLINS: Yes.
SERWER: The Student Loan Marketing Association.
COLLINS: Oh, yes, I remember them well.
SERWER: Yes, we've got stock chart here, because while you're paying, they're making out. I mean, this stock is up over three times over the past five years...
MIGUEL: Yes. SERWER: ... while the market's tanking. So, what you should do with your student loan money if you've got a little bit left over, buy the stock.
MIGUEL: Go buy stock.
SERWER: I mean, you know, I'll tell you just quickly, you guys...
MIGUEL: Yes.
SERWER: ... I think there is going to be a real outcry here, because five percentage points like that is too much. I think they're going to rethink some of these rules.
MIGUEL: It's a tough choice for these, you know, students out of school, because, you know, you consolidate -- you know, one easy payment...
SERWER: Right.
MIGUEL: ... but you miss out on all of the great rates.
SERWER: Yes, exactly.
MIGUEL: All right, thanks so much.
COLLINS: All right, Andy, thanks so much for that lovely news.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired June 30, 2003 - 08:50 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RENAY SAN MIGUEL, CNN ANCHOR: If you think lower interest rates will mean cheaper student loans, you may want to study the fine print.
Andy Serwer is "Minding Your Business," and he joins us now.
You mean somebody is going to miss out on all of these bargain basement interest rates?
ANDY SERWER, "FORTUNE" MAGAZINE: Yes, this is really startling news to me, you guys. And I think that's partly because I graduated from college about 75 years ago. Listen to the cough. I'm not going to call you on it, Heidi.
Anyway, student loans, this is some fine print, as you say, Renay. This is really interesting. You know, everyone is talking about refinancing, obviously a huge boom in that as far as houses go. Student loan rates are falling to a record low 3.4 percent. Everyone is talking about consolidating loans.
The bad news is, if you've already consolidated loans, forget it. You're locked in. That's the fine print. Because once you've consolidated your loans, you can't then again refinance, because you're set for the life of the loan.
Some really startling numbers today in "USA Today," $100 billion consolidated since 1998. This is just how the average undergraduate has got about $16,000 and a graduate has got about $23,000 in student loans, big money for people just leaving school. But listen to this. Half the people who have consolidated since 1998 are over 6 percent, and 10 percent of the people who consolidated are over 8 percent.
HEIDI COLLINS, CNN ANCHOR: That is huge. So, who benefits from this? Who's making the money?
SERWER: Well, Sallie Mae, remember them?
COLLINS: Yes.
SERWER: The Student Loan Marketing Association.
COLLINS: Oh, yes, I remember them well.
SERWER: Yes, we've got stock chart here, because while you're paying, they're making out. I mean, this stock is up over three times over the past five years...
MIGUEL: Yes. SERWER: ... while the market's tanking. So, what you should do with your student loan money if you've got a little bit left over, buy the stock.
MIGUEL: Go buy stock.
SERWER: I mean, you know, I'll tell you just quickly, you guys...
MIGUEL: Yes.
SERWER: ... I think there is going to be a real outcry here, because five percentage points like that is too much. I think they're going to rethink some of these rules.
MIGUEL: It's a tough choice for these, you know, students out of school, because, you know, you consolidate -- you know, one easy payment...
SERWER: Right.
MIGUEL: ... but you miss out on all of the great rates.
SERWER: Yes, exactly.
MIGUEL: All right, thanks so much.
COLLINS: All right, Andy, thanks so much for that lovely news.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
