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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Despite Rate Increase, Federal Student Loans Still Better Than Private

The current federal Stafford loan rate of 6.8 percent is still better than most private loan rates

| BY Kent McDill

As Congress continues to wrestle with finding a way to reduce federal student loan rates, it is important to note that the numbers still favor federal loans over private, financial analysts say.

On July 1, loan rates on the federal Stafford loans doubled from 3.4 percent to 6.8 percent as the deadline to stop the automatic increase passed in the midst of Congressional disagreements over how to keep the rates low. The Republicans want the rate to be tied to the 10-year Treasury note rate to protect the federal government from losing money, while Democrats think there should be a flat rate low enough to keep student loan debt as low as possible.

But even at 6.8 percent, the Stafford loan rate for college loans is lower than almost any private loan that can be obtained.

The Consumer Financial Protection Bureau is quite clear on the topic. “For most people, federal student loans are a better deal than private student loans,’’ the CFPB says on the front page of its web site.

Besides the fact that the loan rates are almost always better, federal Stafford loans do not charge interest for the time the student is in school. Repayment of federal loans is usually more flexible than private loans.

The one benefit to private loans, according to the CFPB, is that they can loan larger amounts than the Stafford loans can and do. But repayment rules on private loans are steadfast and are quicker to penalize non-payment. Also, private loans usually can be adjusted during the term of the loan to a higher interest rate.

A Spectrem Group Millionaire Corner study from the first quarter of 2103 reports that a third of Mass Affluent Investors (with net worth under $1 million not including primary residence (NIPR), are concerned about financing education for either their children or grandchildren, although the numbers dropped from 2012 (from 41 percent to 34 percent for financing for children).

When asked what their No. 1 concern was, almost one-third of Mass Affluent investors surveyed said “maintaining my current financial position” (32 percent), followed by “my own health” (19 percent). “Financing the education of my children” ranked sixth overall, behind “losing my job or spouse losing their job” and “being able to retire when I want to.”

About the Author

Kent McDill


Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.