Well, ladies & gents, without much further ado, I bring you what I term "The Scariest Article In The World Today". While I don't agree with the final argument (that we will soon be seeing $100 Trillion bills), I do embrace the qualitative end-result.
My Question to you, dear BBLers, goes like this:
(1) Assume you are the average law graduate in 2010 with a mixed debt from undergrad and law school of approximately $110k (80k federal, fixed; 30k private, variable). Assume, also that the Fed has increased target rates to a reasonable 4% (so, given the historical spread, private lenders are going for between 6-7.5%). Your fed loans are capped at 6.8% per the Stafford agreement; your private loans are all over the place (some are at 2%, some are at 6% depending on when you originated them).
What steps, if any, can you initially take to (a) cut your interest rates; and (b) consolidate your loans into "one simple monthly payment."? I guess my question is-- can you go to Bank XYZ and say "I'm 110k in debt at a weighted average of about 6% (regardless of fixed v. variable). If you lend me 110k to pay it all back right now, I'll agree to pay you back at 6% fixed for a term of 10 years"? If so, what steps need to be taken; if not, why not?*
* I realize that there is a potential for transaction costs needing to be incurred. Notwithstanding that problem, I'm wondering what kind of pro-active solutions law students can take to stay ahead of a potential sky-rocketing interest rate in the near term?