Unlike with most debts, the current federal law states that student loans cannot be dissolved or written off in a bankruptcy. This is a point of contention for Orman, who said “I couldn’t agree with Sen. Elizabeth Warren, D-Mass., more,” referring to Warren’s vote against the recent Bipartisan Student Loan Certainty Act of 2013.
“Why are we charging our students interest on federal loans at all?” questioned Orman. “We are financing this bill on the backs of our future children and it’s a travesty,” she maintained.
In this week’s episode of “The Suze Orman Show,” Orman gives callers and guests strategies to pay down their student loan debt. She also explains the nuances of the new interest rates that became effective in August.
Federal student loan rates for 2013-2014*
Undergraduate loans 3.9 percent
Graduate student loans 5.4 percent
Plus loans (parents and students) 6.4 percent
*These rates are for new loans only and are fixed for the life of the loan. The rates for new borrowers will reset each July and are based on the 10-year Treasury note.