The column by Froma Harrop, “Student-loan companies face the end of subsidies,” (Sun Journal, March 27) gave your readers misinformation about student loans.

In fact, the rates and repayment terms of federally guaranteed student loans are set by the government and remain unchanged for undergraduates. Loan servicers, such as Sallie Mae, are required to follow them on behalf of taxpayers.

Private student loans, which are not guaranteed by the government, are priced based on factors such as the credit history of the customer and, when applicable, his or her co-signer. Contrary to the picture the article painted, the average interest rate paid by our private loan customers is 6.53 percent.

In March 2009, Sallie Mae introduced a new model of private student loan in which students keep up with the interest payments while pursuing their degrees, rather than the old model of capitalized interest while paying nothing on student loans during the college years. By using this pay-interest-as you-go loan, a typical college student can save more than 50 percent in finance charges and pay off her loan in an average of seven years after graduation, rather than the typical 15 for the private loan offered by many other banks.

Erica Eriksdotter, Reston, Va.

Manager, Sallie Mae


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