Student loan debt 101: Avoid programs like SafeStart
A chance at a 60-month interest free loan at any point during the first five years of graduation sounds like a very, very low return for an origination fee of 4% to 7%. And what if you can't pay the loan back within 60 months?
But the real reason that SafeStart is such a horrible idea is that Income Based Repayment already allows students with little or no income to make little or no federal student loan payments -- without a 4% to 7% origination fee or a requirement that they pay the money back within 36 months.
If SafeStart applied to private student loans, it might in fact be a very valuable service -- although the default rate on private loans would likely make it unprofitable. But in its current form, it's very expensive and provides something less valuable than what is already available for free.
It's just another example of services offered parents and students who haven't done their homework.