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A graduate reacts with mixed feelings to student loan rate freeze

Tracy O./Flickr Creative Commons

For Orin Davis, 30, a freeze on his student loan interest rate is, generally, a good thing. After all, it would mean a small savings on the more than six figures in debt he incurred as a PhD student at Claremont Graduate University.

Davis studied organizational behavior and positive psychology at Claremont. He started his PhD in 2007, at the height of the market. By 2010, when he graduated, the economy and employment prospects had plummeted.

So Davis left California and headed East. Davis is now a positive psychology researcher and consultant in Boston. Though he has followed the news on the efforts to freeze student loan rates, Davis said it was hard to get clear information about what that would actually mean for him.

Davis said his feelings on the bill were mixed.

"On the one hand, my wallet finds it rather convenient," Davis said. "OK, basically I’m getting to keep more of my money...and yet, the thing I’m left wondering is, when is the other shoe going to drop?"

He noted that the costs to the government to maintain such a freeze would have to come from somewhere — in this case, they come from a couple changes in federal pension insurance funding. And Davis wondered if that would perhaps ultimately end up costing him or his family members more later on.

Davis also said that a one-year freeze meant that the interest rate was likely to shoot back up again afterward.

"This would probably be optimal for me if I could manage for me to get all the money and pay it off at that low rate," Davis said. "But that’s just not happening."

Though it has been a couple years since graduation, Davis said the majority of the debt remains to be paid. And even though it may be the best time to get into the market as a young investor, Davis said he can't afford to take that risk now, with so much debt hanging over his head.

"Anything I’ve got I’m going to be putting toward paying off these loans," Davis said.

Davis said he doesn't know how long it may take him to pay off the debt, but he knows it will take some time.

"I’m 30, and I’m looking forward to hopefully, in the relatively near future...toward having a family, and how am I going to do that?" Davis said. "How am I going to afford to have kids if I can’t pay this off quickly?"

Tami Abdollah can be reached via email and on Twitter (@latams).