Where can an investor earn a 7.9 percent guaranteed annual rate of return? Not 30-year United States Treasury bonds, which pay about 3 percent; shorter-term bond rates are even lower. And certainly not other countries sovereign debt; some of the most economically fragile nations in the Euro zone sell 10-year bonds bearing interest rates of less than 6 percentand those returns are surely not guaranteed.
Try your kids. The interest rate on subsidized federal student loans is currently 3.4 percent, but will jump to 6.8 percent on July 1and that covers just a slice of the market anyway. For undergraduates who dont qualify for the subsidy, its already 6.8 percent. For graduate students (including law students), the rate is 7.9 percent.
