Low interest rates (loans)

[NicMouse64]

With the new interest rates being so low (5%), does it make sense to borrow the max even if I don't need it to pay off the higher interest rate loans (8%)? I know there is a one time loan servicing fee, but the 3% difference that would accumulate each year would make up for the difference after a couple years. Am I missing something about this strategy? Not sure if this is the right place to put this but would like to start a discussion as loan disbursements will be coming soon.

---

Members don't see this ad.

 

[Matthew9Thirtyfive]

 

[NicMouse64]

View attachment 311430

hahahahaha

 

[NicMouse64]

It's what I'm doing.

It's technically against the MPN, though, unless the money being used against old loans was a required living expense. I'm using it against higher-interest private student loans myself.

Ah, I don't remember from the MPN, that's a good point.

 

[popopopop]

If my loans were disbursed before July 1st for the fall, but my spring loans are disbursed in Jan. '21, would the interest rate be the old 6% or will one be 6% and one 4%~? Someone told me both will be 6%~ since my first was disbursed before July 1st. I'm not quite clear on this.

 

[darklabel]

Ah, I don't remember from the MPN, that's a good point.

People have recklessly used school loans in the past for egregious purchases but the government doesn't care either way, they're making their money off of you. I wouldn't put too much into the MPN. Back when interest rates were 0% people would take out the max loans and put it in some kind of savings account and keep the interest rate payments. No one that I'm aware of has ever gotten in trouble for that.

 

[NicMouse64]

People have recklessly used school loans in the past for egregious purchases but the government doesn't care either way, they're making their money off of you. I wouldn't put too much into the MPN. Back when interest rates were 0% people would take out the max loans and put it in some kind of savings account and keep the interest rate payments. No one that I'm aware of has ever gotten in trouble for that.

when were interest rates 0??????

 

[dragoon]

There was a similar question on reddit. See it if applies to your situation: