Should I take the lower interest rate?


Full Member
2+ Year Member
Jun 13, 2016
    incoming MS1, I have the scholarships and funds to cover the total CoA for the first year. I was going to do that for the first year; and then just take out tuition + CoA for the last 3 years. But with interest rates dropping from 6 to 4.3, should I take out loans the first year and hold my savings until interest (possibly) spike back up at some point during years 2-4? or am i trying to get too cute here and should just do my original plan? excluding scholarships from first year, we’re talking ~40k saved, attending a state MD


    Full Member
    5+ Year Member
    Mar 31, 2015
    1. Resident [Any Field]
      Thinking of interest over the long term, it would be better to use your savings up front. Not worth it to try and predict interest rates, especially given a possible recession that might keep rates down for a few years.
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      Oedipa Maas

      Full Member
      2+ Year Member
      Jun 11, 2019
      1. Resident [Any Field]
        Calculate it out all ways for each scenario (interest stays 4.3, interest spikes year 2, interest spikes year 3, interest spikes year 4) with variants of paid with savings now vs paid with savings later and see what is lowest. That’s what I did when I started and found that for me paying with savings up front saved me the most. That’s really the only way to “know” but you will still have uncertainty with respect to the potential interest rate changes.

        You really can’t predict the rates though. Interest rates peaked my third year, the year I received the most in loans, of course.
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