Author Topic: Variable rate or fixed rate. (Read 2964 times)

henche · « **on:** January 26, 2014, 02:00:07 PM »

I'm refinancing my student debt, to prevent the govt from making money on my debt in addition to taking all the money that I would pay my debt with.

Fixed rates are like 5, and variable are like 3. (Currently paying 7 and

. Do you think I should go fixed or variable?

Menachem613 · « **Reply #1 on:** January 26, 2014, 02:07:01 PM »

Pick one and hedge with a total return swap.

henche · « **Reply #2 on:** January 26, 2014, 02:28:21 PM »

Cool idea. But what's the point--won't I end up in basically the same position as just picking the fixed rate (that is, aren't they already supplying the risk free way of doing it?)

Vosizderneias · « **Reply #3 on:** January 26, 2014, 04:00:54 PM »

Do fixed, the rates can only go up, and the lenders will be the ones winning

notanonymous · « **Reply #4 on:** January 26, 2014, 04:46:42 PM »

Quote from: Vosizderneias on January 26, 2014, 04:00:54 PM

Do fixed, the rates can only go up, and the lenders will be the ones winning

I agree, but depending on how much is left, and how long, it may be k'dai to go with the variable.

henche · « **Reply #5 on:** January 26, 2014, 05:10:03 PM »

I think variable it is.

You have to account for the fact that I'll have more principal now than I will at the later time when the rate might go up.

michael · « **Reply #6 on:** January 26, 2014, 06:38:00 PM »

I vote variable. As the term is a total of ten years, it is not likely that the average interest rate over the term will be two points higher than it is today. And, as you say above, if rates do rise significantly you may be able to prepay in later years, as the principal will be lower.

Vosizderneias · « **Reply #7 on:** January 26, 2014, 06:52:09 PM »

I vote that there will be sharp inflation

AJK · « **Reply #8 on:** January 26, 2014, 08:30:52 PM »

How are you refinancing gov't student loans?

henche · « **Reply #9 on:** January 26, 2014, 08:51:30 PM »

Quote from: AJK on January 26, 2014, 08:30:52 PM

How are you refinancing gov't student loans?

https://studentloanhero.com/featured/5-banks-to-refinance-your-student-loans/

yos9694 · « **Reply #10 on:** January 27, 2014, 12:29:45 PM »

If it was your house, I would say go with fixed. Where interest rates will go in the short term or the long term is a gamble. Entire industries stand to be wiped out by a spike in interest rates and have been worrying about it for years already. You don't take on risks like that willingly to save a few bucks. Losing a house is baaaaad. However, if your student loan debt is a modest amount (compared to your ability to pay off) then the risk is not serious.

henche · « **Reply #11 on:** January 27, 2014, 12:37:59 PM »

Quote from: yos9694 on January 27, 2014, 12:29:45 PM

If it was your house, I would say go with fixed. Where interest rates will go in the short term or the long term is a gamble. Entire industries stand to be wiped out by a spike in interest rates and have been worrying about it for years already. You don't take on risks like that willingly to save a few bucks. Losing a house is baaaaad. However, if your student loan debt is a modest amount (compared to your ability to pay off) then the risk is not serious.

One of the banks I'm looking at caps it at 8.95. Which is only 205 bps worse than my current rate on much of it.

AJK · « **Reply #12 on:** January 27, 2014, 12:46:42 PM »

Quote from: henche on January 26, 2014, 08:51:30 PM

https://studentloanhero.com/featured/5-banks-to-refinance-your-student-loans/

Wowza.

I'm not sure why, but when I did research about refi'ing my loans, I thought that only private loans could be refi'd.

Amazing.

AJK · « **Reply #13 on:** January 27, 2014, 12:48:23 PM »

Now the question becomes:

Will my churning history affect my rates... ugh.

Barryg · « **Reply #14 on:** January 27, 2014, 12:49:32 PM »

Variable...
Loan of 3% sounds good. Worst case if it goes up to 9% then you can always refi to a cc with 0% (Not saying that cc's are for going to college, just showing how you have minimal risk, as you have a way out in worst case scenario.)

myb821 · « **Reply #15 on:** January 27, 2014, 01:00:41 PM »

Quote from: AJK on January 27, 2014, 12:48:23 PM

Now the question becomes:

Will my churning history affect my rates... ugh.

doubt that it will and either way cant hurt to try

AJK · « **Reply #16 on:** January 27, 2014, 01:24:59 PM »

Besides for the pull...

Shua · « **Reply #17 on:** January 27, 2014, 07:35:58 PM »

Quote from: AJK on January 27, 2014, 12:46:42 PM

Wowza.

I'm not sure why, but when I did research about refi'ing my loans, I thought that only private loans could be refi'd.

Amazing.

Wow. I also thought there was no way to refi my loans. Will look into this further.

mb1 · « **Reply #18 on:** January 27, 2014, 07:41:19 PM »

Is the interest tax deductible on these loans?

AJK · « **Reply #19 on:** January 27, 2014, 07:47:38 PM »

Good question, but in what scenario would it make more sense to be worried about the tax deductability of the loans vs the fact that you can save like 50% interest?