myrichuncle.com

[HippieLawChick]

It seems no one here remembers what interest rates used to be like 20 years ago. You can say 8% is a high interest rate, and compared to rates right now, it is. But based on historical comparison this is still quite low. If I had the choice, right now I'd take a fixed rate under 9% on the plan that it'll take 10+ years to pay off the loans and rates will continue to fluctuate upwardly. If rates drop significantly, you can always refi.

What annoys me more than the fixed 8.5% rate on GradPlus is the origination fee. A 3% fee on loan of say 40k is 1200 every year, lost to the void...

If you do it through some other lenders, they give you the 3% back. When you say 1200 every year, you just mean each time you take out a loan, correct? (Not that the same loan would be 1200 each year)

Which other lenders??

[whoisjohngalt]

It seems no one here remembers what interest rates used to be like 20 years ago. You can say 8% is a high interest rate, and compared to rates right now, it is. But based on historical comparison this is still quite low. If I had the choice, right now I'd take a fixed rate under 9% on the plan that it'll take 10+ years to pay off the loans and rates will continue to fluctuate upwardly. If rates drop significantly, you can always refi.

What annoys me more than the fixed 8.5% rate on GradPlus is the origination fee. A 3% fee on loan of say 40k is 1200 every year, lost to the void...

If you do it through some other lenders, they give you the 3% back. When you say 1200 every year, you just mean each time you take out a loan, correct? (Not that the same loan would be 1200 each year)

Which other lenders??

T.H.E (Total Higher Education), by Northstar.  http://www.northstar.org/

[Alamo]

...Just to give you an idea of how fast LIBOR goes up, last year this time it was only 3.8%.  The FED is gonna keep hiking.  Loans that are tied to prime are the way to go, if you go with private.

Um, according to this graph, prime and LIBOR seem to mirror each other pretty closely, particularly over the past 5 years.  I don't see why one would go up without the other.

EDIT: Forgot link: http://www.briefing.com/morningstar/mtgdata/prm_lbr.htm

[whoisjohngalt]

2 things.

1) Sorry Steve.jd, but you are horribly wrong.  Prime is never the way to go.  Companies use the prime rate because it sounds better (honestly!) to say "your interest rate will be prime - 1%" rather than "LIBOR + 2%).  I dare you to show me a period over the past 15 years where  loans tied to prime were a better deal.

2) Myrichuncle is going to be offering stafford loans as well as GradPLUS.  It was in the WSJ the other day.

http://biz.yahoo.com/prnews/060615/nyth076.html?.v=49

[Steve.jd]

...Just to give you an idea of how fast LIBOR goes up, last year this time it was only 3.8%.  The FED is gonna keep hiking.  Loans that are tied to prime are the way to go, if you go with private.

Um, according to this graph, prime and LIBOR seem to mirror each other pretty closely, particularly over the past 5 years.  I don't see why one would go up without the other.

EDIT: Forgot link: http://www.briefing.com/morningstar/mtgdata/prm_lbr.htm

I didn't say that prime would not go up as well...the reason I feel prime is better is because,

Prime -.5 or 1 is less than Libor + 2.7....

2 things.

1) Sorry Steve.jd, but you are horribly wrong.  Prime is never the way to go.  Companies use the prime rate because it sounds better (honestly!) to say "your interest rate will be prime - 1%" rather than "LIBOR + 2%).  I dare you to show me a period over the past 15 years where  loans tied to prime were a better deal.

2) Myrichuncle is going to be offering stafford loans as well as GradPLUS.  It was in the WSJ the other day.

http://biz.yahoo.com/prnews/060615/nyth076.html?.v=49

[Erapitt]

Regardless, I assure you, 2.25% + LIBOR PLUS a 1-1.5% origination fee is NOT a good rate no matter how you look at it.

My current consolidated debt is just under 3% and I know times have changed since then, but there is still no reason to get a loan with that high of a rate.  You will be paying it off forever.

[cesco]

It still seems like going w/the fixed GradPlus rate at 8.5 that can be knocked down to 7.0 is the best way to go. 

With the way interest rates keep rising - it just doesnt seem safe to take a variable rate.  I tend to air on the conservative side w/money, but GradPlus is what I am leaning towards...

Opinions on this?

[Alamo]

I just hate the 3% origination fee on Grad PLUS loans.  I'm going private, LIBOR+2.55% w/no origination fee and a 9-month grace period (which I think I'm really going to appreciate if I end up in a clerkship).  This can also be knocked down 1% if you do auto-debit and make enough on-time payments.  But it is a risk if interest rates continue to shoot up; I'm betting they'll level off before too long.

[Erapitt]

I just hate the 3% origination fee on Grad PLUS loans.  I'm going private, LIBOR+2.55% w/no origination fee and a 9-month grace period (which I think I'm really going to appreciate if I end up in a clerkship).  This can also be knocked down 1% if you do auto-debit and make enough on-time payments.  But it is a risk if interest rates continue to shoot up; I'm betting they'll level off before too long.

They def. aren't going to be leveling off.  They just were at all time lows, now it will raise up for sometime.  The economy is getting better and as interest rates increase, so will mortgage and loan rates.

[Alamo]

I just hate the 3% origination fee on Grad PLUS loans.  I'm going private, LIBOR+2.55% w/no origination fee and a 9-month grace period (which I think I'm really going to appreciate if I end up in a clerkship).  This can also be knocked down 1% if you do auto-debit and make enough on-time payments.  But it is a risk if interest rates continue to shoot up; I'm betting they'll level off before too long.

They def. aren't going to be leveling off.  They just were at all time lows, now it will raise up for sometime.  The economy is getting better and as interest rates increase, so will mortgage and loan rates.

That's your prediction, and I understand you're going to make your decisions based on the assumption that rates will rise.  However, since you're not on the federal reserve board, I don't think you can say that they "def" are going to do one thing or another.  Beranke hinted in a speech a week or two ago that he's considering stopping the rate hikes; that very day the Dow went up 200 points.