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Student Loan Interest Rates Pay Attention

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  • Student Loan Interest Rates Pay Attention

    It pays to pay attention to loan interest rates and which way they are changing into the next year.

    As an MS4, our curriculum starts earlier than the other 3 years, meaning that student loans are disbursed earlier than the other years. The interest rate that we get charged nowadays depends on the 10-year T-note sale which is decided some time in May but that interest rate applies only to loans disbursed July 2016 to July 2017, ie. interest rate is not dependent on the academic year but date of disbursement. There is potential to shave off some percentage points from your interest by making the dates work for you.

    Let me explain: Loans disbursed July 2016-July 2017 are cheaper 5.31% vs 5.84% (2015-2016). My MS4 loans had a disbursement date of a few days ago since we just started the year. If you accept these loans, you get charged 5.84% NOT 5.31% for the life of the loan (because they are based on disbursement date not academic year). What I did? Tuition usually is not due for a couple of months after posting, so I'll accept my loan after July 1, getting a 0.5% lower interest rate for the life of the loan. You can work the other way if next year the interest rates are higher than this year's, ie. accept loans ASAP. Maybe 0.5% is not much of a difference for some but hey, I don't want to pay the banks 1 penny more than I have to, and this is so simple to do really.

    Just thought I'd put it out there so maybe someone else can benefit from it if it applies.

  • #2
    I was happy to see the news of the lower interest rates as well (wife is a 2nd year). My wife's disbursements/tuition due dates haven't lined up to be able to take advantage of this but I had similar thoughts as you. 0.5% x over several years makes a big difference IMO.