#1
|
|||
|
|||
questions about student loans and inflation
i was planning on paying out of pocket for my first year of law school this august which will be $38k. at the moment i have more than enough saved from poker to cover all three years, and so i figured i'd just pay up front and avoid the interest on a loan.
however, a friend of mine in already attending law school brought an interesting concept to my attention: if the loan interest rate is below the rate of inflation, taking a loan will actually save me money. hopefully this is intuitive and i shouldn't have to explain further. but, my concern is how will i know what the inflation rate will do in the coming years? is it possible for the rate to decrease...perhaps to the point where the value of a dollar increases substantially? or is the rate pretty much always growing? just trying to get a better idea of this plan since i have no finance background whatsoever. thanks. |
#2
|
|||
|
|||
Re: questions about student loans and inflation
You can get a bit over 5% from a bank account. If your loan rate is less than that keep the money in the bank. Note you will have to adjust for income tax on the interest.
You might get a tad more interest with longer term CDs keyed to your graduation date. |
#3
|
|||
|
|||
Re: questions about student loans and inflation
You won't know what the rate of inflation is/was until a few years after the fact.
|
#4
|
|||
|
|||
Re: questions about student loans and inflation
It has basically nothing to do with inflation and everything to do with the interest you can get on the money. I assume that that reasoning for the inflation comment is because your friend is thinking about how much a dollar is worth at various times. However, you have to realize that if your money is just sitting in a box (not getting interest) your purchasing power (with the money) is decreasing. Maybe this is being nitty but I've heard multiple people make that mistake.
|
#5
|
|||
|
|||
Re: questions about student loans and inflation
How are you guys getting these low student rates? I am locked in at around 6.625% but would love a lower rate. My loans got sold to Nelnet by HSBC.
|
|
|