Student Loan Advice-Any Insights?

Don't have a whole lot of advice to give except that I think the Prime rate will average between 5.5% and 6.5% over the next ten years. It may stay low while the economy is slow and as the economy improves in 3 or 4 years it could go up to 8% to curb inflation. On a side note, the student loan system in this country is absolutely horrible. A federal student loan at 8.5% is absurd. We can utilize tax dollars to subsidize every imaginable program for lazy people who don't work but we can't offer student loans at anything higher than junk bond rates. Anyway, I would go with the private loan for 1.) Lower Rates. 2.)Possible interest tax deduction ( you can't take a deduction on your parents plus loan even if you are paying)and 3.)the private loan will help your credit score in the long run, the plus will have no effect 4.) If Barrack Hussian Obama gets elected we will be in a communist state in 4 years and non of this will matter.

marine 13910 if correct about the sad state of student loan affairs in the country. it's a joke. unfortunately, none of the choices we have are great. there is good advice in the above post. additionally, you should shop around because the fees will vary from lender to lender. sadly, fees can be substantial. if you belong to or can join a credit union, that would help reduce fees. there are many credit unions out there that don't require you to be a teacher or in the military. the rates seem to be pretty consistent across the board. i would take the loan myself (you need good credit-otherwise, get the cosigner or lenders will kill you with bad rate). deduction limits may actually improve over the next years, which will benefit you. also, once you start working, you may be able to refi to better rates. if you can get a decent rate, be careful not to pay the loan off early. stretch the loan out as long as possible and reinvest in a vehicle with a better rate of return.

good luck.

http://www.finaid.org/loans/privatestudentloans.phtml

I found this. Scroll down for a chart comparing all the private loan companies.

"As low as 4%" is actually pretty false/ridiculous for private loans. Unless you already have a stellar credit history (which I doubt because if you're a first time borrower, I'm assuming you just became legal not long ago), your personal rate "based on" prime / LIBOR is probably above the Federal (6%) rate, and around 7-8%.

Also keep in mind that this is a "bad year," and considering you're still in college, years will be good by the time you get out. Prime or Libor will rise, and you may be royally screwed by the variable prime rate (think 13% :-D). I read on the blog of a post-grad how his Sallie Mae beats the credit card bill rate..

Bloomberg's website has some information on the past rates. Note on how much higher they were only a few months ago.
http://www.bloomberg.com/markets/rates/index.html

Sorry about the grim post. Good luck and let us know how it goes!

I'm definitely going with the private loan since the rate I got was 4.5%, also considering the tax/credit benefits on the upside.

The max prime rate for the past 20 years was 11.5 but I'm not really worried about that, 8.5% is not that much better.

Do you really think its worth it to stretch out the loan over 20 years instead of 10?

Also do you think its worth it to pay the interest while in school (2 more years left) to establish credit and perhaps refi for a lower rate when I graduate, or is it negligible. I'm actually going to defer the principle and interest til after graduation. but I'm interested in what you guys think.

Thanks

As a mortgage broker, I suggest stick with a fixed rate closer to 6-7%. Join a credit union and as far as fees, there shouldn't be thousands of dollars may be a few hundred maximum couple thousand dollars which I doubt. Ask a few different lenders to send you their closing costs estimates called Good Faith Estimate in the mortgage industry and try to compare them but don't run your credit more than 2-3 times in month.You can even get their closing costs just by asking how much fees is involved, Should be normally an application fee for couple hundred bucks and administration for another couple hundred..Credit Unions are the best in my opinion.. Good luck !