Author Topic: choosing loan rate and term  (Read 1847 times)


  • Bristles
  • ***
  • Posts: 429
choosing loan rate and term
« on: December 10, 2015, 01:55:06 PM »
So i was just approved to refinance my student loans.

 they are currently:

$31000 @ 7.25 % for 11 more years    monthly payment 360
$30000 @ 6.35% for 11 more years    monthly payment 320
$9900 @ 6.8 for 15 years ( this is the federal consolidation) monthly payment 94
$9900 @ 5.04 for 8 more years monthly payment 120

i was offered a way better interest rate but i am not sure if i should literally choose the max monthly payment and get the lowest rate or choose the lowest and invest all my extra cash, or if i should i should just keep my payment amount the same.

since this is with Earnest i have tons of flexibility.

my options range from paying $510 a month for 20 years @ 4.37%  to paying $1400 a month for 5 years @ 3%.

i know it isnt a huge  difference in the rate but I like the idea of getting done with my loan very quickly. but then i realize that i could pay the minimum invest the left over cash and maybe come out ahead.

more details: all loan payments would be made after maxing out my 401k and an IRA.

i am a high earner,  in a high cost of living area, but i live with room mates, and am single. i have no other debt. i am thinking about saving to buy a house, but am not sure to be honest as real estate in boston is crazy. 

any advice would be helpful.


  • Guest
Re: choosing loan rate and term
« Reply #1 on: December 10, 2015, 02:21:19 PM »
Are all those rates fixed?

If fixed I'd be inclined to take the longest term. Similar to a mortgage when evaluating "early payment versus investing".


  • Magnum Stache
  • ******
  • Posts: 2722
Re: choosing loan rate and term
« Reply #2 on: December 10, 2015, 02:27:14 PM »
At $80,000, I would want to pay it off quickly too.  But the premium for the 20 year term isn't that much and you can still pay it off sooner if you want but retain the flexibility to have small payments whether you want to invest the difference or just have some cushion in case something happens to your income.