Timeline for Student loan payments and opportunity costs
Current License: CC BY-SA 3.0
8 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Apr 12, 2015 at 18:12 | vote | accept | ILikeFood | ||
| Apr 10, 2015 at 15:06 | history | edited | bigh_29 | CC BY-SA 3.0 |
Clarification based on Ross's comment plus some formatting
|
| Apr 10, 2015 at 10:19 | comment | added | Mike Scott | Agreed, a risk-free tax-free return of 6.4% is an amazingly good deal, and you should jump at it. | |
| Apr 10, 2015 at 10:07 | comment | added | Steve Jessop | @Ross: well, it's a bit more complicated than that. The return from early loan payment comes in monthly instalments between the time you finish paying, and the time you would have finished paying if not for the early payment. So for a perfect comparison, you need to compare with purchasing multiple bonds, some maturing in each of the relevant months :-) But at the level of, "there are no AAA-rated 6.4% bond yields available with any term" I agree it's all the same. | |
| Apr 10, 2015 at 5:19 | comment | added | Ross Millikan | Mostly good, but prepaying debt does not reduce the payments next month, it just reduces the term you will pay them over. As such, (short term) you have the same monthly cash flow, the same income available to buy a house or car. The analogy to a bond is spot on-you get the payback at the end, when you stop making loan payments early. | |
| Apr 9, 2015 at 20:04 | comment | added | JTP - Apologise to Monica♦ | +1 for the clarification - paying an X% debt is getting an X% return risk free. I'd jump on 6.4% in a New York minute. | |
| Apr 9, 2015 at 16:30 | history | edited | bigh_29 | CC BY-SA 3.0 |
added 4 characters in body
|
| Apr 9, 2015 at 16:02 | history | answered | bigh_29 | CC BY-SA 3.0 |