how to beat student loans
the one with the math:
the goal of this page is to teach you how we're using interest rates to pay less than we borrowed for school. Usually people who borrow around $100,000, end up paying way more than that by the time they pay it off. here's how to pay less.
the snp500 has historically grown at a rate of around 10% per year. the average student loan interest rate is a little under 6%. and while you have to pay taxes on your investing gains, it still makes since for most people to invest rather than pay more than the minimum payment on their student loans for a few reasons.
first, taking advantage of taxes. the interest on student loans can be deductible while mid-lower income individuals don't pay much for capital gains.
second, there are creative ways to get companies or even the government to pay off your student loans.
and finally, liquidity. you need have money accessible. for example, would you rather have $100,000 cash and $100,000 debt or $0 cash and $0 debt. while this likely isn't any persons exact situation, its an easy way to reconcile why its valuable to have cash readily available. as you probably know, we love to resell stuff. sometimes we find some brand new Nike shoes at Goodwill that we know we can sell for 4-5x what we paid for them. if we didn't have cash available, we would't we able to make simple flips like that.
the goal of this page is to teach you how we're using interest rates to pay less than we borrowed for school. Usually people who borrow around $100,000, end up paying way more than that by the time they pay it off. here's how to pay less.
the snp500 has historically grown at a rate of around 10% per year. the average student loan interest rate is a little under 6%. and while you have to pay taxes on your investing gains, it still makes since for most people to invest rather than pay more than the minimum payment on their student loans for a few reasons.
first, taking advantage of taxes. the interest on student loans can be deductible while mid-lower income individuals don't pay much for capital gains.
second, there are creative ways to get companies or even the government to pay off your student loans.
and finally, liquidity. you need have money accessible. for example, would you rather have $100,000 cash and $100,000 debt or $0 cash and $0 debt. while this likely isn't any persons exact situation, its an easy way to reconcile why its valuable to have cash readily available. as you probably know, we love to resell stuff. sometimes we find some brand new Nike shoes at Goodwill that we know we can sell for 4-5x what we paid for them. if we didn't have cash available, we would't we able to make simple flips like that.
the one with the refinancing:
we're writing this article and one of the most unique times in the student loan era. interest rates are currently down which allows students to refinance their student loans and a much lower interest rate than the one they currently have. while many companies are promoting that you can potentially get an interest rate of below 3%, we haven't seen anyone actually get quoted that yet. however, we have personally been quoted an interest rate around 4%, so you could probably expect to get something around there. we haven't refinanced our student loans quite yet because many of the lenders require you to start making payments as soon as you refinance. however, we will probably refinance ours as soon as we're done with school.
one important thing to take into consideration is repayment plans. when you refinance to a lower interest rate you generally make two sacrifices that may or may not apply to you. first, you can no longer use a government program to repay your student loans. and second, payment plans in general are less flexible.
we're writing this article and one of the most unique times in the student loan era. interest rates are currently down which allows students to refinance their student loans and a much lower interest rate than the one they currently have. while many companies are promoting that you can potentially get an interest rate of below 3%, we haven't seen anyone actually get quoted that yet. however, we have personally been quoted an interest rate around 4%, so you could probably expect to get something around there. we haven't refinanced our student loans quite yet because many of the lenders require you to start making payments as soon as you refinance. however, we will probably refinance ours as soon as we're done with school.
one important thing to take into consideration is repayment plans. when you refinance to a lower interest rate you generally make two sacrifices that may or may not apply to you. first, you can no longer use a government program to repay your student loans. and second, payment plans in general are less flexible.