<p>My dad tells me this is more than reasonable, but I am financially illiterate and would love a second opinion.</p>
<p>$55,000 loan; 2.1% interest; 25 years.</p>
<p>Thoughts?</p>
<p>Will the debt be yours, or your parent's?</p>
<p>It would be mine.</p>
<p>A couple more questions:</p>
<ol>
<li><p>Do you think you are likely to go to professional school (the kind of grad school you have to pay for, such as medical school or law school) after college? If you do, you are likely to find yourself going further into debt, and that's an important consideration. (Note that getting a Ph.D. doesn't pose the same problem. Graduate students in Ph.D. programs usually have teaching or research assistantships and don't have to take out huge loans.)</p></li>
<li><p>Do you aspire to a profession that doesn't pay well, such as early childhood education or church work? It's harder for people in such careers to pay off loans than it is for those in better-paying careers. There's special reason for concern if you will need to go to professional school AND you plan on a career that does not pay well (e.g., legal aid lawyer). People in that situation are doubly screwed by low pay and high debts.</p></li>
</ol>
<p>I think that is a tremendously good deal.</p>
<p>Is this a loan he is offering to make to you? Or did he actually find a loan with those terms somewhere???</p>
<p>What's the loan for? the purpose will help define if the terms are good. then I'll have a couple more questions.</p>
<p>I believe monthly payments on that loan come out to $235.00</p>
<p>If I could find a $55k loan today for 2.1% for 25 years, I'd take it and purchase 55k worth of CDs paying 5.5%.</p>
<p>What are closing costs? And is the 2.1% a "teaser rate"? (I'm betting it is a "variable" offered by the college, but to the parents....)</p>
<p>"If I could find a $55k loan today for 2.1% for 25 years, I'd take it and purchase 55k worth of CDs paying 5.5%."</p>
<p>Now you talking like me :)</p>
<p>and like Bernard Baruch. ;)</p>
<p>Marian: I don't have any definite career plans, but I'm considering something in international development. I'm not interested in medicine or law.</p>
<p>Bay and Mini: The Swedish government provides student loans with those terms to Swedish citizens (which I am). According to my dad, the interest rate fluctuates but is unlikely to exceed 3.0%. </p>
<p>Opie ofMaybery2: To pay for a B.A. from Dartmouth.</p>
<p>Oh, and the investment idea is a good one, but I'm technically supposed to use it for tuition. ;)</p>
<p>If you don't take the loan, what would you do instead of going to Dartmouth?</p>
<p>
If you don't take the loan, what would you do instead of going to Dartmouth?
Plead with the financial aid office? Tell my parents that contributing $7,000 towards a $22,000 EFC is unreasonable, and ask them to reconsider? Attend college for free (excluding room and board, a.k.a. "apartment and groceries") in a country I left six years ago and don't intend to work in? I don't really have a choice, but I guess I'd like to know exactly how rash and irresponsible it is before I go ahead and do it.</p>
<p>The reality is $55k at 2.1% for 25 years is an utterly fantastic deal. You'll be paying $235 a month, but over 25 years, accounting for inflation, it will (or should) come out MUCH less than that. Just don't pay it off early.</p>
<p>Had you said 10 years, at 7%, the equation might look far different. Your dad said unlikely to exceed 3%. Is there an interest cap? What is the rate tied to?</p>
<p>Normally, I am really debt- and risk-averse. But this is a really good deal.</p>
<p>Here's another way to look at it: Recalculated at 7% interest, which is closer to a market rate, your $55,000 loan is worth about $33,000. So . . . would you pay $33,000 to attend Dartmouth vs. whatever the alternative is?</p>
<p>(P.S.: Yes you would.)</p>
<p>mini, I don't know what interest caps are or what the rate is defined by, but it's based on the socialist notion (after all, this is Sweden) that everyone should be able to afford an education. I'll ask my dad about those things, but based on what you posted here, it definitely seems less daunting than I originally thought.</p>
<p>camelia: It is a great deal.</p>
<p>I am generally against students taking on excessive debt, but this deal is too good to pass up, and in this case "too good to be true" may actually be true. Just one minor detail: Is the loan in U.S. dollars and repaid in U.S. dollars? Since it is a Swedish Govt loan program, I would also guess your worst case scenario (no job, illness, inability to repay) would not be as bad as if you were in a typical U.S. student loan program.</p>
<p>I would take a closer look at the program details... but er... I can't read Svedish!!! :D</p>
<p><a href="http://www.csn.se/%5B/url%5D">http://www.csn.se/</a></p>
<p>Never mind, there is an "English" version button at the bottom of the page!</p>
<p>You need to see in writing what the interest rate will be in the future. That rate is great, but how high can they bump it up? Is it fixed at a rate for the entire repayment period? :)</p>