Should Isaac Use Savings or Debt for College?

[hegemony]

http://online.wsj.com/article/SB125278725092906155.html

[TroyP]

Why not some of both? Stafford loans are running at 5.6% right now, which is cheap money. He could invest the rest in an IRA.

 

With Sallie Mae, I get a .25% interest rate reduction for autimatic debit, and after 36 on time payments, my rate drops by another 1%. That could get him down to 4.35%, on a 15 year note that's less than $125 a month.

 

I agree that $30k in loans could pose a significant financial burden on him after graduation. $15k would be quite managable, and would still allow him to set aside a significant amount for his Roth.