A refi is good when you have variable rate debt and you're exposed to a high rate environment. See: mortgages BUT: majority of student debt is fixed rate, and there are already legal caps on student loan APRs. Bottom line: student loan refi is a solution looking for a problemhttps://twitter.com/amyklobuchar/status/1120465113847402497 …
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Also, likely, refi’s are preferable when rate is high for time t but uncertain for times t+n, but net long-term return is likely similar to present (e.g. some pharmaceuticals); also maybe still applicable to student loans in re: potential taxation on future earnings
You mean like getting a refi into a longer-tenor student loan to keep the tax deductibility for longer? That is definitely an interesting idea, though worth mentioning that the student loan interest deduction is capped at $2500/year. But it could still be a good reason to refi!
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Yeah outside the current environment for student loans but the idea is essentially some guaranteed net present rate that tries to price in potential future increases and decreases that likely work out on net; the concept applies in re: student loans which are subject to labor mkt
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ahh I see what you mean, like more dynamic pricing that accounts for the interest rate environment? That would prob make student loans cheaper, but my feeling is that the bigger problem is the current regime extends too much credit to borrowers who will never be able to repay
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That said, a strategic refi for tax purposes would be a limited use case. At end of the day, student loans have low cost of credit which intrinsically limits the usefulness of a refi. IMO the bigger issue is that student loan underwriting standards are basically nonexistent.
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Precisely; when the gov’t is the lender, it changes the policy rationale and, IMO, refi is a way to sell Warren’s concept to conservatives/Rs that are against a wealth tax; but I think the argument can be made compellingly that a refi isn’t unreasonable for some income range
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