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  1. #1
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    Question Financial Advice Needed...Iowa Student Loan Index Change?

    I recently recieved a letter from Iowa Student Loan (ISL) giving me an option to change the index that is used to calculate the variable interest rate on my partnership loans and am looking for advice on whether or not I should change. Any help is really appreciated as I am not a financial Guru.

    I'm very scepticle on why they are offering this option to those that have private loans and am hoping someone else in the same situation or someone who is more familiar with these indexes can provide input on how to determine which rate is better....

    With that said, here are the options:
    Option 1: Keep Current COF index
    -This is the current (Cost of Funds) index used for my loans and is determined by periodic auctions of ISL's bonds.
    -Without getting into the details of my loans, my rates will increase fairly significantly using this index.

    Option 2: Change to Use LIBOR (3 month avg) index
    -This is the 3 month avg. of the London Interbank Offering Rate.
    -Without getting into the details of my loans, my rates will decrease by about 2%.
    -On paper, this definitely looks like the best "current" option. The question is, how stable is this index and does it only look like a better index for the time being?

    Now that I've laid out these options, I'm also struggling with why ISL is doing this?
    ~ Are they giving us this option b/c it is required by law and they are hoping that a majority of us will overlook the letter they sent out to keep us on a higher interest rate?
    OR
    ~Are there other reasons they are trying to get people to switch to the LIBOR index b/c keeping them on the current COF Index will hurt them in the long run?

    Sorry for the VERY long post, especially if you actually read the whole thing.......but any advice with this is really appreciated!


    - 的知 not a spin my wheels type of guy." - Coach Paul Rhoads

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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    There was another thread on this a bit ago, I think the consensus was the LIBOR average. That's what I'm doing anyway.




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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    They're doing this because they've have trouble getting funding due to the turmoil in the markets. About a month ago, the register ran a story about Iowa banks starting to help provide funding to them.

    Going with the LIBOR option is the way to go.



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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    Well the LIBOR is based in London. In general I think our index rate is better than the LIBOR, but....with as crazy as our markets are, and being in a possible recessional period, I'm not really sure what to do.

    I also received the letter. It is ridiculous how much the interest rate is increasing...from like 8.36% to 11%+. Mortgage rates are only at like 6%.

    WTB rich wife to pay off my loans and support me.


    You can't polish a turd.

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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    Thanks a lot for the replies thus far - I'll see if I can't find the previous thread on this....

    I've been leaning towards the LIBOR myself, especially b/c the European markets are better than our own at the moment. On paper the choice seems obvious, but I just wanted to make sure ISL didn't have their "own agenda" on this whole thing.

    I've never really trusted how ISL has calculated the current index anyway, so this may be my opportunity to break free of an index that's calculated by the sale of their own bonds... My rates have steadily and consitently increased since I started paying off my loans......


    - 的知 not a spin my wheels type of guy." - Coach Paul Rhoads

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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    I went to the LIBOR option as well. Good info in the other thread:

    http://www.cyclonefanatic.com/forum/...dent-loan.html

    I'm thinking I should try to pay off this loan as fast as possible so I'm no longer forced to deal with ISL or their horrible website!



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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    Quote Originally Posted by Jonecy View Post
    Thanks a lot for the replies thus far - I'll see if I can't find the previous thread on this....

    I've been leaning towards the LIBOR myself, especially b/c the European markets are better than our own at the moment. On paper the choice seems obvious, but I just wanted to make sure ISL didn't have their "own agenda" on this whole thing.

    I've never really trusted how ISL has calculated the current index anyway, so this may be my opportunity to break free of an index that's calculated by the sale of their own bonds... My rates have steadily and consitently increased since I started paying off my loans......
    Here's the deal (at least how I read it)...if you go to the LIBOR you can't ever switch back. If you don't switch to the LIBOR now, you could potentially switch to it down the road. My wife is going to stay put for now to see how it plays out for a while. Fortunately I did the fixed rate back in the day.



    的知 just glad I have Homan as my bodyguard, Eustachy joked. 的f I ever make it real big and get to drive a limo everyday, he値l be driving it. I thought he came off the bench like somebody was stealing his cow or something.

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  8. #8
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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    Quote Originally Posted by Jables22 View Post
    I
    I'm thinking I should try to pay off this loan as fast as possible so I'm no longer forced to deal with ISL or their horrible website!
    Amen to that. There's nothing more frustrating than when you try to submit technical feedback on their website only to get an application error when you submit it!

    Thanks for the link!


    - 的知 not a spin my wheels type of guy." - Coach Paul Rhoads

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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    Quote Originally Posted by tigershoops31 View Post
    Here's the deal (at least how I read it)...if you go to the LIBOR you can't ever switch back. If you don't switch to the LIBOR now, you could potentially switch to it down the road. My wife is going to stay put for now to see how it plays out for a while. Fortunately I did the fixed rate back in the day.
    Yeah, that caught my attention too....
    Statement In Letter: "PLEASE NOTE: If you make this change, you will be unable to change back to the COF Index."

    But, I didn't see anything regarding another offering period to switch to the LIBOR. Can you explain why you think this?

    Thanks!


    - 的知 not a spin my wheels type of guy." - Coach Paul Rhoads

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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    Quote Originally Posted by Jonecy View Post
    Yeah, that caught my attention too....
    Statement In Letter: "PLEASE NOTE: If you make this change, you will be unable to change back to the COF Index."

    But, I didn't see anything regarding another offering period to switch to the LIBOR. Can you explain why you think this?

    Thanks!
    I am just assuming since it didn't say anything about not being offered again that you would be able to switch in the future. I'm not 100% on this however. I just don't want to be locked into something that high for the next 20 years or however long we're paying with no way to change back.



    的知 just glad I have Homan as my bodyguard, Eustachy joked. 的f I ever make it real big and get to drive a limo everyday, he値l be driving it. I thought he came off the bench like somebody was stealing his cow or something.

    http://blogs.dmjuice.com/?cat=43

  11. #11
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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    I'm not sure what to do with mine as well. I didn't like the whole can't ever switch back. Only 2 of mine jumped up in rate and they are not very big loans, so I'm not too worried about it. I need to take another look at it and make a decision this weekend.



  12. #12
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    Re: Financial Advice Needed...Iowa Student Loan Index Change?

    Quote Originally Posted by tigershoops31 View Post
    I am just assuming since it didn't say anything about not being offered again that you would be able to switch in the future. I'm not 100% on this however. I just don't want to be locked into something that high for the next 20 years or however long we're paying with no way to change back.
    Okay, thanks for the explanation.

    Based on some of the information posted in the previous thread by The_Architect (see links below), my previous experiences with ISL and my overall gut feeling, I think I'm gonna make the jump to LIBOR.

    Here is a forecastor:
    Forecast of 3 Month LIBOR Interest Rate

    And here is some historical info:
    3 Month LIBOR - Rate, Definition & Historical Graph

    Everyone's situation is different, so I'm not trying to tell anybody what they should or should not do; however, it seems to me that the LIBOR is a safer bet here. If it turns out that the LIBOR skyrockets for some unforeseen reason, I will probably look into other options at that time (personal bank/cu loans, etc.) or hopefully be in a position to pay them off.

    I just don't really trust the financial situation that ISL or the American Economy is in right now, so I don't see a reason to stay with the current index. Even if the COF Index does improve, how long will it take for that to happen b/c it's already much higher than the LIBOR and I don't see the American Economy turning around anytime soon?

    Of course now that I've made a decision to switch to LIBOR, ISL will probably go bankrupt or something and everyone with a loan still using the COF index will be released of their financial obligations. Who knows?

    Anyway, thanks to everyone who gave feedback on this - It's very appreciated and it's great to have somewhere to go for advice from people in similar situations.

    Best wishes on paying off those loans!


    - 的知 not a spin my wheels type of guy." - Coach Paul Rhoads

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