September 18, 2023
Question:
With federal student loan interest at it highest levels in a while, are there other funding options I should be considering?
Answer:
While there is no foolproof way to avoid higher interest rates on student loans, there are a few ideas to consider:
If you/your child have federal direct unsubsidized loans (interest accrues immediately as opposed to subsidized loans where the interest is deferred while the student is in school), you can pay down the accrued interest periodically even before the student has to begin repayment. Though this technique doesn’t avoid the interest rate, it may help manage it better for the long run. This is when compounding interest can work against you.
Do you have relatives who may want to help you/your child and get assets out of their estate? Did you know that anyone can pay an educational institution directly and not have the dollars be subject to gift tax? What a fabulous gift to give!
Do your friends ask you financial questions?
Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters.