Q I have a Stafford student loan, $45,000 with a fixed annual percentage rate of 4.5 percent. Currently this loan is with ACS Education. However, this loan has been sold more than 10 times in the last eight years and I feel that it's a matter of time before it is sold again to another firm.
I bank with AffinityPlus and have accrued many points to buy down the interest rate. Does it make any sense to get a personal loan with a low interest rate (3.5 percent or lower) and pay off this student loan, then pay off the balance with my bank in a payment plan of $700 a month for the next five years?
I'd love your opinion.
TA
A To cut to the chase, I'm not a fan of this financial maneuver.
I've gotten a number of questions similar to yours. The desire to take advantage of lower rates is understandable. A number of people have told me about problems associated with a new student-loan servicer.
Still, the trade-off to weigh is the flexibility of student loans in case you run into trouble versus interest rate savings.
Since I usually worry about the unexpected downside -- what could go wrong? -- I think you would be giving up too much flexibility for too small a gain. To my thinking, the debt repayment flexibility built into the terms of federal student loans is a critical consideration and, by that metric, I would keep the federal student loans.