conmisdosmanos wrote:
Can one of you please explain what this means: "rates of Prime+100bps and 1mLIBOR+450bps "? (Solaris1, I stole that directly from one of your 'Financing your MBA' posts.)
You'll have to forgive solaris1, after a year at Stern he just assumes everyone talks like a banker. It means the interest rates are variable, based on benchmark rates (either the prime rate or the 1 month LIBOR) plus a certain margin: 100 basis points over prime or 450 basis points over LIBOR (a basis point = 0.01%). So assuming the current prime rate is 3.5% and 1 mo. LIBOR is 1% (I just made those up), these loans would currently charge 4.5% or 5.5%, respectively. You can easily find the current prime and LIBOR on the internet or in the WSJ. As the prime rate or LIBOR increase/decrease, the interest rates on these loans will increase/decrease.
conmisdosmanos wrote:
Also, is there some sort of consensus on whether it's best/cheapest/easiest to just go with the GradPLUS loans, or to shop around for private loans? Obviously, everyone's situation is different, but there seems to be a lot of debate on that topic. I'm inclined to do whatever is simplest since I'm so clueless, but I'm definitely interested in learning.
There is a lot of debate on this topic precisely because there is no real consensus. Currently, the rates on GradPLUS are above the rates on many private loans, but are fixed compared to the variable rates of private loans. So people who think that interest rates will remain low for the near to mid-term are generally more in favor of private loans, while people who think that interest rates will go up (like I do) are more in favor of the fixed-rate GradPLUS.