The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

Friday, May 29, 2009

Hyperinflation worries
Tom Smith

No joke.

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Tom Smith


At least it would make me feel better about my student loans!

Posted by: Matt Lister | May 29, 2009 1:49:23 PM

Tom: I think I read somewhere that the Federal debt is now 65.4 trillion. USA Today or somewhere. Wowzers.

Matt: Re: student loans. It depends. Check out ALL of your loans. Some of mine are variable. Some are fixed rate.

Variable rate loans - in theory - will increase with inflation.

I say, "in theory," because it's possible that the Fed will not raise interest rates once inflation hits. If that's the case, we will be sitting pretty. (Variable-rate loans rise based on the Fed's rate; not according to the rate of inflation.)

Do not count on that, though. The Fed may raise rates. If so, we'll be paying credit-card level interest on our student loans.

Do an audit of all of your student loans. Pay interest-only on the fixed rate loans. Attack as much principal as possible on the variable-rate loans.

***Oh, I'm not meaning to insult your intelligence! I didn't know much of this stuff until a few years ago. So perhaps you don't, either.

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