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[JTB]

I am about to consolidate some direct stafford loans (subsidized and
unsunsidized) through nelnet. They offer two options:

1% APR reduction after 36 payments
3.33 % Principle reduction after 30 payments

Now nelnet makes their loans 180 months only, not 120 as I would
prefer. There are no early repayment penalties, though, so I plan to
pay ot off in 8 or 10 years. Their payment exstimator shows me that I
will save a bit of money if I choose the interest rate reduction for my
loans (although this assumes equal payments for 180 months):

3.37% $4,732.49
3.37% $2,748.67
4.17% $3,246.49


What I'm hoping somebody could tell me is how how quickly I would have
to pay off the loan to make the principle reduction the cheaper option
for me (assuming equal payment every month). I'm asssuming the
priniple redution will be cheaper as long as I pay it of in less than X
months while the interest rate reduction will be cheaper if I pay it
off in more than X months?


Here are the nelnet estimates based on 180 month term.


(Interest rate reduction) 180 x $76.03 = $13,248
(Principle reduction) 180 x $71.83 = $13,081

Thanks, all!

[JTB]

Oops, I messed up above. The last two lines are reversed. It shoudl
read:

(Principle reduction) 180 x $76.03 = $13,248
(Interest rate reduction) 180 x $71.83 = $13,081