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I've posted this question to a few other boards, and someone recommended checking this one. I will about $22,706 in Stafford Loans after I consolidate in the spring. Using the loan estimator on Kentucky's student loan web site, I should get a fixed rate at 2.875% (minus 0.25% for setting up a regular payment from my checking account), with a repayment period over 20 years and $125 monthly payments.

My plan is to make exactly the minimum payment every month (after 30 months they also forgive 3.5% of the principal) and stretch out the repayment of this loan as long as possible. Inflation (a debtor's best friend) will basically make my interest payments for me. My only question is the possibility that $20,000 in debt could hurt me when I want to get a mortgage. I have no other debt, and since student loan debt is very low interest, I wouldn't expect it to be a problem. But I was just curious... seems like there has to be a catch when the present value of all my monthly payments will only be $23,816 (assuming 3% inflation). That's barely $1,000 more than the principal.

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