A mysterious stranger in a very official looking suit introduces themselves as Sweeney, loan transference specialist.

I heard that you have already accrued some college debt. Terrible shame, terrible shame. But there is a silver lining to that dark cloud of accumulating debt, indeed! I have a sweet deal for you! I can transfer that loan. Take care of it completely. Today!

Everything has a price of course, but I'm sure you'll be able to pay once you graduate. Instead of the initial amount you borrowed, we'll say you only borrowed a TENTH of it! Imagine! Now, we do expect you to pay it back in a timely manner, so the interest rate with be ten times as much. Please consult the following handy pamphlet explaining the process. My apologies that is a bit dated.

A 2012 Direct Unsubsidized Loan had an interest rate of 3.4% and tuition was about $10,000 per year (though Direct Loans on average only covered $4,000 per year). After four years of deferment, that would be 10,000(1+(0.034/12))^48= 11,454.62. Compare to Sweeney's sweet deal of only $1,000 at 34% interest: 1,000(1+(0.34/12))^48= 3,823.21. That's only a third of what you'd owe without Sweeney's sweet deal! A grumpy bystander called Oscar offers some critiques on this contract.

4. How does Sweeney's deal work with this year's Direct Loan interest rate? Be sure to state the interest rate clearly, and compare paying it back after four years the regular way versus paying it back using Sweeney's sweet deal. (Check your work: Instead of THIRD of the cost it should be more like saves you a THIRD of the cost. Be sure you understand the difference; it's a lot of money!)

Is it still a sweet deal?