You are enrolling in an MBA program. To pay your tuition, you can either take out a standard student loan (so the interest payments are not tax deductible) that has an EAR of

5%

or you can use a tax-deductible home equity loan with an APR (monthly compounding) of

5.875%.

You anticipate being in a very low tax bracket, so your tax rate will be only

15%.

Which loan should you use?

The after-tax rates for the two loans are:

Compare	Percent
Standard loan rate:	enter your response here%. (Round to three decimal places.)