The 91 Day T-Bill Rate Steven Carlson Miguel Delgado Helleseter Darren Egan Christina Louie Cambria Price Pinar Sahin

Outline Introduction The Data Transforming the Data The Model The Forecast Conclusion

Introduction Should those with student loans consolidate? Consolidation allows the borrower to roll multiple variable interest rate loans into a single fixed loan. With interest rates at record lows and growing inflation concerns, consolidation can be a vehicle to significantly lower payments.

The Data The data is collected from the Federal Reserve Economic Data (FRED) for the 91-day T-bill rate for the last auction date in May of each year.

T-Bill Trace

T-Bill Correlogram

T-Bill Histogram

Dickey-Fuller Test

Transforming the Data Take the First Difference of the series

Histogram of Transformed Data

Dickey-Fuller Test of Transformed Data

Correlogram of First Difference

The Model

Correlogram of the Model

Actual, Fitted, Residual

Histogram of Residuals

Residuals Squared

ARCH/GARCH Model 1

ARCH/GARCH Model 2

Model 2 Actual, Fitted, Residual

Correlogram of Residuals

Squared Residuals

ARCH Lagrange Multiplier

Testing the Forecasting Capability

Using the Model to Forecast

Plot of Entire Series (Including Forecast)

Forecast Recolored

T-bill Forecast

Conclusion The predicted result is an interest rate of 1.24% for May, The forecasted rate is higher than the current rate. If you want to consolidate your loans, do so before the next rate, which the forecast shows to be higher. While significant uncertainty exists in the model, the 91-day T-bill rate is expected to steadily increase.