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

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

3. 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.

4. 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.

5. T-Bill Trace

6. T-Bill Correlogram

7. T-Bill Histogram

8. Dickey-Fuller Test

9. Transforming the Data Take the First Difference of the series

10. Histogram of Transformed Data

11. Dickey-Fuller Test of Transformed Data

12. Correlogram of First Difference

13. The Model

14. Correlogram of the Model

15. Actual, Fitted, Residual

16. Histogram of Residuals

17. Residuals Squared

18. ARCH/GARCH Model 1

19. ARCH/GARCH Model 2

20. Model 2 Actual, Fitted, Residual

21. Correlogram of Residuals

22. Squared Residuals

23. ARCH Lagrange Multiplier

24. Testing the Forecasting Capability

25. Using the Model to Forecast

26. Plot of Entire Series (Including Forecast)

27. Forecast Recolored

28. T-bill Forecast

30. Conclusion The predicted result is an interest rate of 1.24% for May, 2005. 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.