Pay off Student Debt with HELOC or with Mutual Funds
I recently graduated from university and racked up approximately $50,000 worth of student debt. During my time in school, my wife and I managed to put some savings into our mutual funds which have also grown to approximately $50,000. We also have a HELOC that has a max limit of $110,000. My question to you during my analysis: do I take out all of my money from my mutual funds and pay off my student debt now, or do I pay off my student debt with my HELOC that can eat this up and keep the money growing in the mutual fund. I've compiled a table with various scenarios and additional info that helps is that the $50,000 in student debt from OSAP has interest rates of 6.45% on the federal portion ($33,356), and 4.95% on the provincial portion ($16,643). I know that if I used my HELOC to pay off my student debt, I can lock in an interest rate of 3.05%. Furthermore, the analysis assumes that the mutual funds will appreciate at 7% per year, and this, I believe, is a safe assumption.
My observations are that it makes no sense to leave the money with OSAP (option 1). Furthermore, it looks like it wouldn't help even if I used $10,000 to pay of my student debt, as I would lose ~$10,000 after 10 years (Cumulative).
I'm leaning towards paying off my student debt with my HELOC, and permitting the mutual fund to nicely grow at the assumed rate of 7%.
Is there something missing in my analysis, or is there advice that some of you can give me on this long term plan. Any help/advice would be nice.
Thank you in advance.