School Loan Advice

[tkell]

Hello all,

I will be attending graduate school full-time in the coming months. Program length is approximately 27 months. Total cost of books and tuition is ~$22k.

I have about $12k saved up and will have around $15k by the time I start the program.

Is there any reason not to take out the max subsidized Stafford loan starting now? My thinking is maximize the subsidized loans the first year and a half and then consider an unsubsidized loan the last year if necessary to keep the interest away as long as possible.

Am I off base at all?

[jpg7n16]

Do you currently have a job? Salary? What position will you qualify for at the end of the program, and what salary will that position offer?

Eventually, you want all the debt gone - but right now (depending on your current job/salary) your priority may be to keep cash on hand.

Although some would disagree, I'd likely rather see you with $15k cash on hand, and a $15k subsidized loan, than $0 cash on hand, and $0 loans.


Once you graduate, you could take excess cash, and pay off the loans in huge chunks. Especially if your new job has a significant jump in salary.

[Leggett44]

Run, Run far away from student loan debt. I have a lot of student loan debt and it discourages me. I started responsibily with very small amounts, but then I took the maximum. I didn't need it and I wasted that money. Now, 10 years down the road, I feel like I am heavily burdened by the debt load. Yes, I can take the interest off my taxes, but I pay more in interest each year than is allowable for tax purposes.

[disneysteve]

Is there any reason not to take out the max subsidized Stafford loan starting now?

I wouldn't take out the maximum loan amount unless I was in need of the maximum loan amount to cover my anticipated costs. I would borrow the smallest amount you can manage to borrow so you don't have to deal with repaying as much later.

How much will you be earning while in school? I'd do what I could to maximize your income during those 27 months and minimize the amount you have to borrow to pay for school.

[Frugal]

My younger sister wants to go into grad school this year, and tuition will be nearly $70,000 per year, plus her living expenses. I personally turned down grad school to avoid further school loan debt..it is a trap, and hard to get out of once you incur it. I know, because i still have loans from undergrad.

That being said, in some fields you can pay it back pretty fast. I would talk to people in your situation, parents, friends, etc., and see what they would say about your individual situation, since they will know you better than anyone on here. It differs from person to person the cost-benefit analysis of grad school.

[Hector]

Try not to take a lot of student loans.

I know a lot of people with a grad degree who dont take out loan more than their tuition fees. They become frugal during grad school and work part time to take care of their living expenses. They were able to pay off loans in no time.

I also know people with a grad degree who treat check from student loan as their income and spend a lot. They dont wanna be frugal while they are in school and wanna live life like other people who work full time are living. But it takes forever for them to pay off that debt.

[disneysteve]

My younger sister wants to go into grad school this year, and tuition will be nearly $70,000 per year, plus her living expenses.

What the heck is she going for? What school is $70,000/year not counting room and board? How long of a program is it? That is truly insane.

[khosta]

Try your ardest to stay away from student loans subsidized and unsubsidized!!! I have both myself I am paying off and it horrible!!! I wish I never took student loans out, ever!!! They are the worst!!!

[LoanAmortization]

If the interest rate is none, then it would make sense to take out the maximum. Otherwise it could cost more.

[timbuckley10]

Do not take out the max if you don't need it! It may seem simple now but down the road you will kick yourself if you take on more than you absolutely must. Living on a tight budget is a given for college and don't try to expand your budget using loans.

[thefrugaltoad]

I agree with taking out the smallest loan you can afford. While most degrees are a great investment, starting a new career saddled with large amounts of debt is the wrong thing to do if you can avoid it. Have you looked at scholarships and work study as a way to pay for some of our college costs?

Paul - The Frugal Toad

[LoanAmortization]

Yeah, overall try to keep the debt and interest rate to a minimum. There are scholarships available that should cover some of the cost.

[Frugal]

Loans are tough. Sometimes, they can be bad in the long run even if they are subsidized. I personally would avoid taking out unsubsidized whenever possible.