<p>I have recently gotten into Baylor University and would really like to go there. However, it isn't exactly the cheapest school in the world to attend. </p>
<p>Tuition, fees, room, and board add up to about $39,199.
I should get $16,827 in need-based grants.
I qualify for $8,500 in scholarships.</p>
<p>When you subtract this, we're at $13,872.
Subtract $5,500 in loans ($3,500 subsidized, $2,000 unsubsidized), and we're down to $8,372, an amount my parents say they think they can swing.</p>
<p>Is it a bad idea to take out these loans? If I take out $5,500/year for 4 years, I'll graduate with about $22,000 debt. How hard will this be to get out of? How long do I get to pay them back?</p>
<p>Help!?</p>
<p>NOTE: All of my numbers are from Baylor's financial aid estimator.</p>
<p>What is the monthly payment you will have to make on that principal?</p>
<p>For a 10 year loan at a blended interest rate of 6% for $22,000 I get $244 a month.</p>
<p>Doesn’t seem so bad . . .</p>
<p>Other considerations:
while you are in school payments must be made on the unsubsidized loans
it may take you longer than 4 years to graduate
Baylor will recalculate your need each year, so your awards may change </p>
<p>It might be a good idea to talk to the Baylor financial aid office to verify this info; also maybe ask your folks to make payments on the unsubsidized loans for you?</p>
<p>If you can graduate with nothing more than Federally subsidized loans, you have done well. It is all of the non-subsidized loans that ruin years of people’s lives and limit their opportunities.</p>
<p>A person should not take more out in loans than they expect to make in their first job. </p>
<p>You should also consider that your parents will probably be eligible for $2,500 of Federal tax credits each year for 4 years. (Congress needs to act to renew these, but that should happen). Even if they don’t pay that much in taxes, most of it is still paid out in a check from the Feds.</p>
<p>Also, after you graduate, you can also deduct student loan interest payments from your taxable income. </p>
<p>You should do everything conceivably possible to graduate in 4 years. If so, your plan looks fine. Many colleges limit their financial aid offers to 4 years.</p>
<p>I just reread your post and noticed that you do plan to take out 2k in unsubsidized loans the first year. You should do whatever you can to avoid that, if possible, because:</p>
<p>a. those payments have to start right away,
b. the interest rate is much higher and
c. the interest builds up when you are college. </p>
<p>If you need non-subsidized loans, it is better to do them in the last year, because then you will pay much less interest. </p>
<p>It is better to use up savings in the first year, because that may make you more eligible for additional aid in later years of college. Also, the amount of Federally subsidized loans increases each year you are in college - I believe it is $6000 the last year.</p>
<p>You do not have to make payments on unsubsidized staffords while you are in college. The interest will accrue on these loans (unsubsidized) while you are in school so it is a good idea to pay the interest as you go (if possible).</p>
<p>Unsubsidized Stafford Loan Interest Rate information
The current interest rate on an Unsubsidized Stafford loan is 6.8% fixed. Interest begins accruing after the loan is disbursed to the school. You are not required to pay the interest while you are in school, but doing so can save you money. If you choose not to pay the interest while in school then the interest is capitalized when the loan enters repayment after being in school, in your grace period, or after deferment.</p>
<p>*I just reread your post and noticed that you do plan to take out 2k in unsubsidized loans the first year. You should do whatever you can to avoid that, if possible, because:</p>
<p>a. those payments have to start right away,
b. the interest rate is much higher and
. *</p>
<p>Charlie…where do you get your WRONG info?</p>
<p>Payments do NOT start right away, and the interest rate is the same 6.8%. The only think you’re right about is that the interest builds while in college.</p>
<p>Anyway…since this student is low income, there’s really no way to get thru college without the full amount of fed loans. She doesn’t have the stats for no-loan schools.</p>
<p>I should have said that many non-Federal loans require you to start paying the interest right away, but not non-subsidized Federal Staffords. For example, repayment of PLUS loans begins following the final disbursement for the year. </p>
<p>As noted above, for non-subsidized Staffords, the interest starts acrueing immediately, so it make sense to try to take those out later in your college instead of earlier in your college years, if possible.</p>
<p>When I comment, I try to answer broadly, because if you look at the counts of people who view each topic, they are read by many more people than just the original poster. If we just answer one specific very question, it is of limited value.</p>
<p>I hope everyone realizes that the people posting on this site are volunteer amateurs, and we make mistakes. People should look upon this site as a starting point, and then get more detailed and up to date information from official sources. That is the value of the back and forth discussion, so we can correct each other’s misinterpretations and misperceptions. Unfortunately, I am not able to correct everyone’s attitudes.</p>
<p>If I did the math correctly, wouldn’t I end up paying more in interest for the unsubsidized loan than the loan is even worth?</p>
<p>Anyway… if my mom gets the $2,500 tax credit, couldn’t I put that money toward sophomore, junior, and senior years? I would just have to find another way to cover that portion for freshman year if I can.</p>
<p>Also, if I’m doing work-study, couldn’t a portion of my income be saved to help pay for college? I don’t plan on my personal expenses being that high, so I think saving most of my income could be realistic. </p>
<p>Plus, I’m applying for a few outside scholarships (each one is about $1,000) so that could help a little bit.</p>
<p>Nice, I’m heading to Baylor also next year! Just a tip that they don’t actually finalize any merit aid until March/April so you can still retake SAT/ACT to boost your scholarship money. That’s what I’m doing. I’m hoping for a 29+ on the ACT in December so I can get $12,500 per year instead of $10,000. Also, $5,500 is GREAT. I hope I only have to take out $5,500. That would be amazing. I’m looking at like $10,000 per year right now.</p>
<p>Taking the full Stafford loan (subsidized + unsubsidized) is reasonable; in fact, it’s often cited as the maximum that anyone should consider taking for undergrad.</p>
<p>I think it’s great that you want to avoid loans…getting a job, applying for scholarships, and looking for ways to cut costs are very good ideas. But consider taking at least the subsidized portion of your Stafford loans, even if you don’t need it to pay the bills that year, as that money can be paid back at any time and may allow you to avoid taking an unsub loan down the road if your financial aid/work study gets cut. Also, if you’re offered a federal Perkins loan, you should take that before any unsub loans.</p>
<p>Federal loans have a long payback period and there are various repayment options. Standard repayment is 10 years although choosing an income based repayment option may result in a longer payment period. They can be deferred if you decide to go to grad school or experience a period of unemployment.</p>
<p>Many students don’t take out subsidized Federal loans their first year because they don’t feel they need it. Then, by their third or fourth years, they run out of savings, and they come to realize they are limited in the amount of subsidized Federal loans they can take out each year. As a result, they get trapped into very expensive private loans for the difference. </p>
<p>Those private loans often advertise low “teaser” rates that few people are actually able to get.</p>
<p>As stated above, it is best to take out the maximum amount of Federally subsidized loans that you can each year. If you don’t need to take the full amount out your senior year, great, but at least you will have that option. </p>
<p>The following is the current maximum amount of Federal Stafford loans that most dependent undergrad students are able to obtain:</p>
<p>1st year - $5,500No more than $3,500 of this amount may be in subsidized loans.
2nd year - $6,500No more than $4,500 of this amount may be in subsidized loans.
3rd year and beyond - $7,500No more than $5,500 of this amount may be in subsidized loans.
Total aggregate - $31,000No more than $23,000 of this amount may be in subsidized loans.</p>
<p>Is it possible to get a job (work study or not) to knock out the unsubsidized loan? Either way, the amount seems reasonable, and I applaud your efforts to reduce your debt as much as possible.</p>
<p>By the way, I know a few Baylor alumni, and they all loved it! :)</p>
<p>Alright… I used Baylor’s financial aid estimator again and plugged in the SAT scores for the next level of merit scholarship up from mine, and I would only end up saving about $200 because they would lower my need-based aid amount.</p>
<p>I definitely plan on taking out the subsidized portion of the loans, because I have no college savings and will need those. </p>
<p>I can start working toward the end of this school year and through the summer to help pay for the first semester’s costs and maybe save for second semester.</p>
<p>I’ll have to use my work-study money for personal expenses.</p>
<p>I think borrowing the max on the federal loans is acceptable. It is the price of a nice car - which, if things aren’t going well at the time, you can do without and utilize public transportation until your situation improves.</p>
<p>But, since nothing is carved in stone, keep all your options open until you have official offers in late Spring. Your comfort level with borrowing will be greater if you have a solid plan to graduate in 4 years - only you know how solid your choice of major is. If you are still choosing between majors, try to plan a first semester or two that would work with either major as much as possible that way you won’t find yourself in a situation where you can’t graduate in 4 years.</p>