Hi. I’m a student at a CC and I took out a 3500 Stafford unsubsidized loan. I will probably have around 500-700 extra dollars after paying my tuition for the whole year. Would it be better to save this money for when I transfer to a 4 year or just pay it back immediately? Thanks!
Edit: Also would you reccomend paying for as much of the CC out of pocket as possible and banking the loans, or use the loan and keep all of my savings for 4 year? Thanks!
Why are you calling this thread “bank loans”. The Direct Loan is a federally funded loan.
Regarding your question…you are talking apples and apples. If you save $3500 a year, it doesn’t matter if it’s your current earnings or money from a loan.
Just keep very careful track of the amount in your savings that is a financial aid loan…because that amount is not included in your assets for the next FAFSA you complete. But really…most of that money will have been used to pay billable costs to your university FIRST.
The loan payments don’t come to YOU. They are sent to the college which uses them to pay any billable costs. All you will have left is whatever is refunded to you.
All you should have in your savings is the $700 max per year.
@mommdc right?
If you’re going to have a shortfall in your junior and senior years after you transfer, then it’s worth paying the interest on the excess loan funds and hanging onto the money, since on your own you won’t be able to borrow more than the federal limit of $7500 in those years, whether or not you borrow less or repay loans in your first 2 years.
Yes, if you have money left, you can put it towards your fall bill once you transfer to university.
@thumper1 I was told that “banking loans” means keeping the money and saving them. I’m not sure if that’s correct but that’s what I meant. I know the loan payments are refunded, I mean the 500- 700 is what would be refunded.
Do you think I should have two seperate savings accounts then? Because as of right now I have a savings account with around 1.5k in it.
Yes, it might be helpful to keep regular savings and financial aid refunds separate.
Double post
Were the loans subsidized? It appears to be the case since $3500 is the max can be borrowed subsidized as a freshman is $3500. If so, then interest is being paid by the government while you are in school and it only makes sense to keep the loans and pay them back with anything you have remaining after graduation.
Even if interest is accruing, it still makes sense to keep it for emergencies now. The interest amount is very low and it will cost more to re-borrow it should you need it in future years.
@twoinanddone Yeah that’s true. You never know when something may happen and I wouldn’t want to be stuck in a bad situation. I’ll keep the money and open up a seperate bank account for it.
Thanks!