I don’t think @gearmom is lecturing you, nor is she saying that you can’t stick to a budget. She’s asking you to look at repayment because you need to be able to repay your own loans.
Right now, you are asking about using Pell funds for study abroad; funds that you don’t appear to have on your own. Interest on loans adds up quickly.
What if you don’t get into the school you want?
Many students have to find jobs that are in very different towns where a person needs to pay rent and transportation.
What if you get sick, or have an accident and can’t work?
School loans are not forgivable: you can’t get rid of them in bankruptcy.
You said in another thread that you are taking this loan as a private one from a credit union. It will not be a student loan, so you won’t have the protections of a student loan, and you’ll have to make payments while you are in school, won’t be able to consolidate it with other student loans, etc. It will be more like a $20k car loan, without the car.
If you’re borrowing $20k for a year abroad to take courses that aren’t guaranteed to transfer, I think you’re borrowing for what amounts to a very expensive vacation.
Has your family been approved for the loan? If your income makes you eligible for enough Pell to put a dent in an overseas trip, I don’t know how your family can qualify for a private loan.
A 20k bank loan after interest is going to be like a 30 k loan. The maximum recommendation for loans for all four years is 27k. Can you afford $500 a month repayment when you are away in Israel and while you are going to school? You might not be able to afford school at all if you have to pay $500 a month for this loan.
If you think 20k is not a lot, then take a year off of school. Work and save 20k. Then go without any worries.
@twoinanddone You can get student loans which are private… I actually won’t have to repay till after school.
@austinmshauri It is a private student loan given through a credit union. I also have around 6k saved up. With established history with the bank, it is actually not to difficult to be approved. A year ago I was approved for a 6k car loan from them with very little credit history. @gearmom 20k is a lot, I said it is not the much in the context of landing a decent job. I know it is a lot without because it has taken me a year and half to just save up 6k.
Also, I really don’t understand how so many of you are assuming repayments are needed while I am in school. It is not the case.
You’re asking about Pell money which tells everyone that you don’t have a LOT of funding on your own.
Repayment on a loan is a big deal. Getting a degree does not presume that you will be immediately employed with decent wages.
You are assuming that you will land a “decent paying job”, but the rest of us know that such things may or may not happen.
Your loan could be sold to another company-which does happen.
Locale of this “decent paying job” affects your costs for transportation, living expenses, etc.
@taylor11 I would wait until Fall of 2020. That would be much less risky for you and your family. You could be more certain that this would be affordable and that credits would transfer. It is a lot of risk just because you are impatient. It does seem like a great opportunity but it will be there in two years. It only seems like forever when you are young.
Sometimes high loans can work out but there have been many, many cases where this much debt is devastating. That is why we are cautioning you. Out of concern for you and your family.
The challenge with your analogy is that there is a high threshold for an unsecured loan (which an educational loan is). If you did not make the payments on your secured loan (car), the credit union would have just repossessed your car. There is nothing to repossess on a private student loan. Your family would have to be credit worthy each year.
What is your anticipated major that you are going to make all of this money to service 100k in debt? My D has friends that she went to law school with who 5 years out have not obtained legal jobs that make enough to service their debt. Unfortunately many of the high paying jobs are located in parts of the country where the cost of living is also very high. My niece who is single 0 dependents makes $125k/year and was eligible for one of the few NYC housing lotteries for her income level. She recently moved to affordable housing building where her rent is $2700/month (she is happy because the market rent in her building is $4k/month). However, she says when they ran her financials, she would not have even been eligible if she were carrying a lot of student loan debt.
Even if you are a STEM student (engineering), anticipating making 50-65k coming out of college, after taxes and living expenses, it will be very hard to service 100K in debt.
And that private loan will NOT have the options of income based repayment.
You have your whole life to move to Israel…debt free.
Your family is Pell eligible which means they can’t help you much in this journey.
Also, if you DO this trip…and then come back to transfer to your four year university to finish…does the school cost less than $13,000 a year total cost of attendance? The junior year loan is $7500 and the max Pell is $5900…which is roughly $13,000. If your college costs more than that…how will you pay?
You need to take a personal finance course this coming term…and learn about debt, and loans, and money management.
There ARE private student loans, but you have to be a student at a qualified institution to get one. You said you are not matriculating at this school, just taking classes. If it isn’t a qualified student loan, it is just an unsecured loan and banks and credit unions are no longer allowed to just lend in any way they want. The Dodd-Frank act requires repayment schedules and income to debt ratios to be followed. There is no way a non-student loan can have a delayed repayment schedule of 4-5 years.
If you’ve got it all set up as a student loan, good for you. Your original question was could you use US govt financial aid at a foreign school. You can if it is qualified. If it isn’t qualified for federal aid, it’s not going to qualify as a student loan from a private lender either. Have you applied for the loan yet, and have you provided all the school’s qualifications to the credit union? Again, if so, good for you.
But it is still too much money to borrow to not have those credit count toward a college degree. $100k is an insane amount to borrow for an undergrad degree. You will NEVER pay it off in 5 years. The payments on a $50k loan @4% interest on a 20 year repayment plan are about $260/mo. TWENTY years. If paying on the normal 10 year repayment plan the monthly payment would be almost $500/mo. Ask how many PARENTS on CC could just pay that every month without it hurting. (answer, none)