<p>I am curious if there is anyone on here that knows how accurate the EFC is when filing your FAFSA. I know some people may not want to share, but i have no problem doing so. </p>
<p>Pell Grant Estimate: $4,595.00
Direct Stafford Loan Estimate: $12,500.00</p>
<p>How accurate are these numbers?
Is this per year/quarter/semester etc?
Can I receive more from the Pell Grant?</p>
<p>I am an independent student (I am 25 years old), so I think that qualifies for me to receive more than average students, correct? I am trying to financially plan out the next 2 years, and would love any input from anyone that may know. If anyone else would like to share, you are more than welcome too. Thank you guys and girls!</p>
<p>@NCalRent - I would honestly say that anyone should get as many grants/scholarships as possible, but they should also take out some subsidized student loans, mainly because they are interest free while in college, so it doesn’t cost anything and it gives you money to do what you need to, like invest in ideas that would help you in the future, or take care of other bills you have that have accrued, anything really, but take advantage while it’s interest free, at least I think so.</p>
<p>If you can help it, you really should really try to avoid taking out loans, period. Why would you willingly put yourself in thousands of dollars of debt if you’re able to afford everything by cutting back a little?</p>
<p>Because you can take out the money while in college and for example put it into a CD account which earns interest and you could theoretically profit off of it. Yes in essence you would be in debt but in reality you would have the money in the bank to cover the debt right?</p>
<p>Or just invest in your own future because maybe you’ll need the start up money or etc…</p>
<p>I’m willing to bet that the interest that will accumulate in the loans over the many years you spend paying it off is far higher than the interest you’ll “profit” off of from the CD.</p>
<p>It’s interest free while in college. And it can just be there for emergency purposes like trans on ur car goes out or needing money for whatever reason you don’t have to use it and you can profit from it easily.</p>
<p>Oh and say that interest does accrue you get that back when you do your taxes, for student loan interest look it up.</p>
<p>@sonic23 - For transfers it’s $5500 per year for subsidized.</p>
<p>If you are going to play rate arbitrage, the trick is be sure to have the capital to pay off the loan when interest begins to accrue… Frankly, few have the discipline to keep the money aside - and that’s where the trouble starts.</p>
<p>Right now, CD rates are pretty nominal (<1%) so the opportunity is pretty small. Walk through the numbers - If you take $5500 each of your 4 years, you’ll accumulate $22k in debt. Using just back of the envelope math, you’d earn $545 (taxable) over the 4 years! Keep in mind, they typically break up your payment so, that over-states your income potential a bit.</p>
<p>Now the downside, interest accrues when you leave school, degree or not. The debt is not forgivable, even in bankruptcy. When interest begins to accrue, it is close to 4%. That’s nearly $900 a year in interest expense if you carry it for a year.</p>
<p>Federal Student loan interest is usually deductable but, that is different than a tax credit - for tax filers that don’t itemize really see no benefit. </p>
<p>Is $545 - taxable - over 4 years worth the effort and risk? Do you have the discipline to keep the cash while your plan plays out? </p>
<p>If your plan is to invest in a less ‘sure thing’ than a CD - see the headlines on Bitcoin or pull up a a 2 year chart on gold, Apple or any of the ‘sure things’ smart people bet on 24 months ago. You are a fool to gamble with other people’s money.</p>
<p>I just spoke to a banker today who is a family friend who advised the use of them if you are putting money away for 3+ years, using the US treasury website savings bond calculator I came up with this:
This is with a $5,500 starting deposit and $5,500 per year deposit with current rates.</p>
<p>"By purchasing U.S. Savings Bonds, in 4 year(s), your investment could be worth (after federal taxes):
$27,059.91</p>
<p>Education Savings:
If you use your Savings Bonds to pay for educational costs, your earnings may be tax free (provided you meet certain qualifications). "</p>
<p>Yeah a lot of people are not very disciplined with money but then again some are, and some may need money to invest maybe in their own ideas or inventions or buy a car anything while the money is interest free. </p>
<p>No one will give you interest free money later in life so take advantage while you can.</p>
<p>And if you are planning a career in teaching or in the public sector, maybe as a public defender as I am you may be eligible for Federal Loan Forgiveness, so I’m not saying it’s right for everyone but it’s worth looking in to for each person.</p>
<p>You are sadly mistaken about the potential upside here. </p>
<p>There are lots of federal debt instruments so it is tough to tell exactly what you are talking about. I suspect there’s a problem with the tool or the way you are using it. Generally, when it comes to money, anything that says ‘could be worth as much as’ is suspect. You could win the lottery, then you’d have millions, right…</p>
<p>To accumulate $5,059 in interest over 4 years on an average balance of $11k implies a comound rate of return <9%%. That’s a tall order without locking up your risk free money for longer than 5 years. The current 10 year Treasury note pays about 2.7%.</p>
<p>Any banker pitching this to you should no-longer be considered a friend. </p>
<p>The issue is your debt is not interest free forever, and forgiveness terms are very narrow. </p>
<p>There are loads of very low interest rate loans for cars, houses and other capital purchases. Borrow for them (if you must) when you need them, not as a pre-emptive way to secure cheap money.</p>
<p>Spending it on your ‘invention’ is simply foolish. You can barely file a patent for $20k. When it doesn’t pan out… You’ll owe around $250 a month for 10 years - by then you’ll want to buy a house, get married, have kids or whatever…</p>
<p>If you need to borrow to go to school, that’s ok - it is an investment that will pay back many-fold. Any financial advisor worth his salt will implore you to keep your debt burden to a minimum when you are young. That includes cars, education, clothes or whatever. You don’t want to start your adult life in the hole unless you have to - and even then, start in the shallowest hole you can manage.</p>
<p>If it was so easy and logical to make money off of student loans like you seem to think it is, Matt, everyone would be doing it. There is a reason why this isn’t the case…</p>
<p>@Ncalrent - So say you were going for a job in one of the fields such as teaching for example what would be the negative impact of taking out 50k in student loans? Would it not be forgiven or what?</p>
<p>Also I used the Treasury’s saving bond estimator it came out to 4% interest compounded semiannually</p>
<p>@smltk1505h - Because college life costs so much on its own that people tend to take the loans out only when they really need them? But that process takes about two months just to fill out the paperwork and get disbursed, if you have the money already there because you thought you might need it ahead of time. I’m simply saying it literally costs you nothing to take the money and put it in the bank, it costs $0 to get that $5,500 a year and put it in a savings account, so what exactly is the downside to that? Just to know that you have the money in the bank IN CASE you need it.</p>
<p>To be fair, Matt4200 didn’t suggest that it was an easy way to pay off loans that can work for any student. He said himself that it isn’t for everyone.</p>
<p>I don’t know if his method is completely flawless, but it might be worth looking in to for some people.</p>
<p>@Cayton - Thanks, yeah I think it’s at least worth taking a look into, it might be good for some and not so good for others it all depends on individual situations.</p>