FAFSA Estimated Family Contribution

Transfer Students UC Transfers
21

<p>@Mat4200 - first, you aren’t going to make 4% interest on a 4 year low risk proposition. Thats what you’d expect from a 4 year junk bond in an environment like this. Pull up a quote on ticker symbol BSJI - it is an ETF that holds junk bonds due in 2018. They are called “junk bonds” because many default, meaning you might not get your $22k back. Second, there’s a problem with the calcualtor or the way you are using it. Bust out a calculator and you’ll see that 4% of $22,000 is $880. Thats the interest you figure you’ll earn in year 4 - when you have the highest balance. Years 1,2 and 3 would be commensurately lower because of the smaller balance. You’ll never get anywhere near $5k in interest. If you are going to take on an investment like this, understand how it works and model it on a spreadsheet, calculator or something.</p>

<p>On the $50k, I’d strongly urge you to find a lower cost option. That will exceed federally subsudized borrowing and result in higher interest that will begin accumulating right away. You’d be looking at monthly payments of $600+ for 10 years or more - which is a HUGE percentage of a teacher’s takehome pay - even less after you pay for rent, etc.- and will follow you into your 30s when you have other uses for the money! It will stand in the way of buying a car, house, etc and, as i noted above, can’t be discharged by bankruptcy.</p>

<p>The problem with betting on loan forgiveness is the rules and your interests will change over the next 5+ years. Or, you may get the job and hate it - but, be locked into a multi-year commitment because of the forgiveness. They ‘own’ you for a while.</p>

<p>You don’t have to look far for stories about people living with their parent into their 30s because of student loans. </p>

<p>Take a look at how much SLM Corp (Sallie Mae - the federally sponsored student loan provider) makes each year. In 2013 - they took in $6.2B in revenue and showed $1.4B in net income - up about 50% from 2012. While they provide an important and valuable function, they are a big comany with built in customer base and a profit motive. Their primary allegiance is to their shareholders - they don’t have your best interest in mind.</p>

<p>Don’t be a sucka… </p>

22

<p>@Ncalrent - And if you simply take the money and place it in a money market savings account at whatever bank you bank with?</p>

<p>Bottom line is yeah it’s not for everyone but for some maybe it’s worth looking into they can have the money there if they need it and if not the after the are done with their BA or Grad school they give whatever they borrowed back, it will have improved their credit and gave them a sense of security to know they had the money in the bank if an emergency happened, it’s interest free so in this scenario there’s no downside.</p>

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<p>Matt - the current money market rate is .39%. (yeah about 1/3 of 1%) If everything goes right, your profit won’t get you a latte at Starbucks each month. Also note, some student loans include fees that will flip your total return negative.
<a href=“http://studentaid.ed.gov/types/loans/interest-rates#are-there-any-other-fees-for-federal-student-aid”>http://studentaid.ed.gov/types/loans/interest-rates#are-there-any-other-fees-for-federal-student-aid&lt;/a&gt;
There’s plenty of downside…and virtually no upside. </p>

<p>It is your future and your decision - just be sure you understand the risk before commiting to a plan that could haunt you well into your 30s.</p>

<p>Honestly, you’d be much better served getting a job to cover unexpected expenses. </p>

<p>Take a few finance classes on the way by - they will help you for years to come.</p>

24

<p>Then put it in a CD like I said first, damn dude I’m not saying you are supposed to profit, I’m saying it’s possible. But you definitely won’t go negative if you do it correctly.</p>

<p>US Bank offers a CD at 1.5% interest compounded semiannually, so if you did that for four years you’d make a small profit while improving your credit. Min deposit 1k for 1+ years.</p>

<p>You do know that Federal Student loans do improve your credit rating if you don’t go in default right?</p>

<p>It’s just money to have in the bank that’s all. And if you need it for an emergency like the tranny on your car going out or medical emergency it’s there already and cheaper than going into a bank and saying hey I need a loan for a car or for repairs or etc…</p>