I might not need the loan..but should i take it?

Paying for College
1

<p>Basically i will be going to school instate, and i have 4675 per semester of Grants.
After paying for room, tuition, books, i am left with about 1300 for food for about 5 months...and this worries me because I do not take into account other small things which come up (and its tight).</p>

<p>I have been offered 2650 in loans per semester, subsidized...Says i do not have to pay interest till 6 months after graduation.</p>

<p>Should i take the full loan out and let it sit in bank incase i need it? and then pay it back in full later (incase i didnt need)?</p>

<p>Or should I stay away?</p>

2

<p>That depends on what is the “cost” of other sources of income to cover incidentals, transportation, books.</p>

<p>To borrow and sock away: that depends on whether or not you are a sock it away person or a soul who sends every penny in his pocket. </p>

<p>If you are a saver, take the loan, invest conservatively, gain the (small) interest, and build your credit rating. In the long run the loan interest will be more then the savings interest by at least 2%. Is that two percent a good price for piece of mind or building a credit rating? Only you can answer that. </p>

<p>If you are likely to spend it, consider your major and goals: will you be ready to begin paying back $5,000, $10,000, $15,000 or $25,000 in loans the day your graduate or leave school? </p>

<p>In calculating payback, consider that the national average for graduation within 6 years hovers around 50%. Half of all students have to begin paying back loans without having a degree-based job or income. Also, always assume that you will be in school or taking loans for five years, not four. Far too few students finish in 4 years to base plans on that Utopian plan. </p>

<p>You loan amount:
$2650/semester x 2 =$5300/year
x 5 years = $26,500 total plus interest, with a 50/50 chance of having to pay it back without a degree. That is a heavy burden.</p>

<p>General guidance in the adult world is to have a nest egg of at least 3 months of living expenses socked away for emergencies; consider borrowing the $2,650 once and really really really only use it for emergencies. Don’t be trapped in an extravagant lifestyle that comes to “require” loans every semester. Not having to pay back $25,000 after graduation puts you in line for a decent house within 5 years, not 15.</p>

3

<p>Also, keep in mind that anything you have sitting in the bank at the time you file your FAFSA for next year (2010-11) will be counted as an asset when determining your financial aid.</p>

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<p>^I don’t believe the loan is an asset for FAFSA as the net value would only be the interest earned.</p>

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<p>Oh, that’s interesting. I was thinking that if my daughter took out some student loan money, but didn’t spend it that year, that any left in her account would have to be declared the following year as a balance in her acccount.</p>

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<p>Money in savings is money in savings. If you borrowed it & didn’t use it, you now have it available to use. It needs to be reported.</p>

<p>Don’t take the loan if you don’t think you’ll need it. You can always do a loan revision request at a later date & request it (as long as you are still in school - don’t wait until the term is done & then ask). If you were awarded a Perkins loan, though, you might not want to turn that down if you think there is any chance you might want it later - those funds are limited & a “no” now may not be able to turn into a “yes” later. You can always pay it back if you find you don’t need it. Stafford loans can be safely declined now & then requested at a later date.</p>

<p>I also would caution that you must attend school at least half time to get a loan. So if you think you’ll need money in a future term during which you might not be half time, you might want to borrow during the previous term if you have eligibility. For example, some of our students will borrow during winter term even if they don’t need it if they know they’ll need it for summer term & they know they’ll only take 4 or 5 credits.</p>

7

<p>kelsmom, on the FAFSA instructions for student assets it specifically say to report only the net asset value (market value less debt). When I called the FAFSA helpline, they agreed that loan proceeds should be decreased by the amount of the loan and proceeds of student loans are specifically excluded. I can’t copy and paste from pdf files, but page 38 of this doc was where I originally got the info:
<a href=“http://studentaid.ed.gov/students/attachments/siteresources/CompletingtheFAFSA09-10.pdf[/url]”>http://studentaid.ed.gov/students/attachments/siteresources/CompletingtheFAFSA09-10.pdf&lt;/a&gt;&lt;/p&gt;

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<p>Cash in the bank is cash in the bank. Net value refers to investments. I talked to one of my managers who has experience at several schools (private & public) - she told me that if a student has money sitting in the bank from loans, it still needs to be reported as cash in the bank. If you have a school that is a real stickler, they may require a copy of a bank statement that states the amount you had in the bank on the day you signed your FAFSA. The expectation is that your aid is used to pay for school costs - so if you aren’t using it to pay for school now, it is available to use later.</p>

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<p>I guess i am set to worry that if i take this loan now, my grant amount will decrease unless I use it all up or keep it under my bed.</p>

<p>anyway, thank you all.</p>

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<p>Again, you can always ask for the loan if you find that you need it. If you prefer, you could take the loan now & send it back if you find you don’t need it after all. The only caution here is that you will need to make sure you don’t blow the money! It’s not an all or nothing decision you need to make right now.</p>

11

<p>all on black or red guys?</p>

<p>;]</p>

<p>thanks again</p>

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<p>If you take the money and pay it back in full before your grace period is up, you will not pay any interest on the money. I’d take it - it gives you some flexibility in case some emergency comes up.</p>

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<p>In our case, the federal loans were deposited directly to the student’s account at the school so there was no option to invest it, save it or buy anything else with it.</p>

14

<p>lkf, do you mean the student couldn’t request a refund of the overage? How do they expect them to pay the unbilled portion of the COA? All of the schools my D looked at had a procedure and date stated on their FA website for receiving payment of excess funds.</p>

<p>rsala, we decided to take the Stafford and Perkins subsidized loans instead of drawing down her 529 fund or paying out of pocket. In our case, it was a matter of planning for future higher costs when she’ll be a grad student for 3 years and will likely only be offered loans, and not nearly enough of them will be subsidized!</p>