<p>Hi,
So I had a few questions about Federal and Perkins loan repayments before I sign the Master Promissory notes. Here it goes.</p>
<ol>
<li><p>So, I have been offered 9000 dollars (5500 Perkins and 3000 federal direct subsidized) for the academic year 2013-14). I am a transfer student and it will take me 2 more years to graduate. My parents can afford to pay the amount the loan that I have been offered. But my dad insists I should take the loan since our family is moving to USA this year and it will be very expensive for us. He says he will pay it all back in large chunks later after I graduate. I know paying back is my responsibility. But if my dad decides it to pay a major portion of the loan in one go is that even possible? I should note that my dad didnt receive his immigrant visa.So he will have to pay back from his home country in Bangladesh.</p></li>
<li><p>After I finish my undergraduate and masters, I plan on working in USA for a while. But I intend to go back to my home country later. Will I be able to pay my loans if I am working in my home country instead?</p></li>
<li><p>My dad suggests I should take the full amount of loan offered. I really wanted to reduce the amount of loan into a more reasonable amount. He says I should not worry about repayment now and he will help me out when the time comes. But I am scared because the repaying is obviously my responsibility. So I want to borrow wisely. The loan I have been offered covers certain costs such as books ($1328), transportation ($1456), and miscellaneous expenses ($1368). I believe if I spend wisely then I can atleast reduce 2000-3000 dollars worth of loan this year. My dad gets annoyed everyt ime I bring this up. He says that I will have years to pay back. So I should stop worrying now. He said I should take the full amount, keep it in a bank and spend wisely. If I manage to save up I can return it before I take loans next year. Is that even possible? I dont think his advice is wise. His main argument is that I have never lived in USA in the first place. So I dont even know how much money I will need throughout the year. What do you guys think? How much of the loans can I reduce?</p></li>
</ol>
<p>Sorry for the extraordinary long post. I know some of my questions might appear stupid. If it does then I apologize. I am trying to figure things out before I take such an important decision in my life.</p>
<p>Thanking you,
Shadowcat2</p>
<p>If you are eligible for these loans, then you are a citizen or permanent resident. The two loans you mention are both subsidized in that there is no interest accruing on them until after you graduate, at which point in time the interest meter starts up. So, open a savings account, and put the money in there and let it earn the big 1% if you are lucky, interest. If you don’t put ANY other money in that account, you don’t have to report it as an asset each year on your fin aid form as it is purely fin aid money, (take out the interest and buy yourself a soda with it). Your dad’s advice is good, in that getting a no interest loan is virtually impossible, so you are keeping a cache of money that you can draw upon if you need it, that isn’t costing you anything. Perkins loans are ending soon and the amount of unsub Staffords are limited each year, so having that money in the bank is like…well, having that money in the bank.</p>
<p>When you graduate, you can decide whether you want to pay off the loans right away and not have the interest start on them, or truly use them as a loan, depending on your situation then. That is, if you don’t spend it before then. Just always be aware that this is borrowed money, not a gift when you spend it, and use it only when you have to do so. </p>
<p>As for your father paying back the loan…sometimes it works out and sometimes not. Most parents do want the best for their kids and will do what they possibly can and will repay loans, give out money, etc. Some have the best of intentions but things don’t work out. Can’t squeeze money from a stone. So where your father will turn up in the future in terms of repaying your loan is anyone’s guess. </p>
<p>And, yes, you can repay the loans from whereever you are working. That is not the issue. Finding a job that pays enough to leave you with enough money to repay is usually the issue.</p>
<p>The Perkins and Federal direct subsidized loans will not accumulate any interest while you are studying. The interest doesn’t begin until you leave or graduate, so actually these are pretty good loans to take out. </p>
<p>I agree with your dad. You don’t know yet how much things will cost, and having some of this money in the bank will give you flexibility while you learn your way around in your new life. In your particular situation, I would recommend that you borrow the maximum amount for this year. Watch your expenses carefully, and if you don’t spend all of the loan money during the year, you can decide at the end of the year whether you want to pay it back early or hang onto it for expenses next year. </p>
<p>I know that the amount of loan that you have been offered is a bit scary, but it is not an unreasonable amount to pay off after graduation even your parents find that can’t help you with the debt. Here is one calculator that can help you see what the payments will be like: [FinAid</a> | Calculators | Loan Calculator](<a href=“Your Guide for College Financial Aid - Finaid”>Loan Payment Calculator - Finaid)</p>
<p>Hi,</p>
<p>Sorry for the late reply. As always, thank you for your reply. It was much easier to sign the MPN after I read all your responses. I really appreciate all your help.</p>
<p>I have a few more questions.</p>
<ol>
<li>So if I keep the amount of loan in a bank account, I won’t have to report it as an asset? </li>
<li>Does it make more sense to repay whatever that I save up at the end of every academic year? I am worried that if I wait till I graduate I might sometimes end up spending the borrowed money unnecessarily. </li>
<li>Will the interest still accrue if I start graduate school as I soon as I complete my undergraduate studies?</li>
</ol>
<p>Once again, thank you. :)</p>
<p>1) No. Financial aid is excluded from reportable assets.
2) It’s up to you. Why not keep it in an account that you do not touch? That way, if you run into trouble and need it, it’s there … if not, you can pay it back right away after graduation. Or, if you end up in grad school right away, use that money for grad school! You won’t get loans with terms that good again.</p>