<p>I'm not too educated on loans and other financial aid stuff, so forgive me if I'm having trouble explaining some of this.</p>
<p>My college is totally paid for with scholarships, so money isn't an issue with that at all. I'm also set as far as costs during college. I was recommended to still take out a type of loan offered to college students because it'll probably be the cheapest interest rate I'll ever have. With taking out the loans I'm eligable for, I could save it up for a car or a house or whatever after graduation with a lower interest rate than I would get taking one out after graduation.</p>
<p>So, my question is whether I should go ahead and collect those loans? I'm used to hearing horror stories about graduating in debt, but would I be worse off taking out one big loan at a higher interest rate?</p>
<p>First of all, if your merit awards meet your cost of attendance, you would not in fact have any of the preferential need-based loans available to you. In addition, you can only borrow up to the cost of attendance with respect to the non-need based loans.</p>
<p>I don’t know where you’re getting advice, but you’d be nuts to incur loans for no purpose. The “cheapest” interest rate you’ll ever get is ZERO – and if you manage to SAVE money, you can even EARN interest.</p>
<p>In essence, borrowing money for non-essentials while in college effectively REDUCES the quality of your life post-college – that repayment money comes out of your income and ergo is not available for your future use!
You may wish to read up on Dave Ramsey to learn a little more about sound fiscal principals as you go forward in life. Google him.
Congrats on being able to attend college debt-free.
Cheers,
K</p>
<p>My school’s financial aid award letter gives me the option to take out loans; someone mentioned it’s because they add in misc. costs for their proposed cost of attending, and my scholarships should only cover tuition/room/books/school basics.</p>
<p>Your argument is exactly what I’ve been thinking. Thank you!</p>
<p>If the loans are subsidized loans (perkins, subsidized Stafford or direct) then the government pays the interest on these until you graduate or drop below 1/2 time plus a grace period of 6 months for Stafford and 9 months for Perkins. If you have been offered these then they are interest free until you graduate. If you think you may need the money for living expenses you can take these out and if you find you do not need the money then you can pay them off without penalty at any time before that. Though some direct and Stafford loans have origination fees so you would want to check that out first.</p>
<p>If the loans are unsubsidized then you are responsible for the interest from the day the loan is disbursed to you. I would definitely not take those unless you need the money for living expenses.</p>
<p>You also need to keep in mind that Stafford Loans, whether subsidized or unsubsidized are restricted to use for educational purposes ONLY. Trying to save the loan funds to purchase a home, car, or whatever after graduation is a violation of the paperwork you complete to take out the loan.</p>
<p>loans are financial aid for the schools, not the students. The students are subsidizing the cost of the institutions through taking these loans. Loans ARE NOT financial “aid” as they actually cost MORE than what is borrowed. They are institutional aid which allows the school to keep its prices up on the backs of kids who do not understand the cost of debt. Don’t borrow money this way.</p>