<p>I was wondering if it would make sense to take out the subsidized loan that is offered even if you aren't sure if you will need it. I am concerned that my son won't have enough summer earnings to pay for his portion of the fall tuition. He is still weighing an internship opportunity in NYC. If he accepts the internship, he will probably only break even. I believe thumper1 said the deadline for the loan freshman year was June 15th.</p>
<p>If it is a question I would take it, since it’s ‘use it or lose it’. Pay off the the interest on it at least. </p>
<p>To be blunt about this, it sets a bad precedent for him to take an unpaid internship and borrow to make up his shortfall for freshman year. Because eventually he is going to have to pay it back… and if he is a musician as your post suggests, his income may not be terrific. @Brownparent, this poster is asking about a subsidized loan. What is subsidized is the interest – the student does not start accruing interest until after graduation. I personally would not have let my kids take an unpaid internship the summer before college started if they didn’t have enough money to pay for most of what they were responsible for freshman year. </p>
<p>ah, sorry about the brain fart, it read unsub. Yes if you are not sure if you may need it I would take it out. Pay it off the next year if not needed. You don’t get a low rate deferred loan like that everyday and it isn’t even accruing interest.</p>
<p>An internship that is only break even isn’t bad, par for the course for some areas of work. Even though it does not seems like unpaid, like @inparent read, I do know kids who did unpaid internships for promise placement in future and it did work out. Sure, there shouldn’t be unpaid internships, but that isn’t the issue here anyway.</p>
<p>I don’t really believe graduating high school senior internships are probably very valuable, and the kid might be better of working a job to earn some money for college. Unpaid internships or those that just cover costs are a luxury – one of my kids did take one over one summer, but she had to cover all her own expenses AND meet her portion of her college costs every year without taking loans to do it. She did a couple other internships during the school year (one for a credit semester her college offered, one just as an unpaid internship with an opportunity local to her college). I recognize that they are required in some fields, but borrowing money so you can do that summer before college starts doesn’t seem financially prudent to me.</p>
<p>If he takes the loan will he be likely to be able to pay it off upon graduation? If so, sure, have him take it, and pay it back as soon as he realizes he doesn’t need it, if he doesn’t. There are fees for taking the loan, but they’re relatively low for an insurance policy like that. If the debt is likely to be crippling to him when he graduates, though, then encourage him to find a way to make ends meet without it.</p>
<p>There are no penalties for paying off a Stafford loan early. If you feel the internship is invaluable and support it, take the loan and if he doesn’t need it come fall, he can pay it back right away. Like mentioned above, you will lose the fee but the peace of mind might be worth it. Will he be able to take a campus job? Would that money need to go to books and living expenses or can it go towards paying off the loan during the year?</p>
<p>As said above, the Direct Loans are a “use it or lose it” situation, though you get the opportunity for the next year’s amounts if you qualify. You can’t go back, however and get the money you did not take in earlier year once the end of the year or June arrives of that school year. My advice is to take the sub loans, keep them in an account, an interest bearing one maybe though what they are giving these days is hardly worth it, and keep in hold. If not used, your student can decide when he’s done at school whether the 4% or so interest that will start up on them once he’s no longer a full time student makes it worthwhile to keep any of those funds he’s gotten or to pay it all back.</p>
<p>He does not have to report those funds sitting there as assets for FAFSA and other fin aid either, as long as he makes sure he has kept the situation clear in case he needs to show a paper trail. Once he spends an amount from them, he cannot replenish the amount that is sacrosanct, and the reduced balance becomes his new amount of protected assets. This is valuable because it allows him to spend down all other assets that get a 20% direct hit towards his EFC and still have some reserves. </p>
<p>OP here. Thanks for the input. Sorry for the confusion, but my son is getting ready to finish up his freshman year at university. The internship does sound like a great opportunity with future benefits to him; however, with the cost of living In NYC, I don’t realistically see how he can do anything but break even. He thinks that he will be able to put some money aside, but I really, really doubt it. @intparent - I do realize that a break-even internship is a luxury, as does my son. I think that is why he hasn’t jumped at the opportunity even though it is in his field and could possibly help him earn money in the future. </p>
<p>My son did not take out any loans for freshman year as he had enough money to cover his freshman costs with his summer job and graduation money. Yes, he is going to work on campus his sophomore year. So, he will be making his own money for books etc… I was only going to have him take out the subsidized portion of the loan. That way, he won’t accrue interest while he is in school. Thanks for the idea of a separate account cpt. as that will make it very clean and there won’t be any co-mingling of funds.</p>
<p>If he is a freshman, that is more reasonable. But I would put this to you – what if he has a similar opportunity after sophomore and junior years? Will you continue to take out loans to cover them? I think he needs to think really hard about whether having debt after graduating is worth it to do this, and what he will do if he has opportunities like this again the next two years.</p>
<p>I think that it is a perfect opportunity to see just how much things cost if he does them on credit. Sounds like he did a good job living on his savings during freshman year. Now he’s going to see just how expensive living in NYC is. He THINKS he can save a little money while taking this opportunity, and it may be an inexpensive way to show him just how much city living costs. He might prove everyone wrong and pay back that $3500 because he has saved much of his summer earning. It may be that he spends it all, but doesn’t want the debt and figures out how hard it is to work during sophomore year while going to school.</p>
<p>I’m anti-debt, but I think this sounds like a good plan. For $35, he’s buying a little insurance. If the same opportunities come up after sophomore and junior year, he’ll be in a better position to know if it is worth it. He can assess whether the internship was worth it after freshman year.</p>