Student Loans

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onion
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Student Loans

Postby onion » Fri Aug 15, 2014 9:46 pm

I was just offered $6,500 of federal student loans to go with my scholarships this year. Part subsidized and part unsubsidized. I did a bit of research online regarding these loans (my school won't even tell me what type of loan it is yet...) but only managed to get more confused. Could you guys give me a very brief run down? Also, what are the interest rates like? I don't really need loans, but would it be a bad idea to take the loans, and pay them off early? Do they pull your credit report for these loans (I imagine they would, obviously)? Anything else I should know?

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djrez4
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Postby djrez4 » Fri Aug 15, 2014 9:50 pm

No idea about credit pulls. By the time I started paying attention, I was well over two years past my loans. If there is an inquiry involved, there is a low threshold.

Interest rates are generally low. But, it's never a good idea to take out unnecessary loans. If you don't need it, don't take it.
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Postby popamode72 » Sat Aug 16, 2014 1:36 am

There's no inquiry involved if you're talking about the student loans I'm thinking of and that I have right now. I guess if you really need to take out loans, only take out what you need and decline the rest and avoid the unsubsidized loans if you can. I declined the unsubsidized loan stuff that financial aid awarded me this time and only took those out last year, Spring semester and this summer.
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Postby jlam572 » Tue Aug 19, 2014 12:11 pm

The one bit of advice I can tell you is AVOID all student loans if you don't need them. Borrow NO more than you absolutely need. If I could do it again, I would have skipped seeing my parents, owning a car, and eating out a couple times a week.

I graduated college with about 75k in student loans. I took me almost 5 years to pay them off. The interest (about 5-6 percent) is tax deductible, but is capped at like 2500 or something stupid like that.

It also hurt my credit score greatly...

When I was in school, I was working two jobs and making a combined total of around 20k a year. They did give me a company car and free apartment though. (credit score low 700s)

After school, I had to take a crappy job as a Nurses Aide at 10 dollars an hour...and 6 months after I graduated...BOOM 75k worth of credit suddenly shows up on my credit report. My debt to income ratio was in the absolute toilet. Score was in the mid 600s because of them.

I borrowed a little bit more than I really needed ...I probably could have survived well and got by with around 30-40k in loans...which would have only taken me 2 years or so to pay off.
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Postby Vattené » Wed Aug 20, 2014 3:47 pm

Categorically speaking, if you don't ABSOLUTELY need a loan do not take one out. Taking out loans just to live more comfortably now will come back to bite you. If you get in the habit of taking them out every semester just because you can, they will rapidly snowball. Interest rates on student loans generally are outrageous compared to the broader market right now.

You may think you will be making plenty of money down the road and will have no problem paying them off, but you never know what circumstances you will be in then. Even if you do make a ton of money, there will always be other things you would like to buy or put it towards.
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Postby MemberSince99 » Wed Aug 20, 2014 4:14 pm

I agree with these guys. I worked while I went part time for a couple of years then went full time and did take loans for that time (got grants also).


It's best to keep it to a minimum costs these days are nuts. And starting wages usually aren't great if you can even find a job in your field as opposed to the same Walmart job for 9 bucks an hour you could have gotten without the piece of paper.


I withdrew from the university to work in the IT field, which I've never regretted as that was the goal in the first place (to get in the door and work in that field) so I had minimal debt. Right now it's under 5k total between subsidized and unsubsidized. I had thought about paying it early but really have little incentive to as the interest rate is low and so are the payments. But if it was 75k yikes I'd be freaking out. I think if I pay anything early, it would be one of my vehicles rather than these but again that's just my circumstances.

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Postby CarefulBuilder14 » Wed Aug 20, 2014 4:32 pm

I generally agree with the previous comments. If you can avoid the loans in the first place, that's the best path.

The interest you pay on $6,500 of debt will probably be tax-deductible. Interest rates on federal student loans are pretty low. If you did get the loan, it wouldn't be the end of the world. There are much worse situations you could get into with student debt - especially private student loans.

My main concern would be that you might end up struggling to find a job or a job that pays well. With an extra $6,500 in cash lying around, you might be tempted to live a little too comfortably now, and end up kicking yourself when you have to pay every dollar of principal and interest back while working long hours in a low-paying job. Avoiding debt now means you will have one less obstacle to deal with after college.

Definitely avoid private loans under all circumstances!
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onion
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Postby onion » Wed Aug 20, 2014 7:39 pm

Thanks for the info, guys. I'll stay away from loans. After doing some more digging, I found out that they don't really have much of a positive impact on a credit report, and even though interest is tax deductible, its not worth the hassle.

Having the money wouldn't be too tempting, I've got a decent sized savings account and make more than enough money to pay the bills and chip some extra into savings after every job. I have around $25k in available credit, which is similar enough to having $25k in loans just sitting there. I won't go crazy and blow up my cards, so I definitely wouldn't do the same with borrowed money.
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Postby popamode72 » Wed Aug 20, 2014 9:53 pm

Wow and I thought I had plenty already. Checked my TU report and I have a little over 6K in student loans right now. Fortunately I live in a state where they give out a really good scholarship that helps cover a lot of tuition on top of going to a public university. My main regret now was maybe I could have taken out less unsubsidized stuff Fall and Spring semester so maybe that would just be about 4K or so. By my school's classification, I'm a sophomore.
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onion
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Postby onion » Wed Aug 20, 2014 10:48 pm

popamode72 wrote:Wow and I thought I had plenty already. Checked my TU report and I have a little over 6K in student loans right now. Fortunately I live in a state where they give out a really good scholarship that helps cover a lot of tuition on top of going to a public university. My main regret now was maybe I could have taken out less unsubsidized stuff Fall and Spring semester so maybe that would just be about 4K or so. By my school's classification, I'm a sophomore.


The scholarships have been a huge help. I ended up getting $300 extra per semester this year. I should be a junior but I'm 2 credits behind due to a car accident, so I'm a sophomore as well.
FICO TU - 728 - 8/14

FICO EX - 716 - 7/14

FICO EQ - 740 - 7/14



Bank of America Cash Rewards - $2,400

Best Buy - $3,000

American Express Blue Cash Everyday - $8,000

American Express Everyday - $10,000

Discover It Chrome - $500 (AU on fiancée's card, helping her build credit)

American Express Platinum - NPSL

Barclaycard Arrival+ - $3,000

Capital One Yamacard - $11,000



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