|
Considering getting extra student loans...
I'm planning on starting college soon and I have to get extra on my student loan, so I can afford fuel to get back and forth. I'm wondering if it might be worth it to get a larger amount and use it to move out of my parents house before I graduate. I'm talking about 20k extra, so that I can buy furnishings and essentials for the apartment as well as have a little cushion afterwards.
Now as young as I sound right now, I'm actually in my 20s, so I have been weighing the pros and cons, but I'd really like an outsiders opinion.
Right now all I have is my boyfriends and he just told me he'd support me no matter what I decide to do. We will not be living together for another couple years, because he is overseas.
Health issues, family issues, and personal issues have kept me from going to school and moving out up until now, so I'm very antsy, and very ready, to move out and on my own. Thanks for your advice! :)
[ ]
Want to answer more questions in the Work & School category?
Maybe give some free advice about: Personal Finance?
Private student loans are the absolute worst kind of debt. You can't get rid of them if you claim bankruptcy. Often, even if you die, someone still has to pay for them. Avoid them at all costs. DO NOT take out extra so that you can have a nice apartment that you can't afford. I would say, it's even a huge mistake to take out extra for fuel. Have you ever watched Suze Orman's show? Look into it. It's a real eye-opener about the dangers of any and all student loan debt.
That being said, nobody told me any of this before I did it. My parents were upset with me and refused to pay for any of my college expenses. I paid for my tuition with government loans, but took out private student loans to cover my expenses so that I could live off-campus. I was able to get decent private student loans with fixed interest rates. $20,000 worth of student loans is going to cost you $200+ a month until you're 50 or 60 on top of whatever else you're having to pay. This was a huge burden when I was just starting out. After college, I went through some really hard times where I wasn't paying other bills because I knew I had to pay this one. I do have it under control now. Sometimes I look around and think to myself, wow, I'm still paying for that Xbox. How can I have all these nice things and only $100 in my savings account? I made some mistakes. I should have been pinching every penny. It DOES NOT cost $20,000 to furnish an apartment. If you have to take out loans for this, all you can truly afford is a card table and some camping chairs. Really. I'm not trying to be mean or funny. You'd be living way above your means and starting your life out the wrong way. This could be a real slippery slope for you. If you do it and it seems like it works out, you could start taking loans out for other things. You can't afford any of this. I should have lived on-campus so that government loans would have covered more. I often ask myself why I was so stupid with money back then. I should have been more concerned about my future and I should have done more research about how bad private student loans were. Instead, I ignored it because I had already made up my mind and I was going to do it anyway. I worry what will happen if I ever lose my job, if I die, or if I have a kid with a lot of medical needs. Luckily, everything's good right now. There's no telling what next year could be like, though.
The deciding factor for you should be what profession you're planning on entering. What is the starting salary of the field that you're planning on going into? How long could it take you to get a job? How much money will you be making in the first 5 years? If it's not much, taking out any loans is a very bad idea. I should not have done it. If I could go back, I probably wouldn't do it. It feels like the right thing to do right now and you may be thinking "what's the worst that could happen" "everything will be fine, it always has been" "people take out student loans all the time and they're okay". You really, really want to do this so you probably will regardless of what advice we give you. Just know the risks. Will you be able to pay for these loans when they come due? That should be your biggest question. If you're not sure, don't do it. You can't be totally sure, can you? There is always another way.
You don't have to take out extra so you can afford fuel. Work so you can afford fuel. Seriously, student loans are really bad to have. Avoid them. I have a friend who worked all the way through college. She was stressed and tired all of the time. Now though, she's way better off financially than I am. She has a great, carefree life. She's able to pay for her own wedding. I'm still scraping to get by. I'm getting by, but it is a struggle. She's doing great and has absolutely no student loan debt. I envy her for what she was able to do and I wish that I had felt strong enough to do it myself at the time. I would have such a better life right now if I did. The little bit of comfort that the loans gave me robbed me of the comfort I could have had for now and won't have for years to come.
Any student loan debt is never worth it because it can be avoided if you're willing to put in the time. The way that your question is worded, it seems like you're looking for someone to agree with you and tell you that you should do it. Don't have that attitude because it will make it hard for you to see the downsides. The downsides here are really horrible.
What this whole situation comes down to is one question. Are you willing to risk future financial stability for comfort now? It sounds kind of bad when you put it that way, but it's really what this whole thing boils down to. Discomfort now will ensure financial stability later. Is this a risk you're willing to take? Those are the pros and cons in a nutshell. Whatever you choose, you'll figure your life out and things will be okay. Just be careful not to make a decision that will haunt you. Good luck.
]
Just make sure you CAN get your loan to cover expenses like fuel and furniture. Not all student loan programs will allow that.
Is it a good idea? That's a highly personal question. Most people will spend at least 10 years after they leave college paying off those loans. That $20,000 now, could easily end up costing you $30,000 by the time you've actually paid it off, and that's an optimistic assumption. For some people, those loans end up costing them much, much more, and that is on top of whatever other loans you absolutely need to pay tuition.
I would say that if you are capable of succeeding at school, while living at home, do that. As ready as you certainly are to move out - if living at home isn't going to make it impossible to do your school work - then I'd live at home. The only situation in which I'd recommend you move out and take on more debt, would be if you felt that living at home would sabotage or waste your chance at an education. Otherwise, in the long run, less debt is better.
]
It has been some time since my child was in college and we looked at the student loan applications. I'm aware the housing for school can be part of the loan though increasing the loan and not using the funds for that purpose now; I'll just have to take your word that you can do this.
As to whether you should or should not do so. Consider the fact that student are almost like a mortgage. While they are low interest, depending on the principal amount of the loan; you could be paying back this loan long after you have replaced the furniture and moved out of the apartment you used the money for. Some student loans have a twenty year payback period.
My sons' student loans have been put in abeyance several times as he returned to school to continue his education. Now that he is finished and working in his profession. HIs degree is in Emergency Medicine and he is a Paramedic/Firefighter, he will be close to retirement before he is finished with his student loans.
Right now, just like a mortgage, most of his payment goes to the accrued interest, very little of what he pays each moth goes to principal. Each year more and more goes towards principal and less to interest. Still as I said he will be within spitting distance of retirement, so to speak before he retires this debt unless he pays it off earlier or make payments against principal.
This is the major drawback of a student loan. Regular consumer loans may cost more in financing charges but the payback period is shorter and it costs you less.
What you really need to do is sit down and work the numbers to see what works best for you. You should also take into consideration that major furniture stores run interest free sales several times a year. If you can take advantage of these sales you save considerable savings. I was offered as much as a 10% discount on one of these sales offering cash payment instead of financing the sale.
]
More Questions: |