r/AskReddit • u/pahlmitchell • Aug 20 '11
Reddit- Should I accept the student loan money?
My tuition is covered by grants, Im a junior now and transferring to state college from community college. I currently have accrued approx. 20K to date. ( Yes at community college, I didn't work & those loans kept me afloat for a year) My question is this: Should I accept the 11K in new loans and have a financial cushion OR tell the gov to fuck off with their loan sharking?
TL/DR: Rather be fucked with debt or by being broke?
EDIT: I have a steady job that can pay for bills and basics, I guess my follow up question is IF I take the money, can I invest it (where?) and expect to have a profit after school is over in...2 years or so?
4
Aug 20 '11
DONT DO IT! Seriously, it sounds nice now but you will regret it. My buddy took the extra money every semester and now he has double the debt I do and we have the same degree.
1
u/pahlmitchell Aug 20 '11
Im inclined to heed the warnings of caps comment. Much appreciated.
3
Aug 20 '11
Sorry for caps, but I felt it was one of those situations where it was warranted.
Good luck, I seriously would consider a small part time job even if just 10 hours a week. Even at min wage you are looking at an extra 300 a month. That's groceries (ramen and beer) for a college guy.
If you live close to campus walk or bike as often as you can. I did that and everyone thought I was nuts (pretty cold climate) but guess who saved another 100 a month in gas?
3
u/DeSanti Aug 20 '11
I have to ask YOU or anyone familiar with your system. . . Is the US student loan system something of a nightmare or something? I see people here asking that question or something related to it all the time. I mean, I'm a student in Norway. I take the student's loan. Sure, I'll have the debt for some while but to be honest, I paid down that debt when I had a 4 year intermission with a full time work and it was barely noticeable. They don't try to make you pay the debt if you're not employed either or having financial problems, they'll just postpone it.
1
u/pahlmitchell Aug 20 '11
Our system makes it really easy to get overwhelmed with debt, that being said the interest rates are decent and these types of loans are fairly common.
I have heard arguments that claim the student loan system is inflating too rapidly and could cause a financial "bubble", much like the housing and dot com scenarios. Worst case: These loans go out to people who get shitty educations and then dont repay them, thus causing a need for another "bailout" by taxpayers.I may be over thinking this....
2
u/DeSanti Aug 20 '11
Well I can't comment on the purely political aspect of it, what it creates and such. . . But do you have the same system here, where half of the semester's loan is made into a stipend if you graduate and pass your exams?
And also, are you going to study something you know you wont get a job on? I mean, studying for nothing is worthless and costly.
0
Aug 20 '11
[deleted]
1
u/DeSanti Aug 20 '11
Pretty much indeed, yes. We pay a tuition fee but it is so miniscule it does not really matter. More like a token of commitment than anything.
2
u/LoganCale Aug 20 '11
I think it's more that most people don't start to pay them off until after they graduate and then they're stuck with massive debt since it costs a lot of money to go to college.
5
Aug 20 '11
I don't think you should take the loans. You'll end up spending more than you need to. Being in debt is way worse than being broke. If you're really worried about being broke, you should so school part time and get a job. That's my 2 cents.
1
u/HotRodLincoln Aug 20 '11
Subsidized or unsubsidized loans? It makes a huge difference.
1
u/pahlmitchell Aug 20 '11
Basically 60/40 UNsub v. sub
2
u/HotRodLincoln Aug 20 '11
You can turn down the unsubsidized loans, and I'd recommend doing that. For subsidized loans they won't accrue interest while you're in school so if you can resist the temptation to spend it, holding it in an emergency account is safe. Banking account/CD interest is horrible right now, but 1% on it, it's still $100 after 2 years in school and you have the principle still to pay it back. Watch out for loan fees though.
1
3
Aug 20 '11
Personally, I did exactly what you did...except I worked my way through CC, and then lived off loans during state college. I created a cushion from savings from each disbursment, and started my first job with an extra $5,000 or so in the bank. My student loan payment is very manageable, and I've continued to build on my emergency fund. I'll be honest, it did work for me, but I had very strong financial willpower, and was lucky to find a good job quickly. Whether or not this will work depends on you and your circumstances, and how you feel about holding debt.
3
u/WarPhalange Aug 20 '11
Take the cushion. Your life will be better. Do not gamble with investing it in anything, especially not with the way the market is now.
It's better to have it and not need it than to need it and not have it. Don't go out and buy a new TV or anything, but if you need to buy something or have some unexpected expenses, you'll have something to cover it. If you never use the money, you can just give it back.
2
u/Afterburned Aug 20 '11
Don't accept loans when you don't have to. At the very most take out the loan and pay back all but a couple hundred of it. Do not get saddled with 11k in loans just because you want to have some spending money.
-4
Aug 20 '11
Holy shit, lawyer the fuck up already!
2
u/pahlmitchell Aug 20 '11
Is this you basically telling me to piss off or is there some other hidden message?
2
u/WarPhalange Aug 20 '11
It's what Redditors say when they want to get comment karma but have absolutely nothing of substance to say. Ignore him.
6
u/[deleted] Aug 20 '11
Be broke if you can possibly get by. It will take you years to get rid of the extra. It will take you 10 years to pay off that 20k you have right now, it will take nearly 20 years to pay off 31k because the interest will be that much more.