back to student loan

[pboychuk]

I understand getting a student loan was ill advised, however, I still think its a good idea, please correct me if im wrong. IF i can get a loan that allows me to defer payment, and does not incur interest till I graduate, I will surely have the money before I graduate. Also, Say i take a loan out for 10k$, theoretically, I would be using it for school expenses, Food, rent, books.. but I may decide to spend the 10k earlier for some business purchase... However, I could probably guarantee that during my college career I would spend 10k on "school expenses" so theoretically I would be using the money for school. HELPP

[GhostFac3]

Depends on what avenues you are getting the loan.

1) Of course you have to be enrolled in school and this kind of stuff will be verified. On top of that, some loans may not allow you to have but a certain percentage of the money over what the school says you need and any other case you could bring up against it.

2) Another issue being that if you can pay for school without them, you may not qualify for as good of a loan as you think you are going to get.

3) Let's say you get the money, use it on business expenses, and everything goes south. Soon after graduation OR you stop attending FULL-TIME, a lot of lenders require you to start back paying them on that loan, leaving you in essence broke and without a college education.

And it all depends on where you go. I dunno where you would be in school or how much it would cost, but since you are in Georgia, you all have things that us Alabamians don't have that may also play a role in it, like the hope scholarship among other things.

Just make sure you do ALL of your research and don't screw yourself over.

[pboychuk]

Well I really only want like 10k, but I dont pay any tuition, so, maybe I wouldnt get approved Im not sure. I guess I will do some research

[BusinessAdviser]

I understand getting a student loan was ill advised, however, I still think its a good idea, please correct me if im wrong. IF i can get a loan that allows me to defer payment, and does not incur interest till I graduate, I will surely have the money before I graduate. Also, Say i take a loan out for 10k$, theoretically, I would be using it for school expenses, Food, rent, books.. but I may decide to spend the 10k earlier for some business purchase... However, I could probably guarantee that during my college career I would spend 10k on "school expenses" so theoretically I would be using the money for school. HELPP

Who advised you against student loans?! They're fantastic! The cheapest money you'll ever find. I'm being dead serious.

[jumper666jr]

Who advised you against student loans?! They're fantastic! The cheapest money you'll ever find. I'm being dead serious.

I strongly agree.

[pboychuk]

Who advised you against student loans?! They're fantastic! The cheapest money you'll ever find. I'm being dead serious.

"Your second plan, apart from it being illegal to use student loans to fund things not school related, is a terrible idea. First of all, private student loans usually have a somewhat high interest rate, between 7-10% and in a lot of cases, the lender can adjust the rate whenever they want. However, what's even more troublesome, is that student loans are never discharged during bankruptcies. If, heaven forbid, something happens and you lose everything you have, student loan debts will NOT be discharged. Futhermore, with student loans, although the payment is deferred until graduation, on most loans you still accumulate interest before you graduate (if it's unsubsidized). It is usually better to get the money from a low interest credit card than take out a student loan."

[pboychuk]

Hey,

So it seems that if I defer principal and intrest while in school my rate will be about 10%, however I am confident I will pay the loan off before I graduate.. So, I figured this is the best route. Another Question I had is in trying to build my credit, since I wont be incuring any intrest because I am going to pay it off before I graduate, Is it better to have a co-signer or not? All a co-sign would do is guarantee me a better rate correct? But, I dont care about the rate because I will pay the loan off BEFORE I graduate.

THANKS

[jasaunders]

First of all, if the loan interest is deferred until graduation, that just means you don't owe any part of the loan until graduation, it doesn't mean the loan is not accruing interest. In your case, if you are a sohpmore, taking a $10k loan at 10% interest and defer all your interest payments, at graduation your principal has increased by a third to over $13,300. It would be unwise to defer interest. (If you are only a freshman, when you graduate your loan would have increased by 50% and you would owe almost $15k)

10% is a horrible student loan rate. As I said in my other post, private loan rates are high, 7-10%, you are obviously getting one on the very high side. The worst part is, I bet if you read the loan agreement, you will see that the rate is adjustable and at the discretion of the lender.

You also guarantee you are going to pay the loan off before you graduate. How are you so sure? You realize businesses fail, right? A lot of businesses fail. Especially businesses from first-time entrepreneurs. I'm not saying this to deter you from starting a business. I'm saying this because you can't assume your business is going to succeed. You need to make decisions considering the risk. The downside here is that if this business fails and you can't pay back the $10k before you graduate, what will you do?

[BusinessAdviser]

"... It is usually better to get the money from a low interest credit card than take out a student loan."

I don't know if I've ever heard worse advice. Purely my opinion though. No attack on the original poster...just his or her comment.

[jasaunders]

How would getting money from a student loan at interest rate X be better than getting money from a credit card at interest rate X?

a) your student loan will never be discharged
b) this isn't in the post, but what I intended to say was a balance transfer to a low-interest credit card for the life of the balance, so that in this case the interest rate would be a fixed low rate rather than an adjustable rate with the student loan.

[BusinessAdviser]

Which has a lower interest rate?

[pboychuk]

Oh im stupid, You defer the interest but still incur it. so maybe it would be best for me to get a student loan which you pay as you go with an interest rate of about 5-6%, my dad will co-sign unless it would be much better for my credit to solo the loan. So, with this in mind, credit card, vs loan? the problem with a credit card is i need the "cash."

[jasaunders]

Which has a lower interest rate?

Exact same interest rate.

[BusinessAdviser]

If the interest rate is the exact same, then I would say the credit card would be better. However, why in the world would the interest rate on a credit card be as low as that on a student loan? Maybe that's why things aren't adding up to me.

[jasaunders]

He just said his interest rate for a student loan is 10%. It's not hard to get a CC interest rate at 10%. I get balance transfer offers all the time for 2.99% for the life of the balance. Some credit cards with no rewards would probably offer straight interest rates near 10%. For example, Advanta offers cards for as low as 7.99%.