Posted: 1/21/2008 8:33:23 AM EDT
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I know I could probably find an answer by a google search, but I thought I'd ask here. My question is, can you still get student loans even though you obviously have the cash to pay for school? I'm thinking of going back to school for an MBA and I'd rather take out student loans and pay them back, then dip into my savings. I never had to take out student loans before, I always paid my tuition from savings or working over the summer, so I'm unfamiliar on exactly how it all works. RF |
+1 Are your savings in long-term CD's or something that would cause you to take a hit if you withdrew funds early? FWIW, I paid my student loan off before it started charging interest. There's a short grace period after you graduate before you have to pay it back. So, I borrowed money for free, but I needed it to eat. |
The reason I'm thinking of getting student loans is.... 1. I've got an investment portfolio that is a mix of tax-protected and non-tax-protected money. I'm obviously not going to use 401(k) money to pay tuition and if I use the non-tax-protected money, I'll have to pay capital gains on any I pull out. 2. If I pull money out of investments, I'll have to reallocate my investments, which will likely incure some charges (minimal probably) 3. I've heard some companies will help you repay students as a part of an offer. If you don't have any, you can't negotiate extra $$$. I'll have enough saved to pay my living expenses for the two years, so I just want to borrow for the tuition. If it turns out that once I graduate it makes more sense to pay it off, I will. RF |
| Usually you will qualify for Stafford Loans however given that you do have money they will probably be the unsubsidized kind, meaning that interest is not deferred and starts accruing as soon as they are funded. The rates used to be really low but then the Bush administration changed the laws and they about doubled. Then the Democrats got elected and were supposed to lower them again but I don't know what the status of that is. |
OK, this is the kind of info I'm looking for! Well, I guess it would come down to the interest rate. If the interest rate (after any tax deductions) is lower than the return I expect on the money in my investments, I should borrow the money. I'm a pretty young guy, so my investments are pretty aggressive and I'd expect a average return of 6-8%. RF |
| I don't think there is really any kind of qualification required for the gov't (subsidized) Stafford loans (which are capped at $18,500 per year). Other than going to school, etc. I had money in the bank and my wife worked when I went to school, and don't recall any question at all about either fact. |