Comments on: Why You Should Max Out Your Student Loans http://dividendmoney.com/why-you-should-max-out-your-student-loans/ Helping You Make More Money And Grow Your Wealth Mon, 22 Feb 2010 13:23:19 -0600 http://wordpress.org/?v=2.8.6 hourly 1 By: kidslibrarian http://dividendmoney.com/why-you-should-max-out-your-student-loans/comment-page-1/#comment-56828 kidslibrarian Wed, 15 Jul 2009 11:15:13 +0000 http://dividendmoney.com/why-you-should-max-out-your-student-loans/#comment-56828 This is an interesting article, but there are a few things to consider. First, you would not want to invest in stocks. It is very risky for a short-term investment. Now, the CDs would probably be fine, if the student had the self-control to actually not touch that money. Second, if someone is planning to go to grad. school, the lifetime max can be reached very quickly, especially if pursuing a Ph.D. This means you would have to be dipping back into this early student loan money anyway. Also remember that it will accrue interest on the loan starting six months after graduation, even if it is subsidized. At 6.8% interest, it will be very hard to recoup that unless you plan on taking all you invested and paying it right back into the loan system. So, if you're a first-year dependent student, the maximum you can borrow in subsidized Stafford is $3500 (if you qualify!). The next year it is $4500. The next two years it is $5500 each year. A CD might average 2% a year, and (remember) you don't want to go for five-year CDs, because you want to pay these off before you interest starts accruing 6 months after graduation. This gives you an interest income of around $70 the first year, $160 the second year, $272 the third year, and $380 the last year. This is a whopping total (in very rough numbers, I admit) of $882 for four years. Is this really worth all the headache of maxing out these loans, and the risk of being "tempted" to dip into them when trouble strikes during those four years? No, I'd say not. However, maxing out student loans might be very wise if you used them for your own living expenses (hence did not break the law) but used the money that they freed up (from your job, since that isn't going to living expenses any more) to pay off loans with high interest rates and get you on a more secure financial footing for gradation. For example, coming out of your degree with no credit card debt and no vehicle loan might be well worth taking the extra student loans, whether they're subsidized or unsubsidized. Just my two cents, having spent a god-awful long time dealing with student loans. Take care! This is an interesting article, but there are a few things to consider. First, you would not want to invest in stocks. It is very risky for a short-term investment. Now, the CDs would probably be fine, if the student had the self-control to actually not touch that money.

Second, if someone is planning to go to grad. school, the lifetime max can be reached very quickly, especially if pursuing a Ph.D. This means you would have to be dipping back into this early student loan money anyway. Also remember that it will accrue interest on the loan starting six months after graduation, even if it is subsidized. At 6.8% interest, it will be very hard to recoup that unless you plan on taking all you invested and paying it right back into the loan system.

So, if you’re a first-year dependent student, the maximum you can borrow in subsidized Stafford is $3500 (if you qualify!). The next year it is $4500. The next two years it is $5500 each year. A CD might average 2% a year, and (remember) you don’t want to go for five-year CDs, because you want to pay these off before you interest starts accruing 6 months after graduation.

This gives you an interest income of around $70 the first year, $160 the second year, $272 the third year, and $380 the last year. This is a whopping total (in very rough numbers, I admit) of $882 for four years. Is this really worth all the headache of maxing out these loans, and the risk of being “tempted” to dip into them when trouble strikes during those four years?

No, I’d say not.

However, maxing out student loans might be very wise if you used them for your own living expenses (hence did not break the law) but used the money that they freed up (from your job, since that isn’t going to living expenses any more) to pay off loans with high interest rates and get you on a more secure financial footing for gradation. For example, coming out of your degree with no credit card debt and no vehicle loan might be well worth taking the extra student loans, whether they’re subsidized or unsubsidized.

Just my two cents, having spent a god-awful long time dealing with student loans.

Take care!

]]> By: Valerie http://dividendmoney.com/why-you-should-max-out-your-student-loans/comment-page-1/#comment-54470 Valerie Sun, 17 May 2009 22:39:33 +0000 http://dividendmoney.com/why-you-should-max-out-your-student-loans/#comment-54470 that is exactly my husband's situation. he has ONE class + dissertation stuff left for a PhD in Ed. I just graduated w/my only BA degree and no job yet. We have 3 kids, one has 1 more yr of undergrad, one is just starting college in fall. My husband teaches fulltime and I am substitute teaching every chance I get + petsitting - but we can't even make it pay-to-pay! Our credit is shot (from life-threatening medical events). Now what?! that is exactly my husband’s situation. he has ONE class + dissertation stuff left for a PhD in Ed. I just graduated w/my only BA degree and no job yet. We have 3 kids, one has 1 more yr of undergrad, one is just starting college in fall.

My husband teaches fulltime and I am substitute teaching every chance I get + petsitting – but we can’t even make it pay-to-pay! Our credit is shot (from life-threatening medical events).

Now what?!

]]> By: kimberly http://dividendmoney.com/why-you-should-max-out-your-student-loans/comment-page-1/#comment-48250 kimberly Thu, 15 Jan 2009 21:05:11 +0000 http://dividendmoney.com/why-you-should-max-out-your-student-loans/#comment-48250 What if you have almost maxed out your student loan and have not graduated? What if you have almost maxed out your student loan and have not graduated?

]]> By: Tyler http://dividendmoney.com/why-you-should-max-out-your-student-loans/comment-page-1/#comment-45331 Tyler Thu, 04 Dec 2008 16:50:08 +0000 http://dividendmoney.com/why-you-should-max-out-your-student-loans/#comment-45331 ck, How is this illegal? A portion of student loans is earmarked for living expenses and incidental costs. ck,
How is this illegal? A portion of student loans is earmarked for living expenses and incidental costs.

]]> By: ck http://dividendmoney.com/why-you-should-max-out-your-student-loans/comment-page-1/#comment-45168 ck Tue, 02 Dec 2008 20:56:03 +0000 http://dividendmoney.com/why-you-should-max-out-your-student-loans/#comment-45168 Not to mention this is illegal. It's considered fraud. A man was arrested and forced to pay back all plus some for taking out private student loans and using them for other purposes. Please do your research before listening to such dumb advice. Not to mention this is illegal. It’s considered fraud. A man was arrested and forced to pay back all plus some for taking out private student loans and using them for other purposes. Please do your research before listening to such dumb advice.

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