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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Musings about grad school tuition and loans||Date: 6/16/2008 8:09 AM|
|Author: aj485||Number: 274156 of 309859|
I will (most likely) be starting a Master of Arts in Teaching/initial teaching licensure program this fall. It's a part-time evening program at a local private college. I just filled out the FAFSA this afternoon, and started thinking about tuition payment options.
Regarding tuition: During the first year of the program, students generally take 16 credits. Tuition and fees for those 16 credits is $7,028. Payment options include paying each semester's tuition up front, or paying monthly over 10 months with no interest, with a $75 fee per year for the service. If I did the monthly payment plan, I would pay $736/month from Aug-Dec, and $668/month from Jan-May (1st semester has extra one-time fees). I don't have enough savings to pay up front, but I might be able to swing the monthly payments if I'm very frugal, and postpone my aggressive CC debt paydown. However, I would just barely be scraping by, and would have to use my credit card if any large expenses suddenly came up (e-fund is at $1500 while I pay down $3500 CC debt).
Regarding loans: I currently have $21,538 in Direct Loan federal student loans from undergrad, 7 years until paydown. If I'm reading my account summary right, it's consolidated at 3.5%, but $17,904 of it is a subsidized consolidation loan, and $3,634 is an unsubsidized consolidation loan. Right now I'm paying $288/month on that, with about $60/month going to interest. I would like to defer this loan starting in the fall, and I think that I will not have to pay principal or interest on the subsidized portion while it's in deferment. From how I understand it, I would only have to make quarterly interest payments on the unsubsidized $3,634.
Okay, so you have about $25k in debt. You say you have 7 years til paydown on the student loan - is that with snowballing or minimum payments? What is your paydown plan on the CC debt, if you go to school vs. if you don't go to school? Putting student loans in deferment when you go back to school can be a good idea if you expect the schooling to increase your income. It's a REALLY BAD idea when you expect to decrease your income when you're done with your education.
The FAFSA says that my Expected Family Contribution (EFC) is $15,000. "The EFC is not the amount of money that you or your family must provide. Rather, you should think of the EFC as an index that schools use to determine your eligibility for federal student aid." FAFSA also told me I'm not eligible for a Pell grant. Oh well.
Hypotheticals: If I could get a federal subsidized loan that would cover all of my tuition and books for the year, AWESOME. That's interest-free money. I would definitely put the entire tuition on that loan, and I could continue the aggressive CC debt paydown, after which I would aggressively fatten my savings account to pay back those student loans when they come due.
If I could get only part of the tuition/fees covered with a federal subsidized loan, I would probably just pay the rest of the tuition in cash.
If I couldn't get a federal loan, and I had to get, for example, a private loan at 10% interest that I would have to start paying back right away... I would not even go to school until I could pay in cash. I fear private education loans.
So you think that the AWESOME possibility is to add $15k (assuming a 2 year program) or so more to your student loan debt? That would give you a student loan debt of $40k.
Don't know what a beginning teacher's salary is where you plan on teaching, but in many cases, it's not $40k. The times that I have seen people on this board talking about having a difficult time paying back their student loans is usually when they have more than their current year's salary in student loans.
Presumably, your salary is higher than a teachers's salary now? I think that adding to your debt to pay for an education that will buy you a lower salary is a foolish idea, not a Foolish one or an AWESOME one.
Also: There's a new grant program called TEACH that gives students in licensure programs up to $4,000/year. The catch is that you have to work for FOUR years in a school