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Author: TheNewD Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4818  
Subject: Weighing tuition payment/loan options (long) Date: 6/15/2008 9:25 PM
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Note: LOTS of details ahead. This post is just me musing about my options. All of this is theoretical at this point, because I haven't been accepted to the graduate program. The admissions counselor assured me that with my GPA I shouldn't worry though. The program accepts 78% of applicants.

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.

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.

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 that serves low-income students, within eight years of licensure. I'll be eligible because I'm going to teach science. If you don't fulfill the teaching obligation in that time, the grant gets converted into an unsubsidized loan at 6.5% and you have to pay all the interest going back to when the money was first disbursed.

I don't know whether I would be able to make it 4 years in an urban school. I just don't know.

Of course I also have to think about my ability to pay back my loans on a teacher's salary...

Whew! That's a lot to think about!

TND
Going off to mull
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