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(regarding student loans and paying for college)

...what would you do differently?
...what would you do the same?

What advice would you give to someone who is about to start paying for college?

Thanks!
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SNORT

I would have eaten out less, tracked my money, and in general, been A LOT smarter about how I spent cash.

(I would have refused more/all student loans)

b
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First, I would have converted all cash, savings, etc into things I would need, such as a computer, car/bike, prepaid rent, before applying for student aid

I would have refused all federal workstudy; jobs were available without it, and workstudy reduces your eligiblity for other aid

I would have eaten out less with blepatt, and would have paid down some of my early loans with some of my later loans (higher intrest rate first)

I would have used a single credit card for all school expenses, and for no other purpose. All the interest on the books I bought would have been tax deductible.

I might have done junior college for 2 years before big school.

Danbobtx
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First, I would have converted all cash, savings, etc into things I would need, such as a computer, car/bike, prepaid rent, before applying for student aid

I would have refused all federal workstudy; jobs were available without it, and workstudy reduces your eligiblity for other aid

I would have eaten out less with blepatt, and would have paid down some of my early loans with some of my later loans (higher intrest rate first)


I can see the sense of most of these, but: prepaid rent? Surely you just indicate what your rent is when you submit info about your expected living expenses. (When I was in grad school, at least, you could submit an addendum showing places where your actuals exceeded the expected budget and this was taken into account in determining whatyou could borrow, though I can't speak about actual aid.)

For myself:
- less eating out;
- fewer cappucinos and muffins, more drip coffees;
- less use of credit cards period!
- apply for loans earlier in the year (I usually put it off, ran credit cards up, then borrowed student loan money to bring them down, costing me more interest)
- don't crack into my pre-grad-school 401K for the few thousand dollars it had, that coulda been in the market during the bubble years
- Figure out a way to work in a little consulting in school for $50-$100 an hour, and defer working as a TA at $5K a semester until my dissertation was under way

And the big one:
- Having bought ~$5K of Network Appliance shortly post-IPO on the advice of one of the founders, I'd take the 50% run-up as a cue to buy more, rather than taking a quick gain and missing a >5000% run-up...

About the only thing I did right financially related to grad school was putting off consolidation until the recent trough in rates. (Still waiting on step 2 of my consolidation to complete, but I should get the optimal rate from UHEAA-- 2.75% for the first few years, then down to 1.75%.)

-A
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I would do most things the same financially. I never got in any credit card debt in college. I wish I could have saved more and been contributing to an IRA. I worked 1-2 jobs at all times and always took a full course load. Sometimes I took an extra class. I graduated in 3.5 years. I probably would have slowed down and enjoyed myselfa little more because once you graduate the real world smacks you in the face hard.

I might have eaten less pizza at 1am and not had ice cream with every meal. I put on quite a bit of weight. I would have worked out or run to be more physically active.

Don't start smoking. I know too many people who started in college. Big financial drain.

Enjoy yourself. College is a great time of your life.

Work on having a job lined up BEFORE you graduate.

billyturtle
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Didn't realize it was grad school we were talking about.

1. Finish your dissertation.
2. Try to out do a TA's salary by working for a private firm.
3. Pay off unsubsidized interest as you go.


billyturtle
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Hi A,

I don't have a lot of student loan debt compared to some people I know at work.I went the community college route.I became and officer in three clubs and a member of a fourth,graduated with honors and got a scholarship to the four year college I am currently graduating from.If you can do the same I definitely would.

Other than that,I would look into as much government aid as I could.Ask your local library for info on government scholarships.This may benefit you in two ways,first,you may find scholarships you didn't know existed (survivor,gender,single parent,ancestry,child of a veteran,medical...I know of one woman who did this research every day and got a scholarship for her child because one eye was slightly bigger than the other,you couldn't tell by looking).The second benefit is that you get accustomed to the layout ot the library and where things are.Most new students have no idea how to find things on their own.

I would also ask to see what kind of scholarships the school you are about to attend offers.Some local businesses give scholarships to children of their emplyees,some just for being a resident of a town,some are need or merit based.Most say "preference given to",which means if no one applies from that town/situation,someone else will get it.If you are employed,look into whether your employer has any to offer.

You can apply for scholarships until you're blue in the face.There's no limit,apply to as many as you can even if you think you have no shot.The last scholarship I applied for was the business school's golf tournament scholarship.I got $500.00 toward tuition and I've never played golf in my life.

J.P.

P.S.Make SURE that if you do recieve a scholarship,that you write a thankyou note.I was told this by someone who handles this sort of thing.She said I would be surprised at how many students take the money and forget about it.For some scholarships at my school,a thankyou note is a requirement if you get the scholarship.
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Some good advice. I'd definitely second the recommendation to pay down unsubsidized interest of possible. I always got the unsubsidized interest statements and blew them off - big mistake with law school loans at $27K / yr.!

I would have probably spent less money on all the superfluous junk that I did - and I'm definitely paying for my naive attitude about student loans. I went into law school with $17K in the bank and came out of it with about $81K in student loans. My attitude was "why should I spend my savings on SCHOOL when I can get loans for those costs and spend my savings on things I REALLY need like a new car, a nice apartment, etc.?" Learning to live below your means while taking out the loans (and, thus, reducing your need for them) is a must.

I also probably would have also educated myself better about post-graduation deferrment options. I just ASSUMED I'd pass the Bar exam the first time and that I'd find a good-paying job right out of law school. Neither occurred. It took 3 tries for me to pass the Bar and my first job after law school was a quasi-full-time crappy-paying law clerk position that evolved into a just-as-crappily-paying associate position. I didn't pay my loans because I COULDN'T pay them on my wages - forcing them into default and leaving a huge crater in my financial history that I'm still crawling out of even now (5 years post-rehabilitation!).
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Other than that,I would look into as much government aid as I could. Ask your local library for info on government scholarships.This may benefit you in two ways,first,you may find scholarships you didn't know existed (survivor,gender,single parent,ancestry,child of a veteran,medical...I know of one woman who did this research every day and got a scholarship for her child because one eye was slightly bigger than the other,you couldn't tell by looking).


There's government aid, and then at least for some there are corporate scholarships of various sorts... I actually turned a net profit on my undergrad education (put together scholarships that covered tuition, living expenses, and books, and then sold most of the books to people a year behind me, probably netted about $1000 on the deal, on a ~$70K undergrad education). On the other hand, one of those big aid soruces (AT&T) linked the adi to my major-- I didn't change majors because of it, and that I regret tremendously. They also had a middle manager offer me "academic advice" on which courses to take (to shape me to be a better future employee, basically--not that I was obliged to take their job at graduation, but jobs were offered). He steered me away from one or two computer science courses that would have been huge learning experiences in favor of stuff I really didn't care about-- I wasn't obliged to take their advice but I did, and I really regret that too. You only get to do undergrad once... and some things are worth more than money.

There's also employee perks worth looking at-- my mother worked at Columbia U. and they had a benefit for 50% tuition at any school your child attended... Alas, either we didn't know about that or she wasn't eligible for it yet when my sister was in school, but when my turn came we found out, and that made a huge difference. (Made the not-so-great university salary worth it.)

You can apply for scholarships until you're blue in the face.There's no limit,apply to as many as you can even if you think you have no shot.The last scholarship I applied for was the business school's golf tournament scholarship.I got $500.00 toward tuition and I've never played golf in my life.

How bizarre... :-) I've seen companies that offer to find you scholarships for a fee. I wonder if any of them are worth it...

-A
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I agree completely with the people who would pay unsubsidized interest as you go--I was lucky enough to have scholarships for undergrad, but I took out loans for medical school. Like many others, I used my credit cards a bit too much during school, but nothing out of control. The main factor that is slowing the growth of my accounts, though, is student loan repayment. I didn't pay anything during school or during my residency deferments (5 years after graduation), and my balances basically doubled during that time. I'm paying them down as much as I can, and I've got the balance back down just below the original amount that I borrowed. It's amazing how the interest gets out of hand--pay as much as you can, as soon as you can!
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I agree completely with the people who would pay unsubsidized interest as you go...

yeah, I should have thought of that for my list. (Also, perhaps you could borrow subsidized in later years to cover unsubsidized from earlier years?)
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Thanks everyone for your replies. I've been tempted to get a larger student loan (most likely unsubsidized) than I need so that I wouldn't have to reduce the comfortable lifestyle that I've gotten used to while working full-time in the past 7 years. This was a good push back to reality, which I needed.
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Thanks everyone for your replies. I've been tempted to get a larger student loan (most likely unsubsidized) than I need so that I wouldn't have to reduce the comfortable lifestyle that I've gotten used to while working full-time in the past 7 years. This was a good push back to reality, which I needed.

Just repeat after me, "Ramen noodles are my friend. Ramen noodles are my friend." Repeat ad nauseum. Literally!

jmc
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Just repeat after me, "Ramen noodles are my friend. Ramen noodles are my friend." Repeat ad nauseum. Literally!


Yeah, but they're about the unhealthiest thing you can eat... Cheap ($0.10 or less if you shop around) isn't always good. You can still eat plenty cheap without stooping to this...
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Borrow less.


CPAScott
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Just repeat after me, "Ramen noodles are my friend. Ramen noodles are my friend." Repeat ad nauseum. Literally!


Yeah, but they're about the unhealthiest thing you can eat... Cheap ($0.10 or less if you shop around) isn't always good. You can still eat plenty cheap without stooping to this...

oh my! who would a thought someone would take humor as dietary advice?

jmc
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who would a thought someone would take humor as dietary advice?

Someone that needs a good belly laugh??

J.P.(ducking)
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oh my! who would a thought someone would take humor as dietary advice?

It's not that I don't have a sense of humor, but I've seen people-- both starving students and just starving people-- try to live this way... Very scary. Not good for you at all.

Having been extremely broke at times, I'm conscious of the fact that people who really are at the bottom-- not just starving students, but starving people, by US standards-- resort to this kind of thing to keep their kids' bellies full. I make a point of donating to food drives a couple times a year-- lots of canned vegetables, lots of canned tuna and canned chicken and sardines and oatmeal, lots of beans and rice (white or brown), lots of canned soups (whatever is on sale)... $100 worth of groceries can go pretty far on relatively healthy and palatable food without resorting to ramen. I think of ramen as truly the last resort of those who don't know any better. (It is nice as an occasional junk-foody snack, but that's about it.)

-A
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I would have probably taken every loan that I did --- I needed them.

The problem with school personal budgeting and spending, for most students that feel budget pressures, is the credit card.

The problem has been, that credit card companies lend to the very same people who can't get anything other than federally guaranteed loans.

As a result, the "sweet honey" in a college budget is usually the thing that tips a person over into the trouble zone.

I am surprised that the federal government doesn't curtail or regulate lending to people who are also receiving federal assistance in the form of grants and loans.

If these people were so credit worthy, why does Congress have to step in with grants and loans?

Alternatively, if these people are NOT so credit worthy, why is this exploitative scam being allowed to be run? (And no one give me any crap about "free enterprise" and "liberty"---messing up people's financial profile at an early age to turn a buck would more traditionally have been called racketeering or usury.

My regret, is that I wasn't a lot more noisy as a student borrower, and politically active, to point out all the contradictions and immorality associated with the practice.
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I agree completely with the people who would pay unsubsidized interest as you go--I was lucky enough to have scholarships for undergrad, but I took out loans for medical school. Like many others, I used my credit cards a bit too much during school, but nothing out of control. The main factor that is slowing the growth of my accounts, though, is student loan repayment. I didn't pay anything during school or during my residency deferments (5 years after graduation), and my balances basically doubled during that time. I'm paying them down as much as I can, and I've got the balance back down just below the original amount that I borrowed. It's amazing how the interest gets out of hand--pay as much as you can, as soon as you can!

don't you have a grace period (6 months or something) to pay the acrued interest before it capitalizes? if so, would the better option be to pay the interest money into some interest earning account instead? when it comes time to start paying on your loan you can immediately pay the lump acrued interest and have a little cash left over from your "investment".
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don't you have a grace period (6 months or something) to pay the acrued interest before it capitalizes? if so, would the better option be to pay the interest money into some interest earning account instead? when it comes time to start paying on your loan you can immediately pay the lump acrued interest and have a little cash left over from your "investment".

Depends on what the interest rates are, now, doesn't it? And also on whether you have the discipline to actually do this. Back when I was in school, at least, there were no instruments I knew of with guaranteed rates of return as high as my interest rate (though it's also worth noting that I didn't really look into this at the time).

Wishing I'd not borrowed so much, once upon a time...

-A
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Depends on what the interest rates are...Back when I was in school, at least, there were no instruments I knew of with guaranteed rates of return as high as my interest rate

I'm not sure I understand how the interest rate matters. If you defer the loan and the interest you have the option to pay off that acrued interest in a lump sum at the end of the deferment period. You also have the option to pay off the interest during the deferment. Whichever option you choose, the interest rate (and thus, the acrued total) will be the same, won't it? Which means you either pay it off as you go or allow it to accumulate and pay it off at the end. But the sum total should be the same, shouldn't it? So my point was that you could divert the payments to an interest-earning account instead of toward the interest payments. If you're disciplined enough to make the interest payments it takes no more discipline to re-direct the money to another account - especially if you use automatic payments from your bank. Am I missing something?
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