Confused about loans

[CityGal]

I finally decided to do my research on student loans, and I am seriously reconsidering taking them out. From what I've read, it seems that I may be paying double of what I take out. Am I getting the wrong information? Does anyone know where I can get accurate info about loans? How do you all take out loans? Debt scares me and this will be a huge one. I know this is an investment in my future but that is a hell of an investment. HELP! Any information will be greatly appreciated.

[AshleyJordan]

There's a ton of stuff on the web about that. I know that my views don't necessarily echo those of other QLCers, but, for me, borrowing money to go to school has been the best return on my investment that I will ever, ever, make in my life, and, it allowed me the opportunity to greatly expand my horizons, which has a huge nonmonetary value. It's scary to borrow that much $, but, at least for me, the risk was absolutely well worth it.

[fuzmiq]

There's a ton of stuff on the web about that. I know that my views don't necessarily echo those of other QLCers, but, for me, borrowing money to go to school has been the best return on my investment that I will ever, ever, make in my life, and, it allowed me the opportunity to greatly expand my horizons, which has a huge nonmonetary value. It's scary to borrow that much $, but, at least for me, the risk was absolutely well worth it.

Ashley, what do you do for a living and what did you go to school for? I am just curious.

[aggiegrad05]

I know that my views don't necessarily echo those of other QLCers, but, for me, borrowing money to go to school has been the best return on my investment that I will ever, ever, make in my life, and, it allowed me the opportunity to greatly expand my horizons, which has a huge nonmonetary value. It's scary to borrow that much $, but, at least for me, the risk was absolutely well worth it.
100% agreed.

[NewMrs.]

From what I've read, it seems that I may be paying double of what I take out.


Well, what you will end up paying in interest depends on how much money you borrow and the amount if time it takes until you pay back the loan.

If you receive a subsidized loan, the gov't pays the interest for you until you are finished with schooling. If the loan is unsubsidized, you are responsible for the interest that accrues even while you are in school.

If you do not pay the interest that is your responsibility to pay, it eventually gets added to the total principal on the loan. Once it becomes part of the principal, then you have to pay interest on this amount as well. The money compounds. The same thing happens when you save money in an interest-bearing account, and earn interest, and then earn interest on the previously earned interest.

I am not sure where you live. However, since I live in Pennsylvania, my student loans were through American Education Services (AES), which is the lending arm of the Pennsylvania Higher Education Association (PHEAA). Here is the link to their website. Even though you are probably not going to get loans through AES, I belive that their website has a lot of useful info:


http://www.aessuccess.org

[redav]

I finally decided to do my research on student loans, and I am seriously reconsidering taking them out. From what I've read, it seems that I may be paying double of what I take out. Am I getting the wrong information? Does anyone know where I can get accurate info about loans? How do you all take out loans? Debt scares me and this will be a huge one. I know this is an investment in my future but that is a hell of an investment. HELP! Any information will be greatly appreciated.
The total you have to pay back on a loan is dependent on two things: the interest rate and how quickly you repay it. (This assumes there is not a prepayment penalty. I've known a couple people who were caught by these--they had to pay back the full amount + all interest regardless of how quickly they paid it back).

The higher the interest rate and longer the term of the loan will increase how much you have to pay back. Low interest rate is good all the way around; it reduces your monthly payment and the total you will have to repay. But the length of repayment is different. A shorter repayment schedule means you will pay less over the life of the loan, but you have to pay more each month. A longer repayment period is the opposite. You will have to balance these two when deciding the terms of the loan.

Yesterday I read an article about how many student loan brokers are getting kick-backs from private lenders to sign up students for those loans instead of others with more favorable terms. Such practice is definitely unethical and possibly illegal. You need to shop around for the best deal. Govt loans will be better than private loans.

Here is a way for you to calculate how much you will have to repay:

(Total Payments) / (Amount Borrowed) = (n*i*(1+i)^n) / ((1+i)^n-1)

where:
i = monthly interest rate (annual rate divided by 12)
n = number of months in the term of the loan

For an example, if you have a loan at 4% for 15 years it is:
i = 4%/12 = 0.00333
n = 15*12 = 180

Total amount = 1.33 x how much you initially borrowed. (If you responsible for interest on it while you are enrolled & not paying, I suspect that interest will be rolled into the principle, which will change these calculations.) I don't know the current rates/terms on student loans, but it doesn't look like you would have to pay double what you borrow--you would need to have an interest rate of 6+ % and a term of 20+ yrs.

[workaholic?]

There's a ton of stuff on the web about that. I know that my views don't necessarily echo those of other QLCers, but, for me, borrowing money to go to school has been the best return on my investment that I will ever, ever, make in my life, and, it allowed me the opportunity to greatly expand my horizons, which has a huge nonmonetary value. It's scary to borrow that much $, but, at least for me, the risk was absolutely well worth it.


agreed on my end as well.

[CityGal]

I am calculating the following:

Overseas Tuition- about 22 - 24
Dorms- about 18
Other Essentials (Books, Food, etc.)- about 8 -10

Total Loan Needed: about 60

Am I missing something? Will I be able to get this high of a loan?

I am hoping to take on a temp or part-time job while I'm over there just for any necessities.

While shopping around, I have noticed that the majority of the rates are at 8.5%. The Stafford is set, I think, at 5.8%. Also, I've read that the rate you get is dependent on your credit history, is this true?

[CityGal]

Do interest rates really change every year? I am thinking about getting a graduate plus loan which has no max and is currently at 8.25. Does anyone have this one that can give me some insights? Apparently it works just like the parent plus.

[WorkInProgress]

I have no idea if you'll be able to get a 60k educational loan (from the government, or otherwise).

I do know that a friend of mine did geta significantly larger loan than the one you're describing for law school, and she already had other loans from undergrad, and only a year's worth of full time employment (in an internship). I don't know the terms of her loan, but she mentioned at the time that she'd likely be paying on it until she's middle aged.

EDIT: I haven't gone to grad school, so it's been a while since I dealt with any of this, but I agree that the loans taken to fund my undergrad education I consider money well spent.

[CityGal]

I don't have any other debt so this loan would be it for me. I'm figuring it would be a worthwhile investment considering that I may get a better salary. Also, it sort of seems like the MA is the new BA. I totally need my phd for me though. It's been my lifelong goal.