Living Off Student Loans
September 24th 2007 15:19
In the past week I’ve overheard two students with a similar story: they are living off of student loans. They took out more than was needed, paid tuition, and with the rest I assume they were just going to use it as “play money.”
The most recent one mentioned he had around $6,000 worth of student loan money left. (He had thought he would need it for student teaching, but then he didn’t student teach). What was he going to do with that $6,000? It sounded as if he was basically going to throw it away. He acted as if it was free money; you could tell he was thinking about what it would buy by the tone of his voice.
What would I do with an extra $6,000 in student loans? Pay them back!! Pay it back, pay it back. I can’t say it enough. Why keep this money if you don’t need it? Why let it accrue all that extra interest if you don’t need it for school? This just seems like a disaster waiting to happen.
If he needed another loan for next year, wait until then to get the money back. Otherwise, it’s just an extra year of interest. Wasted money.
What worries me more though is that it can’t be from a federal loan with an okay interest rate. The limit on that would have been $5,500. That means private loans, private loans with 8% plus interest rates. Bad idea.
Did I say anything to this person? No. I sort of wish I had, but I don’t know him, so that might have been strange. Plus, he wasn’t talking to me, just loud enough for me to hear, so that would have been rude.
Would you have given advice if you thought it might potentially help someone’s financial future?
The most recent one mentioned he had around $6,000 worth of student loan money left. (He had thought he would need it for student teaching, but then he didn’t student teach). What was he going to do with that $6,000? It sounded as if he was basically going to throw it away. He acted as if it was free money; you could tell he was thinking about what it would buy by the tone of his voice.
What would I do with an extra $6,000 in student loans? Pay them back!! Pay it back, pay it back. I can’t say it enough. Why keep this money if you don’t need it? Why let it accrue all that extra interest if you don’t need it for school? This just seems like a disaster waiting to happen.
If he needed another loan for next year, wait until then to get the money back. Otherwise, it’s just an extra year of interest. Wasted money.
What worries me more though is that it can’t be from a federal loan with an okay interest rate. The limit on that would have been $5,500. That means private loans, private loans with 8% plus interest rates. Bad idea.
Did I say anything to this person? No. I sort of wish I had, but I don’t know him, so that might have been strange. Plus, he wasn’t talking to me, just loud enough for me to hear, so that would have been rude.
Would you have given advice if you thought it might potentially help someone’s financial future?
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