brown wrote:
rhyme wrote:
naturallight wrote:
Is anyone else thinking about taking a federal student loan even though you don't *need* it?
Yea I thought about it, but I just didnt see an upside...
Federal student loans have deferred payments and are 0% interest while in school, right? So you can take out the loan and pay it all off after graduation. In the meantime, you can invest your money elsewhere.
Please correct me if that's wrong... in that case, I need to decline federal loans
I thought you could only borrow up to $8,500 at 0% interest while in school (the rest, up to $18K, is NOT interest free for two years), and ONLY if you qualify - that is, if your assets dont preclude you from qualifying. Otherwise.... you incur interest on all of it - from the moment you get it.
Presumably, if you don't NEED the money, you wont qualify for it on in a subsidized state (0% interest for 2 years) - in which case you'll pay 6.8%, which, while low, isnt risk free low - that is, to make that money earn at least 6.8% - post tax, you'd have to be making 8 or 9% minimum.
Namely:
A subsidized loan is awarded on the basis of financial need. You wont be charged any interest before you begin repayment or during deferment periods. The federal government subsidizes the interest during these periods.
# You must have submitted a FAFSA.
# For subsidized Stafford loans, you must have financial need as determined by your school.
# You must be a U.S. citizen or national, a U.S. permanent resident, or eligible non-citizen.
So, if I've read things correctly, the BEST I can do is get $8,500 in interest free stuff for 2 years - assuming I qualify - but you still pay a fee...
"You�ll pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. (Part of the fee is for insurance used to pay off loan defaults; the rest reduces the cost of the loan to the government.) Because of this deduction, you'll receive slightly less than the amount you're borrowing."
So I pay 4% on the 8500 - or $340 ... So I get to invest $8,160 for 2 years interest free - assuming I make 5% each year - I walk away with $8996, and owe $8500 - I make less than $500 - BEFORE taxes. If instead, I loose 5% each year - I loose about $1100.
All that paperwork, hassle, fees and RISK - even with the interest free loan!! - to MAYBE make an extra $10 a month doesnt seem worthwhile.
Aaudetat, correct me if im wrong