Author Topic: Pay College or stash the money?  (Read 3818 times)

josephpg

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Pay College or stash the money?
« on: December 31, 2012, 10:52:21 AM »
I have been wondering lately, should i pay the loans off immediately as i have been planning while i go to college, or stash my money and let it grow while the government pays the interest on the loans (for direct subsidized).
paying off the loans immediately means i don't have to worry about them and there's no chance of losing the money in investments, but it also means no savings.

How did the rest of you make this decision?

edit

also, some numbers
first 2 years will be
 6000 per year if i don't do the intersessions, with intersessions could be double that.
this is for a public community 2 year college

second two years
Tuition/Fees: $13,230
Room/Board: $9,937
Total: $23,167
for umass amherst

i think it might be better to save up the money i make from my job and have 12000 to live on for those second two years instead of paying for a dorm.

*edit for community college tuition*
« Last Edit: December 31, 2012, 03:01:25 PM by josephpg »

josephpg

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Re: Pay College or stash the money?
« Reply #1 on: December 31, 2012, 11:07:20 AM »
also, as sort of a sub question, does anyone know if i would have to start repaying the loans once i graduated with the associates?

iamlindoro

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Re: Pay College or stash the money?
« Reply #2 on: December 31, 2012, 11:12:06 AM »
If you're not enrolled in school, your loans go into repayment, regardless of whether you graduate, or what degree you graduate with.

Jamesqf

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Re: Pay College or stash the money?
« Reply #3 on: December 31, 2012, 11:12:47 AM »
The simple answer to your first question is that it depends on interest rates.  If you are paying a higher rate on the student loan than you can earn by investing the money, then pay off the loan, otherwise make minimum payments.


sheepstache

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Re: Pay College or stash the money?
« Reply #4 on: December 31, 2012, 12:18:05 PM »
Personally, I would invest the amount covered by the direct subsidized loans.  Can't do better than free leveraged money.


i think it might be better to save up the money i make from my job and have 12000 to live on for those second two years instead of paying for a dorm.

You're paying for the dorm either way, whether out of savings or current income, no?  The only consideration I would have is if you don't want to be forced to work for money as much once you're at Amherst if the coursework is more challenging there.

josephpg

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Re: Pay College or stash the money?
« Reply #5 on: December 31, 2012, 01:27:40 PM »
ok, a few things.
1. if i got the associates i would go immediately to getting a bachelors, still being a student. So would i have to start paying for the associate loans while getting the bachelors?

2. the interest would not start accumulating until i graduated, so consider it to be 0.

3. i would be paying for an apartment with savings, saving about 3000

As for why Amherst, it does a lot of research and has a lot of connections. A friend that goes there tells me about it and recommends it frequently.

iamlindoro

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Re: Pay College or stash the money?
« Reply #6 on: December 31, 2012, 01:33:48 PM »
ok, a few things.
1. if i got the associates i would go immediately to getting a bachelors, still being a student. So would i have to start paying for the associate loans while getting the bachelors?

No,  as long as you stay enrolled (in a qualifying institution), your loans shouldn't generally go into repayment.

Nancy

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Re: Pay College or stash the money?
« Reply #7 on: December 31, 2012, 02:42:08 PM »
Firstly, congratulations on taking the community college to university route. You will save yourself a lot of money, especially in MA, where even state schools are expensive.

1.) Your loans will be in deferment as long as you are a student and are taking enough credits to be enrolled at least half time- this is called in-school deferment. Once you get to UMass, you should go to the Registrar's office and ask if you need to apply for in-school deferment yourself, or if they will be automatically sending your enrollment status to your lender.

2.) There is a lifetime limit to the amount of money you can borrow under the subsidized Stafford loan program. You can check out the FinAid website for more information, but I believe the limit is between $20K-$30K. This amount will not cover the four year cost of your degree (including community college). Are you considering a different loan? Will you be older than 24 when you go to UMass Amherst? In considering your cost at UMass, donít forget that there are tuition discounts for community college transfer students, as well as a community college transfer student scholarship if you can keep a certain GPA. Look into these.

3.) Where are you considering going to community college? Paying $6K per semester for community college is really expensive. Are you sure this is accurate?

4.) Make sure that you take courses that are transferable to UMass Amherst. There is a program called MassTransfer that ensures that if you take the Mass Transfer block of credits, any public four year institution in MA will have to accept them. Meet with a transfer adviser at your community college to discuss the articulation agreements it has with UMass Amherst.

5.) Visit UMass Amherst yourself and make sure that you like it before you commit to an articulation agreement with that school.

josephpg

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Re: Pay College or stash the money?
« Reply #8 on: December 31, 2012, 03:05:33 PM »
Thank you nancy for being so thorough. You are right there is a 33 percent tuition reduction.