Where to start as a college student?

[Bolt11235]

So I am a junior in college and I am wondering how to start my plan of attack. In a very un-mustachian move, I go to a private liberal arts school 1500 miles away from home. I am getting a degree in teaching (should have thought that one out better). I am wondering if I should pay back my student loans first or invest first? Here is some info about me:

Age: 20
I go to school in Vermont.
My Student Loans after it's all said and done will be around 30,000$ (All Federal Loans, no private).
I do not own a car, so expenses are pretty much zero. Food, housing, etc. is covered by tuition. I have 3000$ in savings and I save between 60-90% of each paycheck ( I earn around 100$ dollars a week as a Resident assistant).

Really any info on what my fellow mustachians would do in this situation would be great!

[Everything in Moderation]

Not sure about saving vs. investing. 

My husband is a teacher and went to an expensive liberal arts school.  He has not gotten a financial return, but it was still completely worth it to him.  You just have to start being smart about your money and career. 

Getting a teaching job is all about who you know.  Network with people is the highest paying school districts!!!

Also, I would suggest starting a tutoring business.  You can make bank if you know how to market yourself.  Put flyers on all cars at parent teacher conference night in a wealthy neighborhood.  Set 2 hour tutoring session minimums, so your time is respected.  Get the word out and put the money towards your loans. 

What about coaching?  Not at the school because you are not paid enough there.  But can you offer private tennis lessons or other sport?  Parents in wealthy neighborhoods pay good money for this stuff.  You just have to be smart about marketing. 

Good luck. 

[gimp]

I'd split investing and repaying your loans.

On one hand, you have loans. That's not so good. The interest rate on them isn't terrible, though.

On the other hand, you need a decently large fun that would allow you to move anywhere in the country for the right job, find a place to live, deal with emergencies, etc.

Also, what kind of investing? Would you be getting any sort of employer match? And so on. It's not a simple yes/no answer.

Once you have a decent emergency fund built up, repay your loans.

[Bolt11235]

Thanks for the input! I was thinking about starting a little tutoring gig on the side. As far as investing goes I was thinking some basic dividend-producing index funds at vanguard.

[Bruised_Pepper]

Depends on the interest rate of your student loans and how what return you'd expect on your investments.

On a more in-the-present note, it's often more cost-effective to rent your own place instead of living in a residence hall, but that means you'd have to get a job while you study which isn't always preferable. 

[mrsggrowsveg]

I was looking at my student loans and there is a loan forgiveness plan for teachers.  I think you pay the minimum payment for a number of years and then the rest is forgiven.  Also, if you teach in an under-served area, they may pay everything.

[nawhite]

I was looking at my student loans and there is a loan forgiveness plan for teachers.  I think you pay the minimum payment for a number of years and then the rest is forgiven.  Also, if you teach in an under-served area, they may pay everything.

The loan forgiveness plans are based on you going on "Income based repayment." Basically you will pay a certain percentage of your income (usually 10% or less) rather than a fixed payment. If you are in a low income job (like some teaching gigs), then you will not have paid off your loans within 25 years. At the end of 25 years your loans are forgiven assuming you NEVER EVER MISS A PAYMENT! Also, you will likely have paid more overall than if you had simply made the payments on a standard 10 year repayment plan. You'll need to do the math.

If you teach in an underserved area the 25 years becomes 10 years. The same NEVER MISS A PAYMENT! comment still stands and you will have to keep the same or very similar job for 10 years. (My wife tried going this path and ended up giving up after 6 months because teaching in Northeast DC is really hard). Teaching in an under-served district generally means moving very far away from your family and friends and you have to stay there for 10 years. I guess all I'm saying is the requirements are (rightly so) very hard to meet. Think carefully before you go that way.

So I am a junior in college and I am wondering how to start my plan of attack. In a very un-mustachian move, I go to a private liberal arts school 1500 miles away from home. I am getting a degree in teaching (should have thought that one out better). I am wondering if I should pay back my student loans first or invest first?

My advice in this situation is that if you decide to invest, do it in a Roth IRA. Your income tax rate is probably lower than it will ever be again so if you are investing, lock in money that you never have to pay taxes on again. That being said, 8.5% and 6.8% loans suck, pay them off asap. But if you're one of the lucky ones with locked in fixed 3.4% loans, I'd be investing instead of paying those off.

[rubybeth]

The loan forgiveness plans are based on you going on "Income based repayment." Basically you will pay a certain percentage of your income (usually 10% or less) rather than a fixed payment. If you are in a low income job (like some teaching gigs), then you will not have paid off your loans within 25 years. At the end of 25 years your loans are forgiven assuming you NEVER EVER MISS A PAYMENT! Also, you will likely have paid more overall than if you had simply made the payments on a standard 10 year repayment plan. You'll need to do the math.

If you teach in an underserved area the 25 years becomes 10 years. The same NEVER MISS A PAYMENT! comment still stands and you will have to keep the same or very similar job for 10 years. (My wife tried going this path and ended up giving up after 6 months because teaching in Northeast DC is really hard). Teaching in an under-served district generally means moving very far away from your family and friends and you have to stay there for 10 years. I guess all I'm saying is the requirements are (rightly so) very hard to meet. Think carefully before you go that way.

I don't think the above information is correct. Try http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/teacher for more info.

[nawhite]

I don't think the above information is correct. Try http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/teacher for more info.

Thanks for the awesome link! Just to clarify then, (1) the first program at the link only applies to under-served (or low income) schools and (2) you must work for 5 consectutive and complete years in that district. (3) You can only get $17k in forgiveness if you teach math or science in High School or special ed. You are only eligible for $5k otherwise. (4) if you aren't in a low income district, the only option is the 25 years on income based repayment like I said in my post.

I'm even more convinced this isn't that great of a deal unless you WANT to teach math, science or special ed in underserved/low income school for 5 years with no option of quitting. If you do, they will forgive about half of your loans. There are better ways to be happy and debt free.

[galliver]

$30k total loans for 4 years of college? Clearly you are doing something right: getting some scholarships, I'm guessing, and apparently working as an RA. The much-touted "mustachian" route of state school comes out to at least that much. Many state schools' tuition are now in the $5k-10k range depending on major and location, and  rarely if ever offer significant scholarships (certain states that admit top 1-2% to their flagship school for free, excluded). Throw in living expenses (avoidable if you live at home, but then you'd probably have a commute, etc). Obviously state schools have RA's, too, but I think they're harder to get (at least at U of IL, I hear that many sophomores and most juniors and seniors live off-campus, so the dorms only serve far less than half of the population. People lived on campus through senior year at my small tech school in Chicago.)  Basically it doesn't sound like you made a bad choice at ALL, to me.

I went to the school that offered me a full-tuition scholarship, worked when I could, lived on-campus all four years, and ended up owing about $25k to my parents. It's now down to $20k. In a sense I'm in a similar place as you--some savings, making a small net profit (if I live right ;) ). My choice is slowly paying back that loan (the numerical interest rate is nominal, but the 'emotional interest' is a bigger incentive here), and saving money. I know when I defend and graduate in 2-ish years, I might need to relocate, perhaps buy a car, etc. Right now I find that liquid savings that I can access are key. Long term investments are just going to have to wait until my income and stability increases a bit.

[Bolt11235]

These are great posts. I was thinking I would just pay the student loans off because debt of any kind bothers me a lot. But I was pretty lucky, I get about 25k in scholarships every year to go to my college. Thanks again for all the great information.

[MrsPete]

At this point, the most important thing to do is to complete your education as inexpensively as possible and get a job.  I'm also a teacher, so I can give good advice on this subject:

Someone commented that it's all about who you know /networking.  This is true.  Almost everyone who is hired at my school is either 1) a student teacher who's just finished up training with us (or with another school in the area who doesn't have an appropriate opening), OR is a substitute teacher.  The administration LOVES to hire from these two sources because it means they've had a chance to "try before they buy".  They've seen you in action: they know whether you "have it" or not. 

So, keeping that in mind, when you reach your student teaching semester, push your university supervisor hard to put you in the school you really want.  Be polite but insistent that you've visited _____ school and would strongly prefer a placement in that location.  Contact your cooperating teacher early, ask for books to take home over the summer, ask what you can do to "get ahead" for your student teaching year, dress professionally when you go to meet him or her.   

It goes without saying that you MUST have an A+ in student teaching and excellent recommendations from your cooperating teacher. 

As your student teaching semester ends, ask your cooperating teacher's help in getting the principal, the department head, and anyone else who seems appropriate to come observe you teaching.  You want the principal to be aware of you.  If he doesn't have an opening in his own school, he will be able to "talk you up" to his fellow principals. 

Become qualified to sub (that usually just means passing a drug test and a criminal background check) when you begin student teaching.  As your student teaching experience comes to an end, let the teachers in your department know that you're available to sub for the rest of the year.  Typically you'll pick up some jobs as teachers take days off for their own kids' end-of-the-year activities, etc.  And every day you're in the school is a job interview.  I remember one student teacher who was actually hired to finish out the year for a teacher who'd left unexpectedly . . . and she was so stupid that she failed to realize she was "up for the job" the next year.  She showed up in sweat pants, let the kids run wild.  She ended up being fired from the sub job, and I don't know if she ever did get a real job. 

Finally, you need to offer something extra to the school; that is, something other than just your teaching degree.  I remember sitting in a college lecture hall, and my professor saying to a room full of student teachers, "Remember that your degree will never get you a job."  Huh?  What?  Why did I just go to school?  He went on to explain that every other person applying for your job has the very same degree . . . so why should they choose you?  Can you coach a sport?  That's the #1 way to be hired.  Are you qualified to teach an unusual subject?  Or are you dual-certified?  Are you bi-lingual?  You need something other than that brand-new degree. 

[Kristin]

Paying off your student loans as quickly as possible while you have $0 living expenses should probably be a primary goal.
Having some savings for emergencies/moving when you graduate is also important. 
With federal student loans, you may have some where interest is deferred, and some that are not.  If all of your loans have deferred interest, GREAT.  That means you can work on paying down that principal while in school and even during the 6 month grace period after you graduate.
The best case scenario is graduating debt free, or with minimal debt.  That will give you the freedom to take a lower paid teaching job in the school district you want if need be, or set you up to really start saving money and investing when you start working full-time.

Good luck!

[dude]

$30K in student loans for a quality education is a pittance.  As others have said, if the rates are high, then get to work on paying them off ASAP -- but I would not do so completely at the risk of not saving/investing.  You will never make up lost returns on money invested very early -- TIME is the most significant variable (particularly because you have some control over it) affecting compound interest.  I'd set a goal of paying off the student loans in a reasonable time while still being able to sock some retirement money away (esp. tax-deferred or matching contribution money).