Should I get a Student loan?

[chemmastr]

I have four to five semesters of school left.

I'm not in dire need of a loan now, and/or probably won't need it, but I've been thinking that it would be a good move to maximize my credit worth in the future.

 

As soon as I finish school, my dad wants to help me buy some property. Moreover another benefit of the loan is that i can maximize my thankyou point returns at 100 points per dollar. i.e. 5000 points yields a $50 student loan credit(rebate).

 

Should I, or should I not obtain a loan thru Citifinacial?

 

FYI. My offer letter from school says 5500 total a year of Federal Direct Unsubsidized loan, 15400 of Federal Plus Loan... I was thinking of getting a small 5500 loan, either the federal unsubsidized or citiassist, which ever is better.

Edited May 20, 2008 by chemmastr

[thesoonerkid]

do you have (or have ever had) an auto loan? i wouldnt get a student loan if i didnt need one...bottom line is that its more debt you will be in...and whats good about that?

[YODEE]

do you have (or have ever had) an auto loan? i wouldnt get a student loan if i didnt need one...bottom line is that its more debt you will be in...and whats good about that?

 

 

I guess I would do the math in regards to the rebates to see if it's worth your while but ITA with the kid...Why get a loan if you don't need it.

[wildmn]

I would avoid it unless you think you will have a hard time acquiring funds after your graduation. If it was subsidized (gov pays int until after graduation) it would be a lot easier to justify it.

 

I suppose if you were worried about cash flow over the next few years the comfort of having a $5000 cushion in a high interest savings account could outweigh the additional interest cost.

 

What is the rate on each of the loans? I suppose if it were lower than what you could get on the open market for your needs it may be worth it.

[Guest Bree82]

I did that and went to Hawaii for a week. Not the best decision... the vacation sucked, I dumped the loser and Im STILL paying back the trip...

 

If the money isnt needed for school expenses dont take it...

[LynnInMN]

If you dont need the loans, dont borrow them. Unsub and PLUS loans start accruing interest the day you borrow them and I dont think you will find a high enough payming interest account to offset the charges.

 

Private loans like Citiassit....absolutely no.

[climbingup]

The only reason I could think of for you getting a student loan is for a mix of credit to improve FICO, or if you actually needed the cash.

I don't know how adding the loan would alter your mix according to FICO. In my case, the loan is the oldest account on my file, so it lengthens my credit history and improves my FICO that way. It wouldn't work that way for you. Your cc are probably the oldest.

 

If you need the cash because you have high balances on cards and need to reduce your debt to income ratio to get a better FICO and interest rate on a future mortagage, then the loan is a good idea, as long as the interest on your loan is much lower than the interest on your credit card balances.

 

If your balances are low and you don't revolve, then it is not wise to get a loan. It will just increase your overall debt and drive you crazy when you've got an unneccessary student loan payment on top of a mortgage payment.

 

If you get the loan, I agree the fed is better.

 

 

Best wishes.

[Momof5]

My tuition is only a small part of the student loans I took out. I took the first one $2500 with $2000 disbursed to me to pay down high rate credit cards (and then locked those puppies up!) 6.8% on an unsub was smarter than 15 - 19% cc interest. Next, I took the sub Stafford. My son is taking the HVAC training and that is not a financial aid eligible program. That loan pays for his education. He will finish in August and I told him those payments are his obligation. He should start at $16/hr after graduation and he can give the payment money to me and I will start repaying that loan right away.

 

As the others advise....if you don't need it, don't take it. If you take it, pay it off asap. No sense paying $50/mo when you can afford to pay more. It cuts down on the interest you pay, improves your credit and you get out from the obligation that never goes away early.