Have to make decision about school loans...

Community Leader
Registered: 08-25-2006
Have to make decision about school loans...
3
Mon, 07-23-2012 - 5:53pm

I got the letter and have 30 days to accept or decline.  The Pell Grant of $925 a term is just enough to cover 6 or 7 credits and books.  So thus far I have not accepted a loan.

I have been offered $875 a term for a total of $2,625 of Fed Sub Direct Loan, and $2,000 a term for a total of $6,000 for Fed Unsub Direct Loan.  If what I found is correct, the Subsidized loan is at 3.4% and the Unsubsidized loan is 6.8%. 

$2,625 @ 3.4%

$6,000 @ 6.8%

Payments starts 6 months after enrollment drops below half-time. 

The only reason I am even considering a loan this year is to get over this hump.  I cannot say that a future job would result in a higher hourly rate.  Currently I make $16.50 an hour, 3% goes into retirement (which is matched) and employer pays health and dental premiums for entire family.  Long-term my hopes is for a good salary and to retire from a job I love (I am 44 and do not forsee retiring young), but right now with only an associates or transfer degree on the immediate horizon, I have to be realistic. 

I am well aware if I can't live within my means, a loan, in the long run, would be fruitless. 

My CC is currently at 13.7% (aprox. $14,000.  I am up for review in August, so still crossing my fingers to get that lowered.) Monthly payment around $300, of which $150 is interest.  Sickening, I know. 

Auto loan is at 7.99% (approx. $2,850 principal) Monthly payment of $177

Transmision loan is at 17% (approx. $2,400 principal) Monthly payment of $83

Medical bills, interest free - $970 to 5 providers plus guessing around $500 for physical therapist so far.  Have not recieved a bill yet.  Been sending in $25 a month to each one.  PT wants $50 a month.  That would be $175 monthly for a minimum of 6 more months.  Of course, will probably always be some kind of medical bills. 

Letter is dated July 18th, so I do have time to see what my CC company does with the interest. 

My income tax refund has been around $5,000-$6,000.  So could estimate even as low $4,000 - $5,000.

 

Up until a year ago, I was able to get by with my tax refund.  Surgery, transmission and new insurance policies is what has put me over the edge.  BTW, I am not trying to get out of increasing my income.  :smileywink:

 

The silver lining in this dark cloud?  With a maxed out CC you can't overspend! 

 

Maybe I am delusional and just want a quick fix.  Even so, it helps to put this kind of stuff out there for clarily.  It is either makes sense, or I am insane.  Either way it makes a decision easier.  :smileyfrustrated:



Serenity
iVillage Member
Registered: 05-08-2006
Wed, 07-25-2012 - 4:53pm
I think the first thing to consider is that you cannot discharge a student loan in bankruptcy. The second thing is to ask yourself if you have the discipline to NOT charge on your card if you have capacity to charge. Looking solely at the interest rate, taking the student loan and paying off your car and transmission loans, and maybe starting an efund is a sensible choice. You could then throw everything at the credit card, and potentially lower your total debt before you have to pay off the credit cards. But if the money you owe will just build up again with the student loans on top of it, do not do this....just my opinion. SJ
iVillage Member
Registered: 11-14-2008
Thu, 07-26-2012 - 5:42pm

My first thought is 6 months is not enough time to have to consider paying it down(either of them). You have too many bills outstanding that you cannot pay currently. It doesn't matter what the interest rates are if you cannot afford another minimum payment here. 

How much longer is your schooling before you can work full time? This may have to be an option sooner than later. 

I know rocks and hard places. I wish I saw an easier solution for you. Can you go back to school next year and work full time to get over this hump for a year? That would put you in  a better place and give you some breathing room. 

Just a thought. Good luck with your decision. 

 

Community Leader
Registered: 08-25-2006
Thu, 07-26-2012 - 6:33pm
Even as I was typing the post, the idea of simply deferring my current debt to a later date didn't sit well.

Sure, I could take the loans and pay off my auto loan and transmission loan and free up $250 a month, but the idea of that much debt just sitting out there waiting for me to finish school makes me a bit ill.

If I really needed a loan to help pay for tuition and books, then I might consider it. And I understand that student loans are partially intended for living expenses, but the idea is just rubbing me the wrong way.

Especially since I do get a large income tax refund.

I just have a feeling I will end up in another pickle down the road and something else will come up the same time the school loans are due. Seems to be Murphy's law.

I haven't done anything yet, but leaning towards declining.
Serenity