Question About Student Loans

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muffeoniv

muffeoniv

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I'm going to be in college full time next year... I know there are grants\financial aid ect. that I will try to get, but I have a question...

I keep hearing about people having "extra money" left over after they pay for school with student loans... I'm not planning on going out and buying flat screen TVs, but I'm just wondering how its determined how much money you can take out for a student loan...? do you decide or does the bank decide?... I know there are limits on federal student loans?...

SO what's all this talk about having "extra" money after using student loans to pay for school?... how do they decide how much they give you for food ect.?... car?
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There will be some number that the school comes up with as an estimated cost of attendance, which is the maximum amount you can get.

You should come up with your own budget, though, and take out only as much as you need. There's absolutely no reason to let borrowed money sit in your bank and accumulate interest. The exception to this is if the money is subsidized (i.e. there is no interest until your graduate). If this is the case, it might make sense to take out the loan and invest anything you don't need, then pay off as much as possible just before interest begins to accrue.
 
is the maximum amount usually way higher than most people need or is it common to take out the maximum amount?
 
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muffeoniv said:
is the maximum amount usually way higher than most people need or is it common to take out the maximum amount?
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No, plenty of people won't even have enough to pay all of their bills with the maximum amount, and they'll need to work or take out private loans.
 
TheProwler said:
No, plenty of people won't even have enough to pay all of their bills with the maximum amount, and they'll need to work or take out private loans.
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I understand the federal ones, but how do the private student loans work?... That's what I'm really asking is there a limit to how much you can take out in terms of private student loans?
 
muffeoniv said:
I understand the federal ones, but how do the private student loans work?... That's what I'm really asking is there a limit to how much you can take out in terms of private student loans?
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bump
 
muffeoniv said:
I understand the federal ones, but how do the private student loans work?... That's what I'm really asking is there a limit to how much you can take out in terms of private student loans?
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The limit is how much a private lender is willing to give you. Private student loans are a bad idea.
 
muffeoniv said:
I understand the federal ones, but how do the private student loans work?... That's what I'm really asking is there a limit to how much you can take out in terms of private student loans?
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Private student loans are based on your credit. They aren't as hard to get as any other loan (read: car loan, mortgage), but they tend to have higher interest rates, aren't subsidized (and in some cases, you have to pay interest while you're in school anyway).

Basically, there something you want to avoid. Period.

If you have more questions, I suggest going and speaking to a financial aid officer. They're more likely to help you than any of us are, since most people manage fine on federal loans alone (at least, until the later years of medical school).
 
Just my $0.02, but my private student loans ended up being much better for me than federal loans. I just recently started paying back my loans from undergrad and my federal loans are a 6.8% interest rate (which I believe is standard) and my private student loans are at a 3.25% interest rate. While I am obviously the exception, private loans worked out better for me, but alas, I also had no other choice than to take out both! :)

::staying on topic, I did use some of my loan money to help pay a small amount of my off campus apartment and $100/month extra in case of a medical emergency or such::
 
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