Loan disbursement

[Bereno]

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For those of you who are financial savvy, I have a few questions:

Lets say I need to take a loan to go to an expensive private school (hopefully not, but just in case). I need a 400k loan, and have a fixed interest rate of 6.8%

1. When would this loan be disbursed?
2. Can I opt to have the full 400k sent to my bank account first, so that I can pay the schools personally?
3. How many loans have you taken out to pay for your education? (note, this is how many, not how much)

Thanks!

 

[HillsNayyr]

You don't get all 400k at once. You will get small chunks at the start of each semester. For example I will get about 53k early in august, which is the estimated cost of attendance for 1 year at my school.

 

[cmcner]

All university tuition and fees will be taken out before they send you the money and they will send you it in installments each semester or trimester, not in one lump sum.

 

[SoulPower]

You wouldn't want to take it all out anyway, you'd be paying more interest due to having it lumped into your account then taking it out over time.

 

[stevesteve121]

You don't get all 400k at once. You will get small chunks at the start of each semester. For example I will get about 53k early in august, which is the estimated cost of attendance for 1 year at my school.

you guys talking about private loans?

i know for many Line of Credits they let you take out how ever much you want/need as soon as you sign on the dotted line.

 

[7 Iron]

you guys talking about private loans?

i know for many Line of Credits they let you take out how ever much you want/need as soon as you sign on the dotted line.

Federal loans aren't lines of credit though. They are disbursed at the start of every term. Also your school will limit your borrowing amount to the "cost of attendance" which the school does not know 4 years ahead of time.

 

[Bereno]

Hmm, OK.

Thanks for the responses! The reason I am asking is because it seems that I have not seen anyone try and hedge their borrowing with an investment that pays equal to or just over the cost of borrowing. Has anyone taken their loans and invested the money in some sort of plan that pays just over the 6.8% interest rate?

For example, why would someone not think about putting their money into a bond that pays 8% interest so that the cost of interest is negated?

I am NOT saying this is feasible, I'm just wondering if someone has tried to find a way to limit their financial losses by hedging their borrowing? 😀

 

[SoulPower]

Hmm, OK.

Thanks for the responses! The reason I am asking is because it seems that I have not seen anyone try and hedge their borrowing with an investment that pays equal to or just over the cost of borrowing. Has anyone taken their loans and invested the money in some sort of plan that pays just over the 6.8% interest rate?

For example, why would someone not think about putting their money into a bond that pays 8% interest so that the cost of interest is negated?

I am NOT saying this is feasible, I'm just wondering if someone has tried to find a way to limit their financial losses by hedging their borrowing? 😀

Probably cause you can't find a good enough interest rate to counter it. If you invested it then there's the off chance you could lose money in which case you'd be SOL.

The gov't probably already foresaw this and that is why they already pay it out semesterly rather than in a lump sum.