July 28, 2017
I am an older student, and after years of attempting to attain a college education without assuming any debt, I have decided that I am going to assume a large debt, study where ever I want, and attain some nice graduate degrees. I have been denied residency status(despite my mother being a full time faculty member at the institution my entire life) I have been denied financial aid(paper work errors, lost transcripts, and the truly ridiculous having too much income). I have taken night courses at community college only to discover despite advisor assurance, that the credits don’t transfer to a four year program. I even worked for UPS trying to get tuition reimbursement that never materialized. I learned all the tricks the hard way and lost a lot of time doing it. I am tired of the public system, and have decided to go to a private institution instead. I have flawless credit despite having an empty checking account and no assets. I imagine I will have no problem borrowing a ludicrous amount of money for school, and I will have to, as tuition has tripled while I have been sitting out working dead end jobs pursuing the night course route. I can only expect tuition and interest rates to rise in the coming years. After exhaustive research, I also realize that I cannot truly anticipate exactly how much debt I will finish school with, or how much I can expect my monthly payments to be. These loans are all terrifyingly opaque, and even real college expenses are difficult to determine precisely, their “cost of attendance” estimates are mostly fairy tales. If I wish to pursue my goals aggressively, my loan debt could be anywhere between 80-240k, depending on an enormous number of factors, and once I start, I have to keep going, no matter how high the number gets, the alternative is to stop, still have the debt, and not have the degrees. I am targeting a fast growing field, and cultivating professional contacts at elite universities will give me a competitive edge, an edge I need as my age and lack of experience in the field will soon start to work against me, but my starting salary out of school may only be 65-80k. My first question is for general advice on how to structure and position my finances in order to keep this amount as low as possible, I’ve already cultivated the excellent credit and acquired the freshmen credits from community college. My second question concerns how an income based repayment plan and loan consolidation for my federal loans will calculate my adjusted gross income. Will my payments to private loans be subtracted before my payment to federal loans is calculated? If so, great, if not, I would be looking at loan payments that I would almost certainly not be able to make my first three years out of school, at which point, fees and compounding interest may raise my debt to an unretirable level. I can’t anticipate what interest rates will be when I graduate, if they rise, will consolidating my loans cause me to pay more in the long run? I apologize for all the questions, I have so many more, and I love your site, one of the best resources I have found while researching.
May 3, 2014
Lots to discuss here, so I’ll just jump into your questions in order:
1) Ways to keep costs low – Your decision to opt for a private school over any public school is likely a VERY expensive one. I don’t think you can reach many conclusions about the quality of a school just based upon whether or not it is public or private. Many of the finest schools in the country are public schools. Many local public schools also have the best job placement numbers, depending upon your field of study. When I went to law school, I worked during the day and went to school at night, this route saved a bunch of money. Additionally, the more affordable housing you can find, the less you will have to borrow.
2) The number used for income-based repayment comes from your taxes. Private loans have almost zero impact on your federal payments. This article might help on how they do these calculations: https://studentloansherpa.com/discretionary-income-calculation/
3) As far as interest rates are concerned, you might be wise to look for fixed-rate loans for your borrowing. That way there is no danger of rates going up. You still would have the option to consolidate in the future if interest rates drop, but getting fixed rate loans now protect you from a dramatic rate increase.
One thing to consider: People normally get into trouble with student loans when their total debt is greater than their starting salary at graduation. If you are in a program where grads make 100k per year, 100k in debt might make sense. If the average graduate makes 40k a year, you will want to keep your debt lower. If you don’t think your first year salary will be larger than your total student debt, you might want to rethink your choices.
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