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Author Topic: Leftover Loans?  (Read 1678 times)

stardustinmyveins

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Leftover Loans?
« on: May 08, 2007, 07:15:39 PM »
What happens when I have loan money left at the end of the year? (and by loans, I'm referring to stafford loans). Do I give it back to the lender, or hold on to it for the next year? Any insight would be appreciated!

Para Legal

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Re: Leftover Loans?
« Reply #1 on: May 08, 2007, 07:26:07 PM »
You can do either. It's yours to spend on approved expenses, i.e. tuition, fees, living expenses, books, etc.

If you have extra, just remember that you will have to pay it back eventually- if you are in a position to give it back, you are essentially making a principal payment in advance back to the lender. It will reduce your principal and interest accumulated over the life of the loan.

Which will leave you with less debt after graduation.

And less debt equals more freedom.

Cheers,

Para  :D
Hamline University School of Law
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stardustinmyveins

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Re: Leftover Loans?
« Reply #2 on: May 08, 2007, 07:34:24 PM »
You can do either. It's yours to spend on approved expenses, i.e. tuition, fees, living expenses, books, etc.

If you have extra, just remember that you will have to pay it back eventually- if you are in a position to give it back, you are essentially making a principal payment in advance back to the lender. It will reduce your principal and interest accumulated over the life of the loan.

Which will leave you with less debt after graduation.

And less debt equals more freedom.

Cheers,

Para  :D

Thanks! That's good to know. =)

TrashCat

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Re: Leftover Loans?
« Reply #3 on: May 09, 2007, 10:18:41 AM »
What happens when I have loan money left at the end of the year? (and by loans, I'm referring to stafford loans). Do I give it back to the lender, or hold on to it for the next year? Any insight would be appreciated!

FYI a good investment strategy is always to let it ride on black.

Brett McKay

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Re: Leftover Loans?
« Reply #4 on: May 16, 2007, 11:30:51 AM »
I suggest keeping it and putting it in a high yield on-line bank like ING Direct. It's good to have that extra money for emergencies like Dr. bills, car repairs, ect. What's nice about the high yield accounts is that many get a 5% return. After three years of college, you might have enough principal to use the interest to pay back your student loans.

dcforlife

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Re: Leftover Loans?
« Reply #5 on: May 16, 2007, 03:16:38 PM »
I suggest keeping it and putting it in a high yield on-line bank like ING Direct. It's good to have that extra money for emergencies like Dr. bills, car repairs, ect. What's nice about the high yield accounts is that many get a 5% return. After three years of college, you might have enough principal to use the interest to pay back your student loans.
Maybe I'm misunderstanding, but how in the world would you be making enough at 5.0% interest to "use the interest to pay" off a loan at 6.8%?

Makes perfect sense to put it in a high-yield account - let's say 5% - because then your effective interest rate is only 1.8%. But unless you match or exceed the rate of the loan, you're going to be paying the principal, the interest you made, and then some more on top of that.

.zone.

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Re: Leftover Loans?
« Reply #6 on: May 17, 2007, 09:20:36 PM »
A financial aid counselor at one of the schools I am considering said you can cancel a portion (or all) of a loan within 120 days of taking it out.  That's what I'm planning to do with most/all of my leftover money (if there is any, that is) :D.

quem vem la-sou eu

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Re: Leftover Loans?
« Reply #7 on: May 17, 2007, 09:36:29 PM »
I suggest keeping it and putting it in a high yield on-line bank like ING Direct. It's good to have that extra money for emergencies like Dr. bills, car repairs, ect. What's nice about the high yield accounts is that many get a 5% return. After three years of college, you might have enough principal to use the interest to pay back your student loans.
Maybe I'm misunderstanding, but how in the world would you be making enough at 5.0% interest to "use the interest to pay" off a loan at 6.8%?

Makes perfect sense to put it in a high-yield account - let's say 5% - because then your effective interest rate is only 1.8%. But unless you match or exceed the rate of the loan, you're going to be paying the principal, the interest you made, and then some more on top of that.


I think he must be referring to situations where you plan on utilizing the funds in the near future.

Also imagine, (and I say imagine because for most of us this exists only in our dreams) you only have to take out the 8.5k in subsidized stafford loans, and you had a remainder. ING would be a good option during the non-accruing period. The interest would be yours. (Is this unethical though? Definitely seems like it would be.)

DDBY

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Re: Leftover Loans?
« Reply #8 on: May 20, 2007, 08:39:40 PM »
The best thing to do it to put in a savings account like ING., not to defraud the government, but as a buffer for emergencies.  The interest you accrue while in law school is insignificant compared to the overall cost of attending and is worth the piece of mind.  If your car breaks down and you need $1000 it won't break your budget, and you will be able to eat for the rest of the semester.  Then the next year request a smallar loan amount that matches your historical budget needs. 

The problem with returning it is that if you made an error and determine later that you do need the money.  You're screwed. You will have screwed your self (Like Ron Jeremy)... Amazing.

At the end of the 3 years you can either sent it back (if it's still there), or use it in place of a BAR loan.