I administer a graduate program, and some of my students live very, very frugally. Others are pulling out the biggest loans they can and living semi-cushy lives (or as cushy as grad student lives get). I myself have small loans to cover books and some of my cost of living because even though I'm employed full-time, that doesn't necessarily cover everything when you factor in grad school. However, the basic rule is "go for as little as you possibly can." Things like whether or not to take a summer session tend to get answered on a case-by-case basis within your program. The program I administer, for example, doesn't offer a summer session. Many of our grad students teach or do research during the summer. The program I attend, however, DOES offer a summer session, so I'm taking a class, because I'm a part time student so taking a class at every possible opportunity makes sense. When it comes time to schedule your summer, if you have the option of taking a class or teaching or doing research, only you (and possibly your advisor), can really figure out what the best choice is.
When it comes time to schedule your summer, if you have the option of taking a class or teaching or doing research, only you (and possibly your advisor), can really figure out what the best choice is.
Oh. See, I was anticipating like, deciding before I take out the yearly loan, budgeting for summer or not. To avoid trying to get it to pay for the summer at the middle of the Spring semester, you know?
But no, I don't plan on trying to be cushy. My biggest expenditures is food, right now. But I'm looking at how much just renting a room is going to be where I'm going, and I'm not going to have much left after paying for rent, monthly.
Worst-case scenario is that you budget for summer school and then don't spend that money, and you can reduce what you take in loans the next year. I'd suggest putting it in a high interest bearing account (I <3 my ING account!) while you decide on that. There's really no way to know ahead of time whether you need to take summer classes in a lot of cases though, since classes tend to be scheduled at least semi-irregularly.
I'm not familiar with a high interest bearing account. What does that do?
I hate to ask specific financial questions here; I feel rather naive and unprepared. But that's the point I am in now - to get prepared. I want to understand the financial rigamarol of loans before I apply for any.
To this day I've avoided credit cards and such, so I have good credit. I don't want to bite into a loan that will turn out to be a mistake in three years, etc.
OK, first of all if you've avoided credit cards, etc entirely you don't have good credit, you have no credit. That can be problematic in terms of finding private loans, because they like to see 2 years or more of good credit, so you might need to find a cosigner if you were planning to apply for any private loans.
A high interest-bearing savings account - OK, if you go to your bank and just open a savings account you're highly likely to get <1% in interest paid to you, probably even less right now since the Fed rate is so low. However, there are some accounts that you can get (typically at primarily investment banks like ING Direct and Citi) that will pay you 2-3% more if you plunk your savings with them. I think right now my ING account is at 2.25%, but it's reached 5.13% at points over the past five years. For money you're not going to use for a while if ever, this can be very much worth it.
For loans, are you primarily relying on Stafford loans or were you going to private loans? Keep in mind that these are very, very different. Stafford loans are your best deal, they're subsidized by the government which means interest accrual is deferred, you can get deferrals or extended repayments or temporary payment reductions, and repayment periods are typically longer. Unsubsidized staffords aren't quite as good a deal, but are still pretty reasonable (they have higher interest rates). Some states also run programs to administer them that reduce the interest rate even further.However, you're restricted to around $22K for those. These are your best bet, and if you can get by with this I would do it.
If you have need for more money than that, you'll need to either hustle for scholarships or fellowships (highly preferred) or go with graduate PLUS loans or private loans. Private loans are higher interest rate, no interest deferral, and are much stricter with repayment terms, and also require a credit history. PLUS loans are usually a better deal, but again require credit history or cosigner. These programs will give you as much money as you want, but you'll pay a higher cost for them, which is why you need to avoid the temptation to take as much as you can. That's the point where madness lies!
For loans, are you primarily relying on Stafford loans or were you going to private loans?
After handling my FAFSA, the school informed me of what loans I'm qualified for. The Stafford subsidized loan only covers $8,500 a year. The unsubsidized loan, around $11,500. This comes out to a total of $20k. The school's projection as to what a full year will cost (factoring in likely books, housing, food, etc) is 26K.
So, I can't rely on the Stafford subsidized. The unsubsidized (which has interest I have to pay during school, as opposed to the government paying the interest) is doing the lion's share of the work, but even with Both, I'm going to have to go private to cover anything else.
Although before I made this post, I contacted the school to find out some facts. They actually have not given me a BILL as to how much my tuition+credits+fees will cost. However, I did some number crunching based purely on tuition/credits:
Tuition for a semester: $6,000 12 credits worth: $1,780 (I'm actually taking 13 credits, but 12 is a nice number). Per semester: $1,780 One year: $14,360.
That's much more reasonable, but again, rent/books/food. Not to mention Summer courses, if I have to take them.
That's all I know at this stage. I don't think I can get any more Stafford subsidized. I'm leery of the Unsubsidized, but I doubt I can get a better deal privately.
That's the max they can give you for stafford loans. OK, it sounds like you will have to take the unsubsidized, but don't panic! You don't actually pay the interest on it while you're in school unless you choose to; while you can, and it reduces your eventual payment time frame if you do, you can have them just roll it into the principal of the loan.
Another thing to keep in mind is that that estimate may be very high. The estimate for my school is similar, but my actual expenses are a bit lower than that. You may consider getting a part-time job, which should be plenty to make up a $6K shortfall. I'm a little confused about your separation of tuition per semester and the "12 credits worth" - do they charge high fees on top of tuition? If so, you might be able to get a fee remittance due to very low income.
You don't actually pay the interest on it while you're in school unless you choose to
Hmm. I was under the impression that the interest still built up. Even though you don't have to PAY on the loan until you graduate, it still builds over time, which is scary.
it reduces your eventual payment time frame if you do, you can have them just roll it into the principal of the loan.
I didn't quite understand this, however.
It will be much less hedgy when I can get my hands on a TA position. The estimated amount that pays is about $4500 a year. That would definitely cover books/rent.
Also, I have another question. This one has been nagging at me. Obviously, I take out the loan to cover all the school fees for this year. What about next year? And the year after taht? Do I take a loan out every year, or do they simply add the next year's sum to the existing loan?
Yes, the interest is added to the loan principal, but it doesn't add up that much. I have about $20K in loans right now and it's about $350 a year. So it's not a disastrous situation whether you choose to pay it or roll it over.
You take new loans each year, they don't add them together usually. You can consolidate them later, but it's best to wait to do that because I believe you can only do it once, usually.
Private loans can have hideous interest rates, which is why I recommend avoiding them if at all possible, but interest rates on student loans are usually low and aren't as subject to market fluctuation as other loans. It's still not great to borrow what's essentially a mortgage's worth of debt, but you're not going to drown under the interest payments if you keep it reasonable.
If you already have a specific program in mind, you may want to contact them. As I said, my program doesn't offer graduate level courses during the summer, so if someone called us and asked us what you're asking, I'd happily tell them to never plan on summer classes, as they don't exist! So it couldn't hurt to get in touch with your program[s] of choice to get a handle on what's average there.
I'm all ready been accepted and scheduled classes. The program does offer summer courses. I just saw the projection of "What you should take out to cover this year's expenses" that it scared the hell out of me, and I am now trying to take a more measured approach: budget.
I want to get all my ducks in a row before I accept the loans that the school says I'm qualified for, let alone take out any other loans to cover what isn't covered.
The program is good, but it's also rather frustrating; it's a small program. The semester I signed up to, they were barely offering any courses I was planning to take. So I anticipate I will have to take some summer course sometime, just to get the classes I want.
I administer a graduate program, and some of my students live very, very frugally. Others are pulling out the biggest loans they can and living semi-cushy lives (or as cushy as grad student lives get). I myself have small loans to cover books and some of my cost of living because even though I'm employed full-time, that doesn't necessarily cover everything when you factor in grad school. However, the basic rule is "go for as little as you possibly can." Things like whether or not to take a summer session tend to get answered on a case-by-case basis within your program. The program I administer, for example, doesn't offer a summer session. Many of our grad students teach or do research during the summer. The program I attend, however, DOES offer a summer session, so I'm taking a class, because I'm a part time student so taking a class at every possible opportunity makes sense. When it comes time to schedule your summer, if you have the option of taking a class or teaching or doing research, only you (and possibly your advisor), can really figure out what the best choice is.
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Oh. See, I was anticipating like, deciding before I take out the yearly loan, budgeting for summer or not. To avoid trying to get it to pay for the summer at the middle of the Spring semester, you know?
But no, I don't plan on trying to be cushy. My biggest expenditures is food, right now. But I'm looking at how much just renting a room is going to be where I'm going, and I'm not going to have much left after paying for rent, monthly.
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I hate to ask specific financial questions here; I feel rather naive and unprepared. But that's the point I am in now - to get prepared. I want to understand the financial rigamarol of loans before I apply for any.
To this day I've avoided credit cards and such, so I have good credit. I don't want to bite into a loan that will turn out to be a mistake in three years, etc.
Reply
A high interest-bearing savings account - OK, if you go to your bank and just open a savings account you're highly likely to get <1% in interest paid to you, probably even less right now since the Fed rate is so low. However, there are some accounts that you can get (typically at primarily investment banks like ING Direct and Citi) that will pay you 2-3% more if you plunk your savings with them. I think right now my ING account is at 2.25%, but it's reached 5.13% at points over the past five years. For money you're not going to use for a while if ever, this can be very much worth it.
For loans, are you primarily relying on Stafford loans or were you going to private loans? Keep in mind that these are very, very different. Stafford loans are your best deal, they're subsidized by the government which means interest accrual is deferred, you can get deferrals or extended repayments or temporary payment reductions, and repayment periods are typically longer. Unsubsidized staffords aren't quite as good a deal, but are still pretty reasonable (they have higher interest rates). Some states also run programs to administer them that reduce the interest rate even further.However, you're restricted to around $22K for those. These are your best bet, and if you can get by with this I would do it.
If you have need for more money than that, you'll need to either hustle for scholarships or fellowships (highly preferred) or go with graduate PLUS loans or private loans. Private loans are higher interest rate, no interest deferral, and are much stricter with repayment terms, and also require a credit history. PLUS loans are usually a better deal, but again require credit history or cosigner. These programs will give you as much money as you want, but you'll pay a higher cost for them, which is why you need to avoid the temptation to take as much as you can. That's the point where madness lies!
Reply
After handling my FAFSA, the school informed me of what loans I'm qualified for. The Stafford subsidized loan only covers $8,500 a year. The unsubsidized loan, around $11,500. This comes out to a total of $20k. The school's projection as to what a full year will cost (factoring in likely books, housing, food, etc) is 26K.
So, I can't rely on the Stafford subsidized. The unsubsidized (which has interest I have to pay during school, as opposed to the government paying the interest) is doing the lion's share of the work, but even with Both, I'm going to have to go private to cover anything else.
Although before I made this post, I contacted the school to find out some facts. They actually have not given me a BILL as to how much my tuition+credits+fees will cost. However, I did some number crunching based purely on tuition/credits:
Tuition for a semester: $6,000
12 credits worth: $1,780 (I'm actually taking 13 credits, but 12 is a nice number).
Per semester: $1,780
One year: $14,360.
That's much more reasonable, but again, rent/books/food. Not to mention Summer courses, if I have to take them.
That's all I know at this stage. I don't think I can get any more Stafford subsidized. I'm leery of the Unsubsidized, but I doubt I can get a better deal privately.
Reply
Another thing to keep in mind is that that estimate may be very high. The estimate for my school is similar, but my actual expenses are a bit lower than that. You may consider getting a part-time job, which should be plenty to make up a $6K shortfall. I'm a little confused about your separation of tuition per semester and the "12 credits worth" - do they charge high fees on top of tuition? If so, you might be able to get a fee remittance due to very low income.
Reply
Hmm. I was under the impression that the interest still built up. Even though you don't have to PAY on the loan until you graduate, it still builds over time, which is scary.
it reduces your eventual payment time frame if you do, you can have them just roll it into the principal of the loan.
I didn't quite understand this, however.
It will be much less hedgy when I can get my hands on a TA position. The estimated amount that pays is about $4500 a year. That would definitely cover books/rent.
Also, I have another question. This one has been nagging at me. Obviously, I take out the loan to cover all the school fees for this year. What about next year? And the year after taht? Do I take a loan out every year, or do they simply add the next year's sum to the existing loan?
Reply
You take new loans each year, they don't add them together usually. You can consolidate them later, but it's best to wait to do that because I believe you can only do it once, usually.
Reply
Thank you. You've answered a lot of my questions, and I feel better.
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I want to get all my ducks in a row before I accept the loans that the school says I'm qualified for, let alone take out any other loans to cover what isn't covered.
The program is good, but it's also rather frustrating; it's a small program. The semester I signed up to, they were barely offering any courses I was planning to take. So I anticipate I will have to take some summer course sometime, just to get the classes I want.
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