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Student Loans
Are there any stipulations as to what you can or can't use the loan money for? I'm eligible for a $3500 subsidized loan for the 2006-2007 school year (I've already paid my tuition and fees in full) and the interest would be lower than if I got a personal loan from another source.
Would it be beneficial to take out this loan for personal use (car, boobs, new apartment or the like)? I assume I'll be in school for at least another year of undergraduate work.
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Re: Student Loans
I used to pay rent and basic living costs with mine. I would highly advise against taking out more than you need though, since there is interest on it. I have huge student loan debt now and it would be a lot less if I just got a part time job to pay for the things I needed instead of being lazy living on loans.
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Re: Student Loans
Yeah, the interest is locked at 6.8% right now, which is like one-third of my credit card. But with it being subsidized I wouldn't be responsible for the interest until after I'm out of school. So if I pay it off (because you can start repaying early) before I'm done with school, I could get away without paying any interest, right?
I want to take advantage of this if I can, but I most certainly don't want to dig myself in a hole for things I don't desperately need.
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Re: Student Loans
I would err on the side of caution and definitely only use the loan money for stuff you absolutely need. It is a decent interest rate, but don't let it fool you into borrowing too much. That's my opinion, but someone else may say otherwise.
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Re: Student Loans
I just used a clients super low-rate school loan to fund her Roth IRA. She doesn't need it for tuition or living expenses. She'll have the funds to pay it back before it even accrues any interest. But she is VERY responsible, and diligent with her financial planning. I wouldn't recommend it for most.
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Re: Student Loans
Ok, so doable, but not advisable.
That's just what I needed to hear. Thank you for your help gals!
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Re: Student Loans
Also, keep in mind that 'Sallie Mae' makes automatic reports to the IRS re student loans, along with college bursar's offices making automatic reports to the IRS of tuition payments. As such, one must now assume that any student loan repayments must be justified / plausible versus levels of income reported to the IRS.
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Re: Student Loans
^No problems there. A massively busy school schedule and pay stubbed job keep has kept me out of the club for the last year. I didn't even have the opportunity to get creative with taxes this year.
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Re: Student Loans
also the interest is tax deductable up to a certain income (thought i would not advise unless necessary anyway).