[Rayne Selene]

Do/have any of you live(d) off student loans while attending undergraduate school? I accepted a small, federal loan last year that doesn't accrue interest while I'm in school and just paid off my tuition and books: I still had to work 40-50 hours a week while attending school. I only managed a B average. I want to apply to graduate school for next year (masters in statistics) so I need straight A's this year. But I've been having to work crazy hours and it just hasn't been possible. I've heard of people living off their student loans. I looked into one offered by Discover and I'm eligible for it with a cosigner. With two years of a masters and this final year of school I would be looking at 3 years of loans...then a job that pays 70k a year entry-level in my area. I would need to ask my dad to cosign (eep!) But if he says yes...is this plausible? Or ridiculously stupid?

[yagr]

I do not know what your locale is in the United States but loan amounts can vary dramatically depending upon where you live. During my tenure with student government at my university, I successfully lobbied the state legislature to increase the state student loan amount from $4000/year to $8000/year. I took the entire loan amount as well as the maximum Stafford subsidized and unsubsidized loans - and anything else I could find. I received quite a bit of negative feedback from the financial aid department for my choice to do so. Here's what I did:

First of all, I quit working to dedicate myself to my studies. Second, I took the first semester's money - which there was significantly more than I needed, and made a down payment on two mobile homes. I lived in the smaller one and rented out the second one. Next semester, I made down payments on two more in the same park and rented them out to students. I continued to do this throughout my college years.

When I left college, I sold the mobile homes that were paid off (there were five) and paid off my student loans in full within six months (It took six months to sell them all). That left me with seven in various states of being paid off. As they became paid off I sold them, often to the students who had paid them off for me, and finished my financial aid experiment up $38,000 after paying for college.

The loans that are available to you while you are in school are the cheapest loans you are likely to get in your lifetime - take advantage of them. Many students get into financial trouble because they use the money to party, waste, etc., but it is hard to go wrong using the money as an investment.

[Rayne Selene]

Originally Posted by yagr

I do not know what your locale is in the United States but loan amounts can vary dramatically depending upon where you live. During my tenure with student government at my university, I successfully lobbied the state legislature to increase the state student loan amount from $4000/year to $8000/year. I took the entire loan amount as well as the maximum Stafford subsidized and unsubsidized loans - and anything else I could find. I received quite a bit of negative feedback from the financial aid department for my choice to do so. Here's what I did:

First of all, I quit working to dedicate myself to my studies. Second, I took the first semester's money - which there was significantly more than I needed, and made a down payment on two mobile homes. I lived in the smaller one and rented out the second one. Next semester, I made down payments on two more in the same park and rented them out to students. I continued to do this throughout my college years.

When I left college, I sold the mobile homes that were paid off (there were five) and paid off my student loans in full within six months (It took six months to sell them all). That left me with seven in various states of being paid off. As they became paid off I sold them, often to the students who had paid them off for me, and finished my financial aid experiment up $38,000 after paying for college.

The loans that are available to you while you are in school are the cheapest loans you are likely to get in your lifetime - take advantage of them. Many students get into financial trouble because they use the money to party, waste, etc., but it is hard to go wrong using the money as an investment.

Wow thats a different take on it than I've ever heard! Also a really great idea. Thank you for the advice. Now I have to see if, after a little more research, I can get a parent to agree.

[Strive4health]

I would highly hesitate using student loans to live off of. I also received aid from loans that don't accrue interest, and I didn't have to take out many this year because I received funding to pay for my tuition. That said, I think there are a few reasons why living off loans as a student today is a bad idea.

First, there is too much uncertainty in the job market. Students often overestimate how lucrative the first job is that they accept, and the income isn't enough to meet their financial expectations. The second reason is you have to pay all of those loans off and not everyone is able to pay off their loans in 6 months. I've talked to people who graduated in the mid-90's and are paying off their loans as of today. When you look at the principle, and then start adding interest it adds up over time. I'd say another reason to not live off your student loans is because living expenses are highly adaptable and it's easy to reduce the expenses. A student loan could be well beyond what your actual needs are, and taking out that much isn't financially responsible.

If your rent is too much, find a different place to live. I understand that might mean having more roommates but that's part of the deal. Yes, I know how much roommates can suck. Consider reducing your travel expenses by taking the bus as much as possible, using a bike, or limiting your car to absolute needs. Scale back on groceries by purchasing generic foods or go to a cheap grocery store and use coupons. If your grocery store has a discount program with a gas station, use it. Keep insurance costs to a minimum-- if your car is older and used, get liability only.

It's also a burden to ask parents to cosign because if in the event you cannot pay-- and it does happen-- they are the ones saddled with the bill. I've read so many stories where this happened and the loan companies used threats, harassed, and went after the parents. I know I must sound "doom and gloom" to you, but I'm also being very realistic. I'm currently in college and this is not my first venture. If I had known these things back then, I'd have made better financial decisions and my student loans would be much lower than they are now. Mine are about 20K, which is pretty minimal compared to most people-- but to me, that's a lot and I'll end up spending the next 10 years paying them off. I'd rather be saving up for a house and moving into one in 10 years and I don't think that's going to happen.

[alicetailor]

Originally Posted by Rayne Selene

Do/have any of you live(d) off student loans while attending undergraduate school? I accepted a small, federal loan last year that doesn't accrue interest while I'm in school and just paid off my tuition and books: I still had to work 40-50 hours a week while attending school. I only managed a B average. I want to apply to graduate school for next year (masters in statistics) so I need straight A's this year. But I've been having to work crazy hours and it just hasn't been possible. I've heard of people living off their student loans. I looked into one offered by Discover and I'm eligible for it with a cosigner. With two years of a masters and this final year of school I would be looking at 3 years of loans...then a job that pays 70k a year entry-level in my area. I would need to ask my dad to cosign (eep!) But if he says yes...is this plausible? Or ridiculously stupid?

Studying along with working requires dedicated efforts. Make sure you balance both of them well.