Just about anyone who goes beyond community college (and even some that only do community college) will need to get a student loan. These loans will likely be for different amounts but you can still get that loan. You’ll also have an opportunity to get different amounts for your loan as well. You can choose to take only the amount that you need to pay tuition or you can get a little extra for books/supplies/rent etc. So what do you do about your loan? How much should you get and how should you spend it? Well I can’t tell you exactly what to do but I can give you my opinion.
If you are going to college and staying at home with your parents or anywhere else that is completely free then don’t get money for your rent. If you are going to be staying in a dorm or apartment and you can afford the monthly rent payments don’t get rent money then either. If you can afford to come up with money for school supplies and books then do that as well. Get only the amount of money that you absolutely need in the form of a student loan. Remember that money is going to come due at the end of your time in school and you’re definitely not going to want to pay for that pizza out with your friends five years down the road. It’s going to cost you a lot of interest.
Why Not Get the Max?
Some people think they should get the absolute maximum amount possible in student loans. After all, it’s free money right? So people think that they should get those multiple thousands of dollars worth of loans and they’ll be able to live off that free money for the entire time they’re in school. After all you don’t have a lot coming in right? You may not be working a lot or you just want that extra money. Well I once knew someone who did just that. I knew someone who decided that living off that money was a great idea. He bought a new laptop and new gaming systems and video games and because he was still in school that money wasn’t due.
Well that person I knew is actually still in college now and it’s been over seven years. He’s getting degrees but he’s still living off college loans and his old ones still haven’t come due yet. By the time he eventually stops doing this he’s going to end up over tens of thousands of dollars. Yes that’s right with just the four year degree he pursued initially he ended up with over $100,000 worth of student loan debt and now he’s continuing at an even more prestigious university. I don’t even want to know how much he’ll owe at the end and yet he keeps accumulating that debt.
You’re not going to be able to get away with not paying that debt off in the end. You will need to eventually pay for everything the government has given you and I don’t know about you but I definitely wouldn’t want to see a bill in the mail with my name on it for over $100,000.
What it Means
If you take out all those loans the government won’t stop you. They’ll keep handing you the check and letting you take what you want. But eventually they want their money back and when you start getting those large bills in the mail (remember you don’t get forever to pay off your loan) it gets harder and harder to pay for them. You end up even more in debt and then you end up with overdue bills because you can’t afford those bills.
If you take out a loan for only the bare minimum that you need for your tuition you’ll be spending your own money for food, lodging and extras as well as anything else you need for your classes. This is a good thing because you only spend the money that you have. If you take out enough money from the government to pay for all of these things what are you going to do with that other money you have coming in? You may have the best of intentions saying you’re going to save it so you’ll have money for your loan later on but rarely does anyone actually do that. You’ll probably end up spending more money simply because you can and then you end up with that big debt and no money to start paying it off.
I decided that I needed to get a student loan in order to pay for college. I simply couldn’t afford to go to a university without that extra money. But when it came time to choose how much money I wanted I looked at my tuition statement. I decided that all I wanted was the absolute minimum amount to pay for my tuition. My parents were still willing to help me with school and I had some money saved up so I was able to pay for books and my car from that money. I was also able to take care of all of the extra expenses that I had through my own income so I didn’t need the government to help with that. After everything I ended up with a four year university degree and a loan of a measly $5,500.
Now I think that’s a lot of money but I know that in comparison to what most people with four year degrees have hanging over their heads? I got my education for a steal. I recommend getting a low loan amount so that you can breathe a little after you finish school. My student loan is due in five years (all student loans are unless you qualify for deferment) and I only owe about $55 a month which is completely manageable. But if I owed over $100,000 divided over five years? That’s something I don’t even want to think about.