Options for grad school loan?

September 20, 2012 6:44 PM

I'm about to bite the bullet and get a student loan. Help me out/talk me out of it/give me a better option. Special snowflake stuff inside.

So, particulars about me.

I'm a thirtysomething adult with a wife and child and I work full time. I'm taking grad school courses to get my Master's in Education, as well as a teaching certification. I have already taken a handful of classes over the past year, very part time--one class per quarter. I'm paying out of pocket and one class per quarter is all I can afford. My school is not cheap, so this past year my bank account has taken a big hit. Per quarter I'm paying about $2,300.

So starting in January, I want to get a loan to pay for school. The benefits as I see them are

ONE: I have more petty cash/spending money/breathing room while I'm in school. I can personally live like a pauper but I have a wife and young son and want to provide for them (and the kid ain't gonna get cheaper).

TWO: I can finish a LOT faster. With a loan I can finish my schooling by early 2014, but without it it'll be 2015 or even later. And I'd be constantly broke for the next two years.

The downside is, of course, I have to start paying back the loan upon graduating. I wonder if this would be as much of a hit as the $2,300 every three months I pay now. Of course, interest would make it more expensive, and that's the major added price I pay for the convenience of the loan. The interest, of course, I would want to be as teeny tiny small low as possible.

My total loan amount would be around $17,000. Give or take a few K. My school isn't all that much help, other than sending me to apply for my FAFSA, which I haven't done yet.

What options do I have? For a government loan is FAFSA the only route to take? Are there any other ways to get money like grants, etc? Are there any special loans or payback exemptions for teachers and educators?

Any advice is greatly appreciated.

posted by zardoz to education (16 answers total)

I don't know what it's like where you are, but if it's anything like Canada, the bureaucracy around your student loan is going to be HORRIBLE. So if you go for the loan, here is my advice:

Every time you interact with anyone from the organization providing/administrating your loan, write down their name and the date and write down all the important bits of what they say.

Keep all the records of all your conversations with the student loan people in one place and refer to them.

That way when you get inconsistent information from badly-trained call centre employees who don't understand what they're looking at when they bring up your file, you will have at least something to back you up when you say "Hey wait, that doesn't make sense."
posted by fullerenedream at 6:56 PM on September 20, 2012

Just don't do it. I have yet to meet anyone, myself included, who ever had the loan repayments over and done with and say 'Wow I'm glad I got those loans!". Instead it years and YEARS of having those loans hang over your head.

There's absolutely no guarantee you're gonna start reaping an increased salary upon graduation to help pay off those loans.

So yeah you're in your 30's with a family, but I'd take the 20's route. Get a job one day/night on the weekends. Deliver pizza. Mow yards. Work at Home Depot. No matter how ya cut it, there's gonna have to be a sacrifice made on you and your family's part if you want to complete the education goals. That's life.

Grants are good. Grants are GREAT! But please don't get a loan... their only goal is to make money off of you.
posted by matty at 7:20 PM on September 20, 2012 [1 favorite]

For a government loan is FAFSA the only route to take?

Yes. The US government insists on the FAFSA. It's not that awful - if you can do your taxes, you can fill out your FAFSA. You'll be able to skip all the stuff about parental income/resources because of your age.

The financial aid department at your school should be the first place to look for grants. However, if they're anything like my school (a Big Ten university), they may not be used to "nontraditional" students. I would suggest checking with your colleagues in the education department as well.

The downside is, of course, I have to start paying back the loan upon graduating.

Many loans are automatically deferred for six months after graduation - the idea is to give you time to find a job in your field. However, interest might accrue during those six months.
posted by shiny blue object at 7:22 PM on September 20, 2012

This is what student loans are made for. In my opinion, yes, you should get one. It is one of the best investments you can make, it's low interest, and the payback period is long. I'm assuming you don't have any undergraduate debt (since you aren't familiar with loans), but $17,000 is really not a huge amount of school debt. For any federal loan you will have to fill out a FAFSA. Full-time graduate students can get up to $18,500 per academic year, part-time students can take up to half of that. If this allows you to finish early and support your family, it's a very good idea.

And yes, there are loan forgiveness programs for teachers, but there are specific restrictions that you should read about here

You likely won't qualify for any grants as a grad student.
posted by Sal and Richard at 7:23 PM on September 20, 2012 [1 favorite]

FAFSA is a must. It's not hard, if you have your tax return it should take about 20 minutes.

What are your employment opportunities for when you graduate? Be very very honest with yourself and look at the worst possible scenario. It might save you money to take out loans if your income goes up enough after you graduate.

Avoid private loans if you can.

There are also aid programs that vary by state; there might be teacher eiducation programs that can help with loan repayment. Again, though, it varies by state.
posted by the young rope-rider at 7:24 PM on September 20, 2012

To be clear, there is a federal program, but in some states there are additional loan forgiveness programs. Example: Texas
posted by the young rope-rider at 7:30 PM on September 20, 2012

Also, there are multiple repayment options. Take a look here

If you took out $17,000 and did the standard repayment it looks like you'll pay about 195 a month for 10 years. That would be worst case scenario. There are repayment plans that stretch the payment terms up to 25 years -- of course, you'd end up paying a lot more interest, but these loans are manageable.
posted by Sal and Richard at 7:34 PM on September 20, 2012

have yet to meet anyone, myself included, who ever had the loan repayments over and done with and say 'Wow I'm glad I got those loans!".

Wow, I'm glad I got those loans!

Seriously, I'm happy that I used student loans to get through my Master's program. If you can avoid it, don't take more than you need, but it seems to me the amounts of money you're speaking of aren't that high (relative to some of the totals I've heard). If I were you, I wouldn't want to sink into a debt of $50k, but if you came out of school with $10-20k in loans, it wouldn't be the end of the world.

For me it meant that I was able to focus on my classes and getting the experience I needed. I only had $14k in loans when I was done, and it took me 6 years to pay them off without a lot of hardship. Were there days where I wish I didn't have to make the payments? Absolutely. But do I regret it? Not for a minute.
posted by scrute at 7:40 PM on September 20, 2012 [2 favorites]

Depending on what kind of job you get after, you'll definitely want to look into forgiveness options, including these teacher-specific options. Your school might also have a loan forgiveness program.

I took out A LOT more loans than you. I've paid back about half so far. It bought me opportunity. I have never regretted it.
posted by murfed13 at 7:45 PM on September 20, 2012 [1 favorite]

If you haven't looked into your school's or program's grants and scholarships office, you should! My master's program had some very small scholarships ($250-1000) that were all endowed with weird demands- only for students who went part time and worked, only for females over 25, only for people who wanted to work in a specific kind of job post-grad, that required very easy, short essays & proof you filled out the FAFSA as applications. I got the scholarships i mentioned, mostly because no one else applied, and while they did not cover my whole bill, I could take fewer loans. YSMV, but why not try?
posted by holyrood at 7:57 PM on September 20, 2012 [2 favorites]

I'm also glad that I took out loans, and the repayment options are very helpful and manageable.

The value of $2300 every three months now, when you are broke and don't have credentials, is much higher than the value of $150 every month when you have finished your credentialing program. Future you is in a better position to pay for school than present you is, because future you has a degree.

I've got about three times the loan amount you're talking about. It sucks and I'll be repaying for a long long time, but I have opportunities I could never have gotten any other way, and I don't regret it for a minute.
posted by Made of Star Stuff at 8:02 PM on September 20, 2012 [1 favorite]

Are you currently a teacher? For a long time, it made sense for teachers to get their master's degrees, because many/most school districts had automatic salary bumps that depended on credentials. This may no longer be the case now that so many school districts are cash-strapped, but finding out is an important part of the decision.

If you're not currently a teacher, then probably not worth it, because you may not find a teaching job right away or for several years.
posted by Sidhedevil at 8:30 PM on September 20, 2012 [1 favorite]

You may already be doing this, but does your school offer a payment plan? It's not a loan, it just spreads the payment for each semester out over a few months so it's easier to plan for. I'm sure you've done this as well, but have you checked whether your job can offer tuition assistance?
posted by beyond_pink at 8:33 PM on September 20, 2012

I have yet to meet anyone, myself included, who ever had the loan repayments over and done with and say 'Wow I'm glad I got those loans!".

We haven't met, but I'm someone who is glad. Had I not taken loans for my MA in Education program, I'd have missed out on quite a bit - including the incredible and very well paid teaching job I have today. I'm probably an exception to the rule, but I definitely think education is one thing to take loans for - how are they going to repossess learning?

I'm actually in the process of applying for another MA program which will total about $50K - that's a lot of money, but I have no hesitation in taking loans to finance this program.
posted by blaneyphoto at 9:53 PM on September 20, 2012 [1 favorite]

I am not sure anyone commenting here has children, so I will pipe in. When your kids are young, your time is priceless. Every moment you spend with them is of tremendous value. I would price that at 20k I am borrowing in loans so I do not have to deliver pizza on the weekend away from my family. Seriously, for the price of three eat-out meals a month after your degree you can have more time and peace of mind while you are with your family while getting your degree. For me I know it's totally worth it. Kiddo will be ok without going to the most expensive pre-school in the area but won't be ok with an absent stressed out dad.

Well, that's how I see it. 17k does not sound like a lot - people spend that much on cars all the time.
posted by Shusha at 7:32 AM on September 21, 2012

What this decision comes down to is economics. Quantifying the cost of the loan is a trivial application of financial algebra any high school or college graduate should be able to complete, so I'll let you fill in the variables on that. Fill out your FAFSA, review the Lifetime Learning tax credit rules, calculate your expected payments based on prevailing interest rates and principle size, etc.

The other half of this equation is about what you can do with that degree. I gather teacher's union's contracts often come with a salary bump for advanced degrees, which might make things very simple indeed. Beyond simple raises, you should also factor in a reduced risk of being laid off, and more professional opportunities. Be wary; these can be harder to quantify, and are prone to being overly optimistic.

17k might be worth it though.
posted by pwnguin at 5:15 PM on September 22, 2012