Student loan hacks
February 10, 2011 1:31 PM   Subscribe

Student loan hacks? Going to grad school (MBA) this fall most likely, and will be taking out loans for tuition and some living expenses. Any pro-tips or tricks of the trade for doing this most effectively? Also anything I should be aware of so that I don't screw myself over in the future?
posted by AceRock to Work & Money (13 answers total) 5 users marked this as a favorite
This is more of a short-term thing, but will hopefully help you manage your money while you're in school. You will get your living-expenses money as a lump disbursement at the beginning of each semester. Figure out how much you'll need per week/month for expenses. Put the lump sum in a separate account and set up a weekly/monthly (depending on how disciplined you are with spending) transfer to your checking account. Keep a buffer in your checking account for emergencies. This will keep you from subsisting on ramen the week before the semester starts.
posted by lunasol at 1:38 PM on February 10, 2011 [1 favorite]

Don't take out any private loans. Or Parent PLUS loans. Make sure that everything you sign are Direct Loans, or eligible to be consolidated into the Direct program at a later date. New repayment programs like ICR, IBR and public service forgiveness are limited to Direct or Direct Consolidation Loans.
posted by T.D. Strange at 1:40 PM on February 10, 2011 [1 favorite]

Keep in mind, every second, that it's borrowed money, and you'll have to pay it back. My (now) ex and I got through grad school with something like $10,000 in debt--we didn't take out nearly the amount we were approved for and scrimped even though there was ALL THIS MONEY just waiting for us; as a result, we were debt-free very quickly. Even if you absolutely have to take out a big loan, don't treat it as free money.
posted by MrMoonPie at 1:43 PM on February 10, 2011 [3 favorites]

I donno if this applies to student loans but in general, unless you KNOW you will be able to pay them back quickly, get a fixed rate, not an adjustable. Loan rates are NOT going to go down much and will quite likely go up. Don't buy the "oh you can just refinance when the time comes" line. Maybe you can, at a somewhat worse rate, or maybe you won't be able to.
posted by d4nj450n at 1:50 PM on February 10, 2011

The cardinal rule (adapt for your program, but this is pithy): "If you live like a lawyer while you're in law school, you'll live like a law student when you're a lawyer."

There really is NO reason to take out more than the barest minimum in loans, especially in MBA programs where you tend to get wined and dined.

Remember--you cannot get out from under your student loans in bankruptcy. Do not take out more in non-dischargeable debt than absolutely required.
posted by Admiral Haddock at 1:57 PM on February 10, 2011 [1 favorite]

Make sure all your other debts are paid off. If you have a car you owe on, pay it off or sell it, you don't need any other debts to deal with going in (and coming out) of this. It is a beast and it will own you until you pay it off. Like it is said above, you can't get away from these loans. Not if you move across the world, not if you declare bankruptcy.
posted by TheBones at 2:28 PM on February 10, 2011

Ha! The first thing I learned in the MBA programme was that I should have taken the absolute maximum amount possible! Regardless, I used had quite a bit left over and used it to make the first few payments once loans came do. Not as efficient as repaying it in a lump sum or not taking it in the first place but very low cost for the risk and credit record protection offered. (Not all loans have grace periods btw).

the MBA equation would say take the max just in case there is an opportunity to use that cash to get somewhere key, network, or start a company. Of course, the MBA equation helped create the financial crisis.

That being said it's not free money, that is true. Don't be greedy, don't be stupid. Do it without a cosigner so that no one else if f*cked if you go down. Don't be afraid to spend the money for reasonable expenses. This can include travel to a far beach somewhere for a holiday if you truly believe that those connections will take you somewhere. Better to spend it and have nothing come from it than miss the networking opportunity of your life.
posted by nickrussell at 2:32 PM on February 10, 2011

Regardless I had... loans came due. Too much time in excel since the MBA!
posted by nickrussell at 2:34 PM on February 10, 2011

Two things I would suggest in addtion (and in helping) to minimizing loans:

First, if you don't have scholarships or an assistantship, ask your department at the beginning of the semester and mid-semester of EVERY semester if a graduate tuition waiver is possible. Inform your department that you don't have a scholarship or assistantship and ask. Sometimes funding from alumni or benefactors comes in to the department at different times. I'm not sure how it is in the MBA programs, but in my human resources grad program, I had two semesters' worth of tuition paid for just by asking! I still had to pay fees and book, but seriously, awesome.

Second, ask around for assistantships. Assistantships give a pretty generous living stipend and pay tuition for working usually 15-20 hours per week. They aren't all teaching, and some may be in your department and some generic campus assistantships. I worked in a daycare setting in our student rec center as a grad assistant and had tutition paid for and $900 after taxes, which was plenty for a grad student living wage. My college was ridiculously unorganized with them and didn't have a central location for postings or applications, but check with your department, campus libraries, rec centers, and grad student affairs to point you in the right direction.

It was a lot of work at the time, but I graduated with only $3,000 in dept from both undergrad and master's doing this.

Congrats on soon starting a program!
posted by shortyJBot at 2:50 PM on February 10, 2011 [1 favorite]

A family member actually negotiated the price of her MBA down. She hadn't picked a program yet and she made an appointment with the dean (or assistant dean or something. I don't know the details). She said that she was really interested in their program, but that the finances were going to make it difficult and she was, with regret, leaning towards another, cheaper school. Their response was "What if we cut your tuition in half?".

Craziest damn thing I ever heard.

They gave her money because she asked for it. It doesn't hurt to try. No, it probably won't work that way for you, but they might have some sort of grant or something that is just lying around waiting for someone like you to ask for it.

(Or, on preview, what shortyJBot said).
posted by It's Never Lurgi at 4:48 PM on February 10, 2011 [1 favorite]

Also, depending on the b- school, many people try to (continue to) live the good life (i.e. spend breaks abroad, live in nice apartments, eat out all the time, etc). Don't do that.
posted by sandmanwv at 6:26 PM on February 10, 2011

MBA is not grad school per se. You can ignore most of the advice that applies to other master's programs.

Don't spend like an idiot, but don't miss networking (i.e. partying, travelling) opportunities or get a reputation as a cheapskate. This is your future community and the relationships you make will be key to your career and life.

If you're at all uncertain about getting a job upon graduation, take out more than you need, so you have something to live on. What will you do if the economy double dips and it takes you 6 months to start working? If you land a job with a nice signing bonus, you can just repay that money early like nickrussell suggests.
posted by jetsetlag at 2:21 AM on February 11, 2011 [1 favorite]

Ordinarily I would agree with the advice to only go with government loans and not private loans to the extent possible, as government loans are much more flexible with different payment, forbearance, and forgiveness plans. However, given how low interest rates are right now, if a Direct Loan isn't giving you the lowest rate, you might consider going with a private loan instead. The one area where Direct Loans are pretty inflexible is the interest rate. You can't negotiate with the government to change it. Loan consolidation doesn't help because they just take the weighted average of your current interest rates and apply it to your consolidated loan -- there's no way to lower the interest rate.
posted by chickenmagazine at 6:19 AM on February 11, 2011

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