Using student loans to build up savings - Page 2

[shelbean91]

Tye-dyed, I'm curious to know what you're in school for. Of course, it's none of my business, so feel free to not answer.

I'm currently in school to become a teacher. I've borrowed the max amount each year to cover living expenses, so by the time I'm done, it will be $30k or so, plus dh's of almost the same, plus I'm considering continuing on to a masters. I'm dreading the eventual payback, but as you said, I'm not going to regret getting my degree. If I didn't do it now, when my kids are young, I'd never be able to. The plan for us was always for me to go back to work when the kids are school age and I'd rather have a career than my office job I used to have, even though I enjoyed it. People say teachers are underpaid, but even with my beginning salary, I'll be making almost $7k or more over what I used to make, with more growth potential.

So, if you're going to borrow the money anyway, you might as well take it. IF you can be disciplined enough to not spend it. When the time comes, you could use it to just repay the loans, which would reduce your debt to income ratio. Basically it sounds like you're trying to trade off a high mortgage payment with a high student loan payment, right?

The poster who mentioned bankruptcy, of course student loans aren't able to be included, but home payments realistically aren't, either. I mean, you can discharge a home mortgage, but eventually, you have to pay to live somewhere- most of us do anyway.

So, to the OP, in an ideal world, I don't think I'd do it, but I don't live in an ideal world and I'd probably make a similar choice, if in your situation.

[Snowdrift]

ok, I'm a little more together today. I'm in law school. The thing with law school is this: it's *hard* to find a job as a lawyer that pays less than about 35k. I mean ya gotta work at it. Low average is closer to 45k, and it typically goes up fairly quickly. Even at a family friendly one can reasonaly expect to make in the 50's-60's within ten years of finishing school. Of course there are crazy paying lawyer out there but not for people for whom family is a priority.

The other thing is though that one needs to pass the bar exam. Then one needs to find a job. While it's hard to find a lawyer job less than 35k or so, it's also hard to find a lawyer job. Not as hard as finding a job in higher ed or anything like that, but well, there are plenty of lawyers working not as lawyers. It's a versatile degree though and one can usually find a fairly decent job of some kind.

When I left sales I was making 24k, and a couple weeks after I left pay was cut down to about 20 for my job. I just couldn't cut it. The numbers weren't terrible; it wasn't that I couldn't sell. I was just *so* unhappy that it showed. I was just not cut out for that path. I kind of wanted to be a teacher--mostly becuase it si a more family friendly field--but don't think I'd be happy there in the long run and also there is a huge teacher surplus in my state--ain't no on finding teaching jobs. Really dismal outlook.

The thign that scares me is the length of repayment. It is a lot of money. I am not happy with the though of having a $650 payment for *30* yrs. A $1000 payment for ten years sounds better--if DH and I can both work and both make decent money. So yeah, there's a lot of ifs, butthere always are.

It jsut seems like a big chunk of cash has the ability to make so many things easier.

[anotherKatrina]

Tye-dyed, I have a different thought about this...I don't think your idea is all that bad.

Any loan you take out for anything involves risk--home, car, education--whatever. And for most of us, borrowing money is how we get those things. It all just depends on what kind/how much debt you are most comfortable with.

If I could own a piece of land with money from a student loan, personally, I'd do it. Then I'd have land and a degree and neither could ever be reposessed. Even if the money just helped me get land, I would still probably do it. Yes, you'll have a hefty student loan payment, but like you mentioned, it would be a trade for a mortgage. And you're already aware of your options in the event that you need help with this repayment.

Also, you can start with this particular plan and change your mind midway if you feel that is no longer the wisest choice for you. It's not set in stone.

Finally, I'd like to add that this is sort of what we did with my husbands education. We borrowed the max. But we were nowhere near as sensible as you. We bought furniture. We ate out a lot. We went to Disneyland. We had a grand ole time. And now we're paying for it and it's pretty hideous to look at the numbers. But if we had done something smart with that money, I would have no regrets.

Yes, it's true, having a big chunk of money does make life easier in the short term and it can make things you want happen more quickly. Take a deep breath. Decide what's best for your situation with the information you have now. Modify later if necessary. You'll be just fine.

Peace,
Katrina