So, I've been admitted to a nice university and am trying to work of finances. Currently I have all but about $6,000 covered and am still waiting scholarship information (I was told it was possible I could get $1000 from that). And this cost includes room, board, food, tuition, books, and supplies. It is an LGBT supportive school and I've been reserved a room in Gender Inclusive housing - an amenity specifically aimed at trans* students. I intent to work over the sumer and save everything I can to help with cost. But I was wondering if, after all is said and done, and I'm still short a couple thousand, it would be a bad idea to take out a student loan? I keep hearing that it is a terrible idea to take the loans, but is it irresponsible if I took out <$5000? I was thinking I could possibly also find a part time job while at school to cover what I took out in loans. What is your experience with student loans and do you think this is a good/bad idea?
Is the loan for one year or your entire program? Student loans have low interest rates and as a supplement to other forms of paying can be a useful tool as long as your financially astute and responsible. Other factors to consider are what type of job you will be looking for when you graduate, how open a field is it so your comfortable you get a job, and what does the field typically pay. Consider speaking to a financial advisor at your school whom Can help you work through this.
Under 5K is reasonable *if* it is a government-backed direct loan. It is the private loans that are particularly shady. And you can always pay it off quickly if you do get work. The risk with student loans from for-profits, especially high-risk loans, is shady terms where your interest rate can double or triple, and suddenly you owe 10 or 15K. Also... student loans are generally not dischargeable in bankruptcy unlike just about every other type of loan. That's one of many reasons why people generally suggest trying to avoid them... and why shady lenders will lend to pretty much anyone.
I agree with what Chip said, especially if you live in the U.S. Our Secretary of Education, Betsy DeVos, just rescinded most of the guidance about and protections from shady, private-owned lenders last week. If you can pay your own way, absolutely go for it. If you can't, take out as little as possible and pay it off as quickly as possible. Student debt, of any amount, can be crippling.
Keep it to a minimum. Stick with government backed above board lenders. I let myself be talked out of getting a student loan when I needed it and inevitably over time things were placed on credit which was much more difficult to pay off.
A government supported student loan is best, however, I'm not sure exactly where you are. If you are in the US and just starting school, I know that my first year loan was not a ton. If you are responsible, a loan isn't always bad - you just have to be on it!
Sadly it's extremely difficult to work through college now a days depending on what state and college you're attending. In my opinion, think long and hard on what specifically your major is and whether you personally value that major more than the amount of money you're taking out for it. Realistically, if you can't afford to pay for college now even with a job, you will likely take out more loans in the future, so anticipate how much you will be taking out per year. If you figure out those two you should be good. I was lucky enough to only have to take out about $5000 for all my years in college. This was mainly due to my parents saving for my college tuition kiss: them). But once you graduate the first thing you should do after finding a job is figure out how to pay your loans back as fast as humanly possible. One thing to not forget is if your loan is bigger than you need is to NOT spend that money. I can't tell you how many people I've seen who took out huge loans and spent all the money after paying off their tuition. DON'T BE THAT PERSON. So weigh if your major is worth taking a loan out for and anticipate how much you will likely need to take out for your 2, 4 or 6 years in college. Have fun at college by the way :icon_bigg!
I'm pretty sure most college students take out student loans. Be sure to have a plan to pay it off quickly after you graduate, because the amount of interest on student loans is ridiculous. As a college student with a loan in my financial aid package, I know that it is urgent for me to get a job asap after I graduate. Note, I can only speak for American schools; I don't know anything about student loans in other countries.
