A student loan can be a great way for pay for their cost of tuition and other expenses. But in the end, it is just money. So, how do you know if you should use it to help your education and your career, or save it for other things?
This post intends to help you use your student loan to create value for yourself, instead of being in debt. Read on.
Tips on How to use Your Student Loan Well
1. Get organized
Start by figuring out what you have, who the lender is, and how much you owe.
If you have a mix of private and federal loans, it is a good idea to consolidate them into one manageable monthly payment.
Consider refinancing or consolidating federal loans through the Federal Direct Loan Program.
2. Treat your Student Loans Like other Bills
Treating student debt like any other debt you have is important for your credit score and overall financial health. Make sure each month you pay something toward the principal owed on each loan.
3. Repayment in Full
If you plan on paying back your loan in full then this is obviously the route for you. You should do this before the deadline comes up so that you can avoid any interest charges and make sure that the money does not go to wastage.
There is no point in having money sitting in an account without doing anything with it!
4. Paying Off Other Debts
If other debts are currently keeping you up at night, repaying them can be a wise move. Many graduates find that they are being hounded by debt collectors as soon as they leave university. Some even find themselves becoming homeless while they try and pay off their debts.
5. Skip the Deferment
If you have a low income or other extenuating circumstances, you may qualify for an income-driven repayment plan, which will temporarily lower your monthly payment amount.
Can I Use Student Loans to Invest or Buy Stocks?
One can use Student for basically anything you want. However, this strategy carries many important risks, so you will want to proceed with caution.
You can use your student loan to invest and buy stocks if it is within the restrictions of personal spending.
Therefore, before investing, you should learn about the rules governing loans that you will have to follow to avoid jeopardizing your eligibility for future student aid.
If you are considering investing with your student loans, be aware of some important caveats first.
Student loans cannot get discharged in bankruptcy proceedings, which means you can’t simply walk away from them if things go wrong.
And if you default on a loan, either by failing to make payments or by leaving school before finishing, the government will garnish your wages until the balance is paid off. That is something to ponder about if you are considering investing in your student loans.
Can I use Student Loans to Buy Assets like a Car or House?
Yes, you can use your student loan to buy assets like a car or house.
However, there are strict rules to follow to avoid losing your loan. The best advice is to avoid taking on any debt that goes beyond what you reasonably need.
The interest rates on student loans can be high, especially if you are a parent borrower and have a co-signer.
If you still want to use your student loans for an asset other than education, check with the lender.
Some private lenders might not mind how you use the money as long as it is for something legitimate.
Most federal loan programs will require that you remove an asset from your name before refinancing your student loans. So, find out how much it would cost to pay off your car or house before applying for a new loan.
Federal student loans allow you to consolidate them. That means that all of your federal education loans get combined into one for more manageable payment.
Can I Use Student Loans to Laptop Computer
You can use your student loans to buy electronics that help you in your studies such as laptop computers, tablets or iPad for studies. Ideally, you can use it to buy virtually anything related to education.
The first thing you should do is to research the various repayment plans available for you .
This way, you will know what your payments will be so that you can budget accordingly. Some repayment plans may have lower monthly payments than others, but they may not be as beneficial in the long run.
Can You Use Student Loans For Living Expenses
Yes. However, the federal government has strict rules on how much you can borrow, and what you can use it for.
You can also get a private student loan to help cover living expenses.
Some private lenders will not require you to show proof of income. For that reason, it could an option worth considering.
Be aware of potential interest rate hikes though. This is one of the things that informs people to find interesting ways to short their student loans and treat them like any other type of loan.
FAQs on Using Student Loans
Is it Ok to use student loans for living expenses off-campus?
It is generally not advisable to use a student loan for living expenses while off-campus. If you are going to school at least half-time, they consider you a student and therefore entitled to receive a Federal Direct Student Loan.
Also, some private lenders will consider a co-borrower who is attending school at least half-time. However, in some cases, such loans may not be considered later if you want to look for grants to pay back. Check out some of the anonymous donors who pay off student loans and research their offers.
Are there student loans that go directly to you?
Yes, there are student loans that go directly to you. The federal government offers three loan programs: the William D. Ford Federal Direct Loan (Direct Loan) Program, the Federal Family Education Loan (FFEL) Program, and the Federal Perkins Loan (Perkins) Program.
The Direct Loan program is the largest and most popular of these loan programs.
Is it illegal to spend student loan money?
It is not illegal to spend your student loan money on anything you choose. A student loan, unlike a car loan or mortgage, is not a type of debt that you are committed to paying off.
You may get your student loans discharged in bankruptcy. If you need help with paying off your student loans, you might want to consider a student loan repayment program.
Best student loans for living expenses
Federal Perkins Loans. These loans are available to students attending eligible schools and are designed to help cover expenses beyond tuition, such as books, transportation, and housing. These loans have low-interest rates and are manageable.
The Grad PLUS Loan: It is available to parents, graduate or professional students, and current undergraduate students. You may borrow up to the total cost of education minus any financial aid received.
Can you use student loans to pay rent?
Yes. Federal and private student loans often come with a six-month grace period following graduation. So, you can use them to cover the rent until you find a job or get on your feet.
But, if the loan carries a high-interest rate or does not include some sort of deferment or forbearance option, then it’s better to wait until you have a job that supplies income.
Is it okay to use graduate student loans for living expenses?
Student loan intends to cover the costs of education and school-related expenses such as books, supplies, and transportation. One should avoid using them to pay for everyday living expenses. However, if you need extra cash for food or rent, then this is the option for you.
When you borrow money from the government or private lenders to finance your education, you enter a contract with those lenders that obligates you to use the loan funds appropriately. Failure to pay can result in severe consequences like damaged credit, garnished wages, and even litigation.
