Timeline for When paying for college, should I take out (interest-free) loans and pay them off with saved money, or use the saved money directly?
Current License: CC BY-SA 3.0
23 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Apr 6, 2017 at 21:40 | history | unprotected | Chris W. Rea | ||
| Apr 6, 2017 at 21:40 | history | protected | Chris W. Rea | ||
| Apr 5, 2017 at 17:02 | comment | added | Agent_L | @MooingDuck and fighting loans is effort completely misplaced. It's the spending that's the problem, not loan which is merely a tool to sustain the problem. Don't tell people to stay away from knives, teach them to use knives properly. | |
| Apr 5, 2017 at 17:00 | comment | added | Agent_L | @MooingDuck I get it, but that line of answer seems more suitable to psychology. or personaldevelopment. stackexchange. And I also don't think it's very difficult for almost everyone. There are people who can control themselves easily and those who struggle to do it. It's the latter who fall into trouble more often and ask for advice more often but it doesn't mean that such situations objectively happen more. IMHO once you stop dealing with cash and just balance out the numbers (like accountants do), the psychological difference vanishes as well. | |
| Apr 5, 2017 at 16:41 | comment | added | Mooing Duck | @Agent_L: While I agree with your point, I disagree with your language. It's a very difficult thing for almost anyone. Mathematically, it's better to keep the money in mutual funds. Psychologically, it's very difficult for most people. Same with advice for which loan to pay first. Mathematically: the biggest interest rate. Psychologically: paying off the smallest first ends with better results 99% of the time. money.stackexchange.com/questions/48073/… | |
| Apr 5, 2017 at 15:45 | comment | added | Agent_L | @DStanley The temptation is always there. You can get a consumption loan or car financing plan anytime. It's part of growing up to learn to resist it. | |
| Apr 5, 2017 at 15:39 | comment | added | D Stanley | @Agent_L No, I'm saying there's temptation to use the cash you saved and use it to buy (or put a down payment on) a house, thereby extending the life of the student loan(s). | |
| Apr 5, 2017 at 15:36 | comment | added | Agent_L | @DStanley If you had not taken the student loan and bought house with mortgage later, you'd end up in exactly same place. Your loan-fueled spending was the problem, not the loan itself. And the loan is free. Precisely because other people are paying the cost, it's free to you. Anyway, while opposing your method, I agree with your conclusion to spend 529 directly. Because I don't see how taking 10% hit (or even risking it) in exchange for 0% loan makes this even a question. | |
| Apr 5, 2017 at 15:31 | comment | added | D Stanley | sgroves sorry, the comment above was a reply to @MooingDuck, not you. | |
| Apr 5, 2017 at 13:22 | comment | added | D Stanley | @sgroves The loan is not free. At best, the interest is subsidized while you are in school. As soon as you graduate, you start accruing interest. Now if you've been conservative and kept the cash aside (not the 529s, as explained below), then you might come out ahead. Or you might decide "I need a car" and keep the loans around a bit. Or you might think "I could buy a house, and the student loan will be cheaper". The next thing you know the loans are still around and you don't have the cash to pay them off. That's what I did so I know it can happen. | |
| Apr 5, 2017 at 10:09 | comment | added | Nathan | Having cash is useful. It means that you may not have to take out a loan for something else later. For example: I have cheap and safe (non-us) student debt, which I could pay off early. But I won't, because I'd rather have debt and a house deposit. I don't know enough about US debt to answer this question though. | |
| Apr 5, 2017 at 9:02 | answer | added | Chris H | timeline score: 3 | |
| Apr 5, 2017 at 6:04 | comment | added | user541686 | @sgroves: I can't think of a single not to do this actually, at least beside it being lots of paperwork (or unless you lack self-control on what you spend)... | |
| Apr 5, 2017 at 5:44 | answer | added | Yakk | timeline score: 7 | |
| Apr 5, 2017 at 0:15 | comment | added | Mooing Duck | @sgroves: The loan is free and the cash accrues interest. | |
| Apr 5, 2017 at 0:00 | comment | added | user428517 | If you can afford to pay for something with cash, why would you take out a loan? I can't think of a single reason in any scenario. | |
| Apr 4, 2017 at 19:10 | answer | added | Lan | timeline score: 1 | |
| Apr 4, 2017 at 19:06 | history | tweeted | twitter.com/StackFinance/status/849337395459784705 | ||
| Apr 4, 2017 at 17:17 | answer | added | Liam | timeline score: 18 | |
| Apr 4, 2017 at 14:04 | answer | added | D Stanley | timeline score: 40 | |
| Apr 4, 2017 at 14:00 | comment | added | user48207 | Note that student loans are not a qualified expense for a 529. | |
| Apr 4, 2017 at 13:49 | review | First posts | |||
| Apr 4, 2017 at 14:02 | |||||
| Apr 4, 2017 at 13:47 | history | asked | curious-collegiate-314 | CC BY-SA 3.0 |