Should I take out a subsidized loan?

Anonymous · ‎11-17-2016

Mainly to boost credit score?

It's a federal direct subsidized loan so the interest rate is covered by the government.

Is this a good idea? Any detriments to doing this?

Anonymous · ‎11-17-2016

I've seen a few of your other posts, I am pretty young and in college too. I took $5,500 of a subsidized loan for a few reasons:

1. Installment loan reporting on CBR

2. Free money essentially, I play to PIF when I graduate and will have made money due to inflation, and investing

The only bad part is they charge a funding fee which is really small in the scope of things.

Anonymous · ‎11-17-2016

@Anonymous wrote:
I've seen a few of your other posts, I am pretty young and in college too. I took $5,500 of a subsidized loan for a few reasons:

1. Installment loan reporting on CBR
2. Free money essentially, I play to PIF when I graduate and will have made money due to inflation, and investing

The only bad part is they charge a funding fee which is really small in the scope of things.

Hey tydawg, thanks for your comment. I've seen you around too.

So really the only detriment to having it is the funding fee?

Otherwise there are no montly payments (as you said, it is PIF in the end), and there is indeed no interest we need to pay?

Thanks!

Anonymous · ‎11-17-2016

Thats correct, as long as your enrolled at least 6 credits (YMMV if your college uses quarter credits) I paid mine down to $5,400 right after it showed up on my CBR so it looks like a paid a little off. The fee I paid was $58. Also IMO it looks nice if your app goes to manual review because they see you were at least one point in college (at least I would consider that if I were an underwriter.

Anonymous · ‎11-17-2016

@Anonymous wrote:
Thats correct, as long as your enrolled at least 6 credits (YMMV if your college uses quarter credits) I paid mine down to $5,400 right after it showed up on my CBR so it looks like a paid a little off. The fee I paid was $58. Also IMO it looks nice if your app goes to manual review because they see you were at least one point in college (at least I would consider that if I were an underwriter.

Thanks for the all the help man, appreciate it.

So I am guessing we PIF at the end of the school year? (spring?) Or how does that work out?

Then, next school year will you apply for another subsidized loan?

Anonymous · ‎11-17-2016

No worries glad to see I am not the only one out there of our generation that thinks credit isn't evil.

I plan to pay off my subsidized loan by the end of April of 2017, as I will graduate early May and I want to avoid the possibility that my University reports me as graduated and I get charged interest. Unfortunately I was only able to take one sub. loan out of my two years in Uni due to my parent's income being to high. I presume you have been offered one by your school's FA office? Everything is based off FAFSA now so it is not so much of an application process but they just offer it to you if your eligible, my Uni holds scholarship money hostage until you file one.

Anonymous · ‎11-17-2016

Mhmm. I got the $5500 as well. I'm wondering if I'll be able to take another one out next year as well.

Please tell me if I am wrong, but pretty much I will not have to pay a dime until I graduate right? -- if I decide to take out the subsidized loan for 2 school years. (Want to make sure that after this year, I don't have to pay off the loan until I graduate)

And okay, you just answered my question. The interest gets charged when you graduate -- I better make sure to pay it all off early like you!

Anonymous · ‎11-17-2016

Yeah that is right not a penny! You technically don't have to start paying until 6 months after graduation, but I am unclear on whether or not interest is charged during this period. I may pay it down to around $300 or so and let it simmer instead of PIF that way I have an installment account reporting and its paid down to less than 10% of original balance. The interest rn is only 3.76% so that is a few dollars a year to keep an installment loan and boost my scores.

Anonymous · ‎11-17-2016

Dang. You could pretty much take out loans all four years of college and not have to worry about paying them until you graduate, and be charged $0 interest. That's pretty cool.

But yeah, interest does start right after you graduate (which is when your grace period starts).

Wouldn't it be best for us to just pay directly down to 500 (less than 10% of balance) after we got the loan?

Why keep the account open? It stays on for 10 years after closure on your CR. The loan will be there to help with the credit mix already.

Can I know which school you go to btw? lol.

Anonymous · ‎11-17-2016

Well currently my student loan proceeds managed individually by me have allowed me generate an additional $1,286.02 in returns by playing the stocks. I kept this money in a separate account. That is why I didn't pay it back right away, but if your not into that you could just pay it back right away, the payment will show as deferred on CBR though so I am not sure how that factors into FICO scoring.

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