First Time Student Loan

[Anonymous]

Can you confirm that these are indeed loans on which you have to pay interest while in school?  For some kinds of student loans, the US govt pays the interest.

[Anonymous]

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@Anonymous wrote:

Can you confirm that these are indeed loans on which you have to pay interest while in school?  For some kinds of student loans, the US govt pays the interest.

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Yes, So the course I applied is a graduate course, So I will be only able to apply for federal unsubsidized loans or Fed graduate plus loans (this requires credit check).

Unsubsidized are loans which accrue interest from the date of disbursement and has to be paid by the borrower.

Subsidized are loans which don't accrue interest/if accrued interest from the date of disbursement government pays for it.

The reason I did for not applying for Fed Graduate plus is that it wanted credit check and the interest rate at 7.02% 

[Anonymous]

Hi DHI.  In that case I like your idea of paying them down a bit early. 

I am surprised that you are permitted to use the loan amount itself to pay back a portion of the loan.  (Your idea of taking out a loan for 9k and then using 4k of it to pay off the loan.)  Strictly speaking “All loan funds must be used for your education expenses" (quote from the Office of Federal Student Aid).  Making payments on loans is not an education expense.

On the other hand, it sounds like in practice you could only get in trouble if you were engaged in grossly fraudulent use of the money (going on vacations, etc.).  I am basing both the theory and practice on articles like this:

https://studentloanhero.com/featured/what-can-i-spend-student-loans-on/

You might want to ask the folks in the student loan room here on the forum just to be sure.

If you do make an early paydown, we'd very much appreciate it until you wait until after the loans report at 100% (95% is fine too) so that we can hear what the scoring impact was.

After your initial paydown, a monthly payment of $2 seems reasonable, which would produce regular monthly activity on the account.

[MakingProgress]

CGID

My daughter will be having student loans appear for the first this fall.   The only thing on her report right now is my cap 1 QS that she is an au on.   Would her info be a good data point for you?

[Anonymous]

Nice to hear it, but it will be less valuable because her profile is so different and less stable than most peoples:

* No accounts in her own name

* Exactly 1 account on the report ( thus very thin)

Contrast that with the profile of our OP, which consists of five CCs, all in his own name.

It will be easier in his case to isolate the precise effect of going from no loans of any kind (open or closed) -- but with several cards -- to the same profile plus an open loan on which he owes most/all of the amount.

[Anonymous]

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@Anonymous wrote:

Hi DHI.  In that case I like your idea of paying them down a bit early.  True, I read 100% utilization may affect or may not affect scores adveresly but it is something that bothered me.

I am surprised that you are permitted to use the loan amount itself to pay back a portion of the loan.  (Your idea of taking out a loan for 9k and then using 4k of it to pay off the loan.)  Strictly speaking “All loan funds must be used for your education expenses" (quote from the Office of Federal Student Aid).  Making payments on loans is not an education expense. Well, I mean technically I need money to sustain myself while I study because I dont have a fulltime job. Its just that I have accounted my finances of stay and transportation etc into my wifes budget so I wouldnt have to touch Fed loan money and pay 6.6% on it.

On the other hand, it sounds like in practice you could only get in trouble if you were engaged in grossly fraudulent use of the money (going on vacations, etc.).  I am basing both the theory and practice on articles like this:

https://studentloanhero.com/featured/what-can-i-spend-student-loans-on/

It is illegal if I use that money for other activities like Vacation or investing in stocks or elsewhere. But trust me I am not a risk taker.  

You might want to ask the folks in the student loan room here on the forum just to be sure.

 I did Speak to them, they mentioned there is student loan reduction that I can apply for before accepting and I did. As per Cost of attendance from my college I shall spend close to 6K for tution fee and 5K for books/accomodation/transportation but I can avoid that 5K cause I have my wife supporting me with rents and we live walking distance from university. 

If you do make an early paydown, we'd very much appreciate it until you wait until after the loans report at 100% (95% is fine too) so that we can hear what the scoring impact was.

Yes I would like to wait too because I am not sure what other educational expenses are my way. 

After your initial paydown, a monthly payment of $2 seems reasonable, which would produce regular monthly activity on the account.

Yes, I was thinking more of $15-$20. So, that my principal is lowered by couple of hundred bucks end of the year and so on for the following years.

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[Anonymous]

My loans finally reported last week; it's my only installments. I have no other open installments reporting. I have one closed installment that reports. My scores increased 20-34 points yesterday (different for each bureau).

Was expecting it to go the other way.

No, I'm not at AZEO right now, and likely won't be for the remainder of the year.