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My sister-in-law is going back for her masters right now. She did the maximum allowed loans from her FAFSA, so after her tuition and fees were paid, she had eno

My sister-in-law is going back for her masters right now. She did the maximum allowed loans from her FAFSA, so after her tuition and fees were paid, she had enough left over to draw a $300/wk "salary" from the remaining balance. She has to pay her rent and groceries and other bills from that, but she usually has about $100 a month left over for "fun" - if she lived in a cheaper apartment or took out additional loans, she'd have a lot "left over," and this is what a lot of Americans do.

renewiltord 2y ago
Wait, why would anyone do this, though? It’s like taking a personal loan from the government that is non-dischargeable in bankruptcy. The interest is going to accrue every year you go to uni. If you use that to go long on the stock market, I get it since the S&P500 beats interest rates right now, though there’s a risk. Using it on personal expenses seems like the lowest EV choice!
- hn4352 2y ago
  Living expenses have to come from somewhere. If you use the time to graduate faster, instead of working to generate weekly income, in some cases you can come out ahead overall. Details vary, but it's not obvious that it's a bad deal.
  - renewiltord 2y ago
    Essential expenses it certainly makes sense. But it seems some amount of it is treated as disposable income rather than liability.
    - johnnyanmac 2y ago
      Based on the breakdown, it sounds like she has $100 leftover per month. That pretty much sounds like "liability" money to me. Barely much to dispose of.
      - renewiltord 2y ago
        The average student loan debt is $38k. If you borrow $100 extra per month, and defer your first payment till the month you graduate, your extra burden is $5300 or so or about 14%. The average borrower takes 20 years to pay off the debt. They’d pay it off 2 years earlier without this extra expenditure.
        johnnyanmac 2y ago
        Okay, but this isn't a 4 year university loan. It's a masters program after she went back to school. Someone pursuing a masters is much more likely to have a plan on how to turn that degree into better career progression or other opportunities. Especially a masters student who spent time in industry. And honestly 5k loans to pay off 2-4 years later is about as good a loan debt as you're going to get. Paying off thst debt is more about having a career plan by that time than penny pinching for as low as loan value as possible.

renewiltord 2y ago

Wait, why would anyone do this, though? It’s like taking a personal loan from the government that is non-dischargeable in bankruptcy. The interest is going to accrue every year you go to uni. If you use that to go long on the stock market, I get it since the S&P500 beats interest rates right now, though there’s a risk. Using it on personal expenses seems like the lowest EV choice!

hn4352 2y ago
Living expenses have to come from somewhere. If you use the time to graduate faster, instead of working to generate weekly income, in some cases you can come out ahead overall. Details vary, but it's not obvious that it's a bad deal.
- renewiltord 2y ago
  Essential expenses it certainly makes sense. But it seems some amount of it is treated as disposable income rather than liability.
  - johnnyanmac 2y ago
    Based on the breakdown, it sounds like she has $100 leftover per month. That pretty much sounds like "liability" money to me. Barely much to dispose of.
    - renewiltord 2y ago
      The average student loan debt is $38k. If you borrow $100 extra per month, and defer your first payment till the month you graduate, your extra burden is $5300 or so or about 14%. The average borrower takes 20 years to pay off the debt. They’d pay it off 2 years earlier without this extra expenditure.
      - johnnyanmac 2y ago
        Okay, but this isn't a 4 year university loan. It's a masters program after she went back to school. Someone pursuing a masters is much more likely to have a plan on how to turn that degree into better career progression or other opportunities. Especially a masters student who spent time in industry. And honestly 5k loans to pay off 2-4 years later is about as good a loan debt as you're going to get. Paying off thst debt is more about having a career plan by that time than penny pinching for as low as loan value as possible.