Student Loans...good or bad?

Question

Had the idea to use student loans to pay for all of my educational costs (tution, room & board, books, etc.) while in school (undergrad, grad, etc) w/deferred payment, and put all the money I earn working part time while in school towards investing (stocks/bonds). Good or bad idea? Any suggustions/advice?

I'm on my own to pay for school, but want to get my retirement funding started sooner than later...figured this would be a good way to do it...especially since I could write-off the student loan payments once I'm making a good income and high returns on my investment returns, lowering the income I have to pay taxes on later, correct?

Answer 1

First of all I would like to gradulate you for investing at a young age this will allow more freedom in decisions you make down the road.
I think a lot of people would say its a bad idea because the return on stock isn't guaranteed and that you would be better to pay off student loan debt and getting a guaranteed rate of return (i.e. the interest rate on student loan debt) on your investment. I also think student loans are the best investment of all. But in the long run I think if you would punch out the numbers you would find your investments will make more than your student loans will cost you. If you think about it your investments will compound over 30 to 40 years at approximately 10% (average most financial planners use). Compare that to your student loans that will be paid back in a shorter amount of time with a relatively low interest rate. Just remember you cannot default on your student loans and they must be paid back.

Answer 2

1

Answer 3

If you can get through school without loans, do it. Student loans are not "good debt" as so many people will try to tell you. Most college students drastically overestimate the amount of money they will make. All of my friends who weren't majoring in engineering were disappointed with their salary offers. They thought they'd be making at least 45-50k but most were only offered 22-28k, which is actually much more typical. If you do manage to get a high paying job right away, you will make too much to deduct the student loan interest. Once you pass something like 50 or 55k individually (100-110 married) you can't deduct the interest anymore. I know because my husband and I are in that situation. Most of our interest isn't deductible because we make too much. I can't remember if student loan interest requires itemization, but if it does you probably won't have enough with just it to justify itemizing. Student loan repayments really just bog you down. Even with all the money we are making, after housing/car/utilities, we don't have much left over and without the payments we'd have about $500 more every month.

Bottom line, if you have to take loans for your degree, do so, but don't EVER take a loan if you don't absolutely have to. It is not a good idea to invest with borrowed money, which is exactly what you are proposing to do.

Answer 4

Whoa!Slow the Gravy Train down Bro.First off you're not going to make multi-bukou bucks over night you know.It's good to be ambitious for your goals,but you don't want to fall flat on your face trying to outrun your own feet.Student loans do help,but they should have told you that they also carry an interest rate fee over time if you don't pay it right back to the Education loan area directly.And the interest rates go up after awhile the same as a bank or credit card,since it is money borrowed from the Federal Goverment.And as for Stocks&Bonds investing,that is money you can't just yank out overnight.You have to keep it invested in for years,before you'll see if you're rolling in the green or declaring bankruptcy.I myself think you're taking on more than you can handle at this time and stagepoint.I can only hope and pray that you don't get slammed later on by the reality of how much you're really trying to get done down the road.But my advice(take it for all it's worth and think on it really hard and well),first complete what you're majoring in,then go into the working field you get your major from,while working in that field,ask after 1-2yrs. what benefits that company field can offer you(such as a 401K plan,which can later be rolled up into an IRA Retirement Plan after another 5-10yrs. switchover from the 401K),then you can pay back your schooling,invest in the company you work with or all the Stocks&Bonds or Government T-Bills you feel comfortable with,without losing everything,and you should be able to retire with a decent nest egg without you or your family having any hassles or headaches later on in your life.

Answer 5

Student loans are good. Higher education will allow you to make more money in life. That's just a fact. You will be able to pay them off so don't worry.

If you go into certain careers you can get loan forgiveness.
http://www.finaid.org/loans/forgiveness.phtml
And there are some tax benefits for students.

Personal note:
I took out loans and used them to pay for all of my education.
I don't regret it one bit. I am so thankful for loans, otherwise I wouldn't have been able to attend. I don't mind having to make payments towards them. It is not too burdensome.

Answer 6

A classic example of students having too much time, if you want a degree, get a degree, if you want to invest, get a full time job and do your investment research.
Student loans should be used for educational purposes,
not speculation!

Answer 7

It's good if you have the time to monitor your high risks investments. However, easy as it seems, the risks may be higher than you anticipate.

Answer 8

good if you can pay them back..bad if you can't