Most of the time on this site, I devote a lot of my space to discouraging you guys from taking student loans — at least the ones you don’t really need. On rare occasion, though, I’ll run into a situation where I wholeheartedly advise someone to take out more loans than they’re even considering.
For Jenn’s question below, this is one of those times. She’s a parent of a 6-year-old and so am I, so I was pretty excited to respond to this mail.
My question is about small student loans. First I’ll give you some background. I’m an almost 29 year old divorced single mother, my son is 6. I’m starting community college full time in the fall as a freshman.
Congrats! Big step — great job for jumping in there.
I will be pursuing an Associate’s in Nursing. I have received the Pell grant and the IL MAP grant that will nearly pay for all of my books, tuition and living expenses for the school year.
I would only need to work to have money for groceries, gas, household items like laundry detergent, and Christmas money.
I currently work two jobs, one Mon – Fri and every third Sat, the other every Fri, Sat and Sun. Basically, it sucks. I don’t get to spend very much time with my son and I feel like I’m just shipping him off to the next person who’s babysitting him for me, usually my mom and grandma. I miss out on seeing him EVERY weekend because of the hours I work, and I only make about $100/weekend doing it. I’ve only had 3 days off work since May, two because I was sick.
I agree, that sucks terribly. But it sounds like we’re onto a solution here.
I want to take out a small student loan, about $2K/year to cover the stuff I would have to work for and sacrifice that quality time. What advice do you have for me finding a loan and not getting screwed over? I’m very good at living on a budget, my car’s under warranty (no surprise car repairs) and if something did come up, I could take a job if I had to.
I know nothing about the student loan world, how it woks, what’s a good interest rate, what kinds of terms to look for, etc, etc.
Well, let me first back up your thinking here and tell you I absolutely agree — take the loan. Student loans are there to support you through school, and that doesn’t just mean tuition and books — it means living expenses as well.
With student loans, you should always look at the trade-off you’re making. Is the money you’re borrowing and will have to pay back later worth the benefit you’ll derive from receiving it?
If you’re a college student who just wants to use the money on booze and road trips and spiraling toward the freshman 15 by eating out five times a week, then that’s probably not the best decision.
However, your trade-off is: a giant increase in the time spent with your young son and the innumerable benefits that come along with it that’ll last your entire life. In my opinion, there’s no more worthy benefit than that.
But let’s be disciplined here and look at what you’ll pay back, and how you’ll be positioned to do so. I assume you’re looking to get some kind of RN job once you’ve got your degree. Those are solid-paying jobs. The nursing profession probably supports more single moms than any other I know.
And how much money are we talking about paying back? Let’s get crazy and say you’re going to take the maximum subsidized Stafford loan of $3,500 for your first year and $4,500 your second year. That’s $8,000 total.
Subsidized Stafford rates for 2010-11 are 4.5%. In 2011-2012, it goes down to 3.4%. I ran those numbers through a repayment calculator, and by those estimations, your monthly payment when you get out of school would be between $80-90 per month for 10 years, assuming you get a $30,000 job.
That’s dirt. Anyone can make those payments, especially a nurse. It’s a win-win situation if I’ve ever seen one.
An extra $3,500 the first year and $4,500 the second year can, as you know, make a massive difference in your and your son’s life together.
My advice? Quit that weekend job immediately once you get your loan. Your son’s probably going into the first grade, so he’ll be at school all day anyway if you want to go ahead and keep the weekday job so you have additional money coming in.
But once the weekend comes, let it be all about you and him. Modestly budgeted, that student loan money can not only pay your bills (especially if you keep the weekday job, at least part-time), but also provide cash for some of the fun mother-son stuff you’ve been missing out on these past few years.
By all means, DO IT.
Now, in terms of how to go about the loan, there probably won’t be much to it, honestly. Check with your financial aid office to be sure, but if your school participates in the Federal Direct Student Loan program, you’ll get your money straight from the government — no outside lenders to deal with. If not, then your financial aid office will point you in the right direction.
Congrats on making this move! I look forward to hearing from you along the way on how things are going. Seriously, drop in from time to time here and let us know how it’s going.
— What about you guys? Any thoughts for Jenn? Let us know in the comments below.