Government Student Loan vs. Bank Line of Credit
What do you think is "better" for paying for school? A government student loan or a line of credit from a bank?
Jul 13th, 2005 1:34 am
Jul 13th, 2005 2:36 am
Jul 13th, 2005 2:43 am
For government loans, when do they start adding up interest?supershocka wrote:Government loan. You don't have to pay anything until you graduate and start working (6mnth grace period I think as well).
Bank loans..you have to make interest payments on any outstanding balance.
Jul 13th, 2005 3:10 am
right after you graduate..which is better than bank loans since for the 4years or so you are in school, you dont incur any interest for gov't loanwoovic wrote:For government loans, when do they start adding up interest?
Jul 13th, 2005 3:52 am
Jul 13th, 2005 3:56 am
not day you graduate, day you finished your study period... since technically, you graduate during your convo a few months after your study period ends.gSSEhh wrote:Many people have been caught by this. Your interest starts accumulating on the day you graduate. The 6-month "grace period" is only "interest free" if you are going back to school. Otherwise, it is only the delay period until they start automatically sucking money out of your account.
Jul 13th, 2005 5:03 am
Jul 13th, 2005 9:44 am
Jul 13th, 2005 12:08 pm
Nyte wrote:The only problem with government loans is that they don't give you enough, and you have no recourse. Say you need $1000, they only give you $800, if you work to make up the remaining $200, they'll see you have more income and reduce your loan to $600.
So to the original question, government loan is definitely better (interest free while ur in school) if you can get enough or any, otherwise, you'll probably need a combination of both without someone else supporting you (eg parents). Better solution is to just make enough so you don't need either, which isn't possible for everyone I guess.
Jul 14th, 2005 12:58 am
Since a student line of credit has a lower interest rate, is it a good idea to take out a student line of credit after you graduate to pay off your existing government student loan?trinity wrote:I used to work in this department.
Student loans start charging interest the day after you finish your last study period. (Usually April 30th). After 6 months, you will need to start making those monthly payments - usually in November of the same year.
Interest rates for student loans are Prime + 2.5%.
Student line of credits can vary; usually Prime + 1% but you are making payments while you are in school.
I personally have borrowed for my schooling with student loans. Some people after they graduate, consolidate their loans with a bank that offers them a lower interest rate. The trade-off? Interest paid on student loans can be written off on your tax return while other bank loans can not.
Some other programs/advantages associated with student loans:
- flexibility....you can revise the terms of your loan to accomodate your budget (ie. extend the term up to the max of 14 years to lower your monthly payment.)
- Government offers Interest Relief program so that if you are not working or have a low paying job, then they will pay for your interest FOR YOU for 6 months at a time...(you would need to re-apply every 6 months up to a max of 5 years)....This is great for unemployed grads. The bank would never give you ANY relief.
Hope that helps.
Jul 14th, 2005 1:06 am
That's not true at all, I don't know anyone who has had their loans decreased from making small wages during school or while working during the summer to save up.Nyte wrote:The only problem with government loans is that they don't give you enough, and you have no recourse. Say you need $1000, they only give you $800, if you work to make up the remaining $200, they'll see you have more income and reduce your loan to $600.
Jul 14th, 2005 1:35 am
That depends, remember the gov't student loan interest is tax deductible, the bank student line of credit is not.woovic wrote:Since a student line of credit has a lower interest rate, is it a good idea to take out a student line of credit after you graduate to pay off your existing government student loan?
Jul 14th, 2005 1:06 pm
Jul 16th, 2005 4:40 am
Jul 17th, 2005 4:03 am
woovic wrote:Since a student line of credit has a lower interest rate, is it a good idea to take out a student line of credit after you graduate to pay off your existing government student loan?
Jul 17th, 2005 10:35 am
Jul 17th, 2005 3:45 pm
Jul 20th, 2005 11:32 pm
I am an EE minon at uoft (going into 3rd) and i just got RBC student LOC at prime + 1% and I have basically no income and my parents didnt' have to co sign for me, plus they gave me a credit card despite I didn't even want it (going to cut it as soon as i get it)Azxster wrote:Ahh... banks are rejecting my student LOC, what is the best way to get approved?
Jul 21st, 2005 12:31 am
Jul 21st, 2005 1:24 am
The interest may suck, but the interest is also tax deductible...J1M wrote:I would highly recommend writing students loans the biggest check you can as soon as you get your first job out of school. There is no penalty for paying them off early. If you work a bunch of overtime one month toss another grand at your loan instead of buying a new TV, etc. Interest sucks.
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