Student Loans

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Replied by FrankN on topic Re: Student Loans

Lexie wrote:

FrankN wrote:

Lexie wrote: I can't imagine having a loan that does not accrue interest. It just doesn't happen. If you took a loan in your name and did nothing but put it in the bank you would still be charged interest. Maybe the interest your earn will offset the interest you are charged.......but I doubt it.


It is probably a student loan that doesn't begin to accrue until after you graduate. That is fairly common with student loans.


I hadn't thought of that FrankN. Makes sense though. I never had a student loan. My dad paid my way through college. Plenty of my younger friends have loans though and will be years paying them off. The interest part does make sense. It doesn't start until the person graduates.


And not all of them are like this. Most government bank loans are, but most private loans do not offer this. You need to make sure you read the fine print!
2 years 3 months ago #1

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Replied by FrugalFran on topic Re: Student Loans

Not paying interest until graduation makes sense. I just can't believe what a mess the student loan situation is. I have some friends who are in a real pickle because of these loans.
2 years 3 months ago #2

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Replied by Lexie on topic Re: Student Loans

FrankN wrote:

Lexie wrote: I can't imagine having a loan that does not accrue interest. It just doesn't happen. If you took a loan in your name and did nothing but put it in the bank you would still be charged interest. Maybe the interest your earn will offset the interest you are charged.......but I doubt it.


It is probably a student loan that doesn't begin to accrue until after you graduate. That is fairly common with student loans.


I hadn't thought of that FrankN. Makes sense though. I never had a student loan. My dad paid my way through college. Plenty of my younger friends have loans though and will be years paying them off. The interest part does make sense. It doesn't start until the person graduates.
2 years 3 months ago #3

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Replied by FrankN on topic Re: Student Loans

Tishbel wrote: It's some time since I've been a student, but I have never heard of a loan that doesn't charge interest (apart from some store credit agreements with an interest-free term). You might not be charged until after you graduate though.

hjm331 wrote: Question: Let's say I apply for a student loan and get approved. However, I don't borrow any money from the loan. Would the loan still accrue interest despite the fact that I haven't borrowed any money? What this would do is give me quick access to money I might need in the future.

Do you mean if you get approved for the loan and then don't actually take it out for some time? That sounds more like a line of credit than a loan. I think you don't get charged interest until you actually take the loan, but the approvals are normally either linked to taking the loan out immediately or time-limited. If you got approved one year, didn't take a loan, then decided you wanted to take the loan the next year you'd probably need to get approved again. Check the T&Cs on your particularly loan agreement.


A line of credit is an approved loan where you don't draw on the loan. However you typically do not get these for student loans?
2 years 3 months ago #4

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Replied by Tishbel on topic Re: Student Loans

It's some time since I've been a student, but I have never heard of a loan that doesn't charge interest (apart from some store credit agreements with an interest-free term). You might not be charged until after you graduate though.

hjm331 wrote: Question: Let's say I apply for a student loan and get approved. However, I don't borrow any money from the loan. Would the loan still accrue interest despite the fact that I haven't borrowed any money? What this would do is give me quick access to money I might need in the future.

Do you mean if you get approved for the loan and then don't actually take it out for some time? That sounds more like a line of credit than a loan. I think you don't get charged interest until you actually take the loan, but the approvals are normally either linked to taking the loan out immediately or time-limited. If you got approved one year, didn't take a loan, then decided you wanted to take the loan the next year you'd probably need to get approved again. Check the T&Cs on your particularly loan agreement.
Last edit: 2 years 3 months ago by Tishbel.
2 years 3 months ago #5

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Replied by FrankN on topic Re: Student Loans

Lexie wrote: I can't imagine having a loan that does not accrue interest. It just doesn't happen. If you took a loan in your name and did nothing but put it in the bank you would still be charged interest. Maybe the interest your earn will offset the interest you are charged.......but I doubt it.


It is probably a student loan that doesn't begin to accrue until after you graduate. That is fairly common with student loans.
2 years 4 months ago #6

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Replied by FrugalFran on topic Re: Student Loans

I'm not sure how that would work with a student loan. Years ago, I owned a house in Canada and was approved for a home equity line of credit and I didn't get charged interest until I actually borrowed money against it, but that's probably a whole different animal. It's my understanding that when a student loan is approved, the money gets deposited into the student's bank account, so that would begin accruing interest right away.
2 years 4 months ago #7

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Replied by Lexie on topic Re: Student Loans

I can't imagine having a loan that does not accrue interest. It just doesn't happen. If you took a loan in your name and did nothing but put it in the bank you would still be charged interest. Maybe the interest your earn will offset the interest you are charged.......but I doubt it.
2 years 4 months ago #8

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Replied by hjm331 on topic Re: Student Loans

Thanks Wanderer! I'm going to be moving away from LA and going south to San Diego. it'll be the first time that I live alone so it's pretty exciting! San Diego State University is one of the top schools in the country so I'm definitely blessed to get admitted. They have a very low admittance rate and competition is fierce to say the least.

Yes, I've heard some things about those private loans well. That's why I've been looking into the Federal Stafford Loans. They offer low interest rates so that's always an option.

Question: Let's say I apply for a student loan and get approved. However, I don't borrow any money from the loan. Would the loan still accrue interest despite the fact that I haven't borrowed any money? What this would do is give me quick access to money I might need in the future.
6 years 5 months ago #9

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Replied by Wanderer on topic Re: Student Loans

I received an admittance e-mail from San Diego State University last week! I'm very excited about it because I will be moving out and living on my own. I've been independent since I was 17 but I'm finally getting a chance to move out and experience living the on-campus student life. I've applied for financial aid and some scholarships. Would it be a good idea to apply for the Federal Stafford Loan and not use it unless I need? The interest rate for these loans are significantly lower than private loans.


Congrats on becoming admitted to San Diego State University! That is a really big life event. On campus life allows for a closeness with fellow students and faculty that is not elsewhere available. As to student loans and the like, you may want to explore any grants that you may find in addition to loans. Watch the private loan market (been lots of stories here).
6 years 5 months ago #10

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I received an admittance e-mail from San Diego State University last week! I'm very excited about it because I will be moving out and living on my own. I've been independent since I was 17 but I'm finally getting a chance to move out and experience living the on-campus student life. I've applied for financial aid and some scholarships. Would it be a good idea to apply for the Federal Stafford Loan and not use it unless I need? The interest rate for these loans are significantly lower than private loans.
6 years 5 months ago #11

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