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Grad student advice needed

RobmanRobman Registered User regular
edited September 2010 in Help / Advice Forum
Hey fellow post-grads,

So I've got a surplus over my living expenses this year, even with a decent food budget. A rather healthy surplus, thanks to a really cushy high-paying TA position.

Based on your experiences, is it better to generally enjoy myself or pay down the student debt? My debt levels are pretty goddamn low for where I am, but they're still there. If I was OK with not going out much, not going on vacation this year, and not doing anything really exciting, I could reduce that debt by 1/3rd. After next year, I could eliminate it entirely.

Do you regret not living it up in grad school, or do you find yourself wishing you'd paid off more of your debt while you were still a student? After you graduated, did you really resent not getting the nicer car/apartment, or were the memories worth it?

Robman on

Posts

  • kaliyamakaliyama Registered User regular
    edited September 2010
    What kind of loans are they?

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  • RobmanRobman Registered User regular
    edited September 2010
    A student loan.

  • EshEsh Tending bar. Eating out. Motorcycles. Portland, ORRegistered User regular
    edited September 2010
    Robman wrote: »
    A student loan.

    I'd pay down any unsubsidized at least.

    Honestly, in grad school, you shouldn't be having too much fun.

    "At first he thought it might be a natural occurrence - maybe a rabbit. But upon closer inspection, it was clear a knife had been used. And rabbits don't carry knives."

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  • kaliyamakaliyama Registered User regular
    edited September 2010
    This might take a while... what kind of student loans?

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  • HachfaceHachface Registered User regular
    edited September 2010
    Put the money in a high-yield CD until you have to pay the loan back.

    edit: This assumes interest is not accruing on your loan until a certain date.

  • RobmanRobman Registered User regular
    edited September 2010
    kaliyama wrote: »
    This might take a while... what kind of student loans?

    A student loan owned by someone who understands the terms and conditions thereof, and wasn't looking to get into nor observe a debate among fiscal scholars about various types of student loans.

    Rather my question was as my OP put it: do people find the lifestyle differences after graduation 'worth it' to live as frugally as possible during graduate school (although I firmly reject this notion of 'no fun'), or do they feel that the missed opportunities for conferences and vacations weren't worth it? And the opposite from the people who 'lived large' so to speak, was it 'worth it' or are the lifestyle penalties after graduation too harsh?

    EDIT Also, take the sanctimonious tone and shove it. In future, instead of putting cutting comments in like "This might take a while...", how about you just ask your question or better yet read the OP?

  • EshEsh Tending bar. Eating out. Motorcycles. Portland, ORRegistered User regular
    edited September 2010
    Robman wrote: »
    kaliyama wrote: »
    This might take a while... what kind of student loans?

    A student loan owned by someone who understands the terms and conditions thereof, and wasn't looking to get into nor observe a debate among fiscal scholars about various types of student loans.

    Rather my question was as my OP put it: do people find the lifestyle differences after graduation 'worth it' to live as frugally as possible during graduate school (although I firmly reject this notion of 'no fun'), or do they feel that the missed opportunities for conferences and vacations weren't worth it? And the opposite from the people who 'lived large' so to speak, was it 'worth it' or are the lifestyle penalties after graduation too harsh?

    EDIT Also, take the sanctimonious tone and shove it. In future, instead of putting cutting comments in like "This might take a while...", how about you just ask your question or better yet read the OP?

    You asked us whether you should pay down the debt. That depends on if the debt is accumulating interest. Don't be a goose.

    "At first he thought it might be a natural occurrence - maybe a rabbit. But upon closer inspection, it was clear a knife had been used. And rabbits don't carry knives."

    Final Fantasy XIV:Lilja Sunblade
  • LewishamLewisham Registered User regular
    edited September 2010
    Honestly, I'd fucking save it for when you need it. If the car breaks down or whatever, you'll be happy you have that surplus. I envy you... I'm about -$100 a month according to Mint. Being in surplus is awesome.

  • saggiosaggio Registered User regular
    edited September 2010
    Debt reduction is the gift that keeps on giving. I am unclear on whether or not your student debt is from your undergraduate days or not, and how the CSLP as well as whatever provincial loans or grants you have deal with postgraduate study and loans taken out for them.

    At least at the undergraduate level, the CSLP does not charge you interest for your "in study" period. It may accrue, certainly, but any payments made against your loan while you are "in study" go directly against the principle. In purely economic terms, if you can wipe out your study debt while you are still in this in study period, you'll save all of the interest, which you will then be able to retain as future earnings when you join the work force.

    In purely rational, economic terms it makes some sense. It's probably what I would endeavour to do if I was in your situation. And really, you can live it up on a budget, too. You just might have to learn how to brew your own moonshine or something.

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  • HorusHorus Los AngelesRegistered User regular
    edited September 2010
    I am talking from personal experience.

    Try to calculate how much you will save in interest if you payed more than minimum. If the savings isnt that much then why are you paying more?

    Also keep a portion of surplus for a clusterf*#@ situation.

    Break it down for 40% emergency, 20% school, 20% misc etc... just as an example.

    For example for me I am buying a house for every $20 more I pay monthly I save $7k of interest on the lifetime of the loan.

    Hope this helps your situation

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  • KistraKistra Registered User regular
    edited September 2010
    Find a balance that makes you happy. I haven't graduated yet, but my experience has been that the people that try to live in a crappy place and do nothing that costs any money for fun burn out pretty quickly.

    My husband and I are both grad students right now and we sat down and talked about our budget and decided what we each wanted to be able to spend on fun stuff each month and as a result are making smaller payments on college student loans than what we could if we really wanted to scrounge but we are both really happy.

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  • SpazHappySpazHappy Registered User
    edited September 2010
    Assuming you are in the US, any surplus in money should go directly toward paying debts, no questions asked.

    With the way the economy stands right now, you cannot afford to fuck around. If deflation happens (which experts put at about 50% probability now), and dollars become much more valuable and harder to earn then your debts are suddenly going to be much more expensive.

    You will not have fun going into a deflation with a ton of debt. If we were still in the Bush years right now you could probably get away with spending your surplus on fun stuff but those days are long gone now.

  • WezoinWezoin Registered User regular
    edited September 2010
    Or you could do something along the lines of pay off 1/6th and keep half of your surplus to 'live large', but about half as large.

  • mtsmts Registered User regular
    edited September 2010
    eh, if your loans aren't that high i say wait. if any or unsubsized than pay those off, but otherwise spend a little on yourself.

    You don't need to pay off any debt until you are out of it. I mean the responsible thing is to put it aaway and save it, but I personally would spend some of it and enjoy myself

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  • Zul the ConquerorZul the Conqueror Registered User regular
    edited September 2010
    I got out of school 3 years ago with essentially no savings, into a job where I could comfortably pay my student loans. For the first year I lived essentially at my means, not really building savings - had a little bit of $$ in my eyes and spent it on a really nice apartment.

    Now, I'm looking at buying a house or replacing my car down the line, and realizing that although I have good income, I don't have terribly much saved up for down payments on such things. I've adjusted my lifestyle to build savings at a decent rate, but I do feel like I'm a little behind the curve - it'll be a 2-4 years before I could really consider a 20% down payment on a house.

    Given that student debt is (generally) at a pretty low rate, and my understanding is that it isn't particularly frowned upon by other lenders, I think there's value in paying the debt only at or slightly above the required rate, and building savings at the same time. When it comes time to buy a house (or to a lesser extent a car), you might not be able to get a loan if you've payed an extra $20k against your student loan but have no cash for a down payment.

    Similarly, cash savings are good for unexpected expenses too. You don't want to be in the position of being ahead on paying your 5% student loan but being forced to charge $2k of car repairs to a credit card.

    Long story short:
    My advice is to keep up with your student loans but start building liquid savings.

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  • mtsmts Registered User regular
    edited September 2010
    the required rate of paying off student loans while still a student is 0. You don't have to pay anything back until you are no longer one

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  • kaliyamakaliyama Registered User regular
    edited September 2010
    Robman wrote: »
    kaliyama wrote: »
    This might take a while... what kind of student loans?

    A student loan owned by someone who understands the terms and conditions thereof, and wasn't looking to get into nor observe a debate among fiscal scholars about various types of student loans.

    Rather my question was as my OP put it: do people find the lifestyle differences after graduation 'worth it' to live as frugally as possible during graduate school (although I firmly reject this notion of 'no fun'), or do they feel that the missed opportunities for conferences and vacations weren't worth it? And the opposite from the people who 'lived large' so to speak, was it 'worth it' or are the lifestyle penalties after graduation too harsh?

    EDIT Also, take the sanctimonious tone and shove it. In future, instead of putting cutting comments in like "This might take a while...", how about you just ask your question or better yet read the OP?

    I ask because the terms and conditions of your loans, along with what field you are in, will determine the answer to your question. I said that because you are doling out information piecemeal. Are they federal or private loans? What kind of federal if federal and what's the interest rate on any private loans? If you are TAing, you are getting a PhD, right? I ask the type because I am curious as to A interest rate and B whether they are subsidizes (eg certain Stafford loans). The penalties vary by your field and the nature of your loan. Your question is unanswerable with the information you gave us.

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  • ceresceres Just your problem OooModerator mod
    edited September 2010
    My student loans have been in this repayment/deferment cycle sort of thing because my student status has changes. Right now I'm in a half-time deferment, and I *could* be paying it down more than I am, but I have decided to wait. What I'm doing is making sure the interest doesn't accrue by paying that down (plus about $5) every month. The loan itself isn't really hurting me, the money is really needed elsewhere right now, and there are tax benefits to paying off interest as it happens.

    I'm not really sure what you want to hear. If you're worried about missing out on something, you can save your money and still leave yourself a nice entertainment budget. If you just want to save it, save it. If you want to blow it all in Vegas every month, well, I wouldn't do that. But we don't know your lifestyle and how you like to live and entertain yourself, and while we can give you ideas of what you objectively should do, we are in no position whatsoever to tell you what you'd regret.

    Objectively, unless you're joining a convent after grad school and will never have fun again (although I'm sure the nuns would argue), there's no good reason not to save as much of your money as you can and still take yourself out to dinner and a movie sometimes.

    edit: Also, without knowing the type of loan and the interest rates, it's hard to know what to tell you anyway. If you don't pay anything down and have unsubsidized loans with a ridiculous interest rate, you'll probably be sad when you graduate. If they are unsubsidized, you really are a fool not to pay the interest as you go if you can whether you want to spend your surplus on hookers and blow or not.

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  • EggyToastEggyToast Registered User regular
    edited September 2010
    If this "surplus" is actual "extra income" then I'd advocate just paying down a portion of your student loans and enjoying (or saving) the rest of it. If this is a "surplus" that's actually a "loan" then I'd suggest immediately paying off debt with it.

    I've got about $4000 left in my undergrad student loans that were put on hold when I started my masters degree, and now that I'm finished they'll kick in again -- but the interest rate is like 3.25%. Current loans are 6.8% or more, which is quite the difference. If paying the loan according to the terms & conditions doesn't affect your budget otherwise, then there's technically nothing wrong with maintaining the debt -- other than you're paying interest.

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