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Grad student advice needed
Robman
Registered User regular
Registered User regular
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?
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?
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I'd pay down any unsubsidized at least.
Honestly, in grad school, you shouldn't be having too much fun.
edit: This assumes interest is not accruing on your loan until a certain date.
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 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.
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
― Dr. Seuss, Oh, the Places You'll Go!
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.
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.
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
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.
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.
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.
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.