Student Loans

Last night I spoke to my sister, who recently enrolled as a full-time undergrad student. She was able to secure a very small grant to help cover expenses, but also had to take out additional student loans. She debated for awhile how much to take out - enough to cover tuition & fees only, all education-related expenses (textbooks, etc.), or enough to cover some of her living expenses as well (she's off-campus, so it would include rent, utilities, food, and vehicle expenses). She ended up taking out the maximum allowable loan, to make sure that she'll be able to cover her bills.

I'm sort of conflicted on this. I don't have a problem with student loans, so long as the amount is reasonable and you anticipate being able to pay it off. I took out about $29,000 in loans for my undergraduate degree. On a 20-year repayment plan, my monthly payments are $200/mo right now, and will drop to $160/mo in three more years (if I paid according to the schedule). I was pretty lucky in that the interest rates on federal loans was significantly lower than they are now (about half!). It doesn't seem like much, but when the total loan amount is more than a new car, and it's over 10 or 20 years, that's huge!

I looked up the maximum amounts in federal student loans that she'll be eligible to take over the next few years, and based on those numbers I'm guessing that she'll end up taking out about $35,000 to $40,000 by the time she graduates. Based on a loan amount of $35k, on a 20-year repayment plan, she'll owe $250/mo in minimum monthly payments... and on a 10-yr plan, it'll be $382/mo.

If she graduates, gets a job in the field, and continues to work for several years, it's totally worth while... she'll make up that amount in higher wages within a few years. But if she can't find a job, or decides to do something else instead, that's a lot of money to owe.

It sucks to have to take out loans that are almost double the tuition bill, just to cover living expenses and basic necessities, but it's almost a requirement. You can't really make it through school as a full-time student when you have to work full-time in addition... and you need a place to live & food to eat. I don't want to encourage her to take out more in loans than she truly needs, because it's so easy to break into the piggy bank and use it for "fun" stuff (been there, done that!) - but I definitely understand what it's like to have to project out 5 mo's worth of expenses & anticipated income and then guess at how much in loans you'll need to cover the deficit.

Selling stuff

I listed some old textbooks (from last semester) for sale online several months ago, and only one sold right away. The other two listings actually expired after 60 days, and I had to relist them for sale. Both books sold this week, probably students trying to get good deals on textbooks for the upcoming fall term. One was $35, the other was only $15 - but hey, after shipping that's still an extra $40! 

I have a few other books laying around, and a few household items that we no longer need, so I think I'm going to spend a couple of hours this weekend listing those items on Amazon and Craigslist... hopefully I'll be able to make another $60 or so! 

Expensive Month

Perhaps it's a good thing I decided not to make a written budget for the month of July. I knew it was going to be an unusual month, but we've already encountered a few expenses that I hadn't foreseen. 

We had to purchase a school textbook, for $80. I knew that the class had a textbook, but in the past we've been able to get away with just checking a book out of the university's library, or sometimes not buying the book at all. And when we do need to buy books, I've almost always been able to find them online (at Amazon or Half.com) for way less than the campus bookstore. It's usually under $50 per class, and then I've had great success reselling it at the end of the semester for the same price I paid. 

Unfortunately, two of last semester's books have not sold, and I wasn't able to find this semester's book for less than $75 (many were selling for upwards of $125!). 

I had my car professionally cleaned, which was an extra $60. 

And then there's our upcoming "last minute" trip, which will probably cost $250-300 (travel, parking, and food)... plus we'll have to take a few days off work, which means less money on the following paycheck.