am I doing the right thing taking out loans?

[duhnay]

So, first off, I am going to a public university (in-state tuition in Florida) in a Rehabilitation and Mental Health Counseling Program and I received my undergrad degree in Psychology.

I never had to take out a student loan before b/c I had a bright futures scholarship and very helpful parents and I worked part time throughout my college career...

The only debt I have is 1 credit card and I have 950 dollars I have to pay off on it until I'm debt free.

I have filled out the FAFSA and got a Federal Direct Unsubsidized student loan for 20,000 (for 1 year) with an interest rate of 6.8% and I start repayment 6 months after I graduate.

I also got a grant from my school for $750 for the year that I was planning to use on a computer or to pay off my credit card maybe?

heres the details:

-Estimated tuition (from school website) is $9,640.00 (for 1 year)

-It also says books/supplies for a year will be about $1,000

-I need a computer really bad which will be around $800-900 I am thinking...

-I am planning on working part-time if I can to cover personal expenses and bills

-I have parents that help me pay for my rent and car and I cover all other bills myself with my job...

-I cant get a GA position until my 2nd semester but am planning on applying next semester for sure

so I guess my question is: is taking out about $10-12,000 per year a lot of debt? so that would be like $20-21,000 total for my graduate degree (without taking into account my GA position I am hoping to get, so it may be less)..

thanks for you help/opinions...

oh and also, I have looked at job outlooks and it seems I will have no problem being set up with an internship that will turn into a job at the end of the 2 years but I will not be making top dollar until I get more experience obviously. But, at least its very likely to get a job in the field of mental health counseling when I graduate...

[MDF]

No, comparatively it is a very reasonable amount of debt that will likely result in manageable monthly payments after graduation. Obviously, your employment prospects are something to consider, but you can always spend time during your first year of study applying for scholarships, teaching assistantships, and other forms of aid, and then reassess your need for loans the second year. If you're lucky, maybe borrowing will only be necessary the first year. Good luck!

[duhnay]

Awesome! Thank you for your response! I will look into more opportunities during the first year like you said. Thanks for the advice!

[ImGrumpy]

With all the doom and gloom on student loan debt these days, it makes it hard to realize that students have been taking out loans prior to 10 years ago and they have frequently done just fine. While students' situations now have changed the game and many are taking out unreasonable amounts of debt, you seem very financially responsible and are doing the right thing asking questions and examining your budget before you get into trouble. Overall, $20,000 is a very reasonable sum to take out in educational loans. No more expensive than a new car! Your total monthly loan repayment amount will be about $230 a month on $20,000 total.

I would suggest that you could have more problem with the credit card debt. While $950 isn't a large amount, with high interest rates, you would be better served to get that balance down to $0 and then pay it off each month. If you start getting into that habit now, the $230-$250 a month on your student loans won't impact you so much after you graduate. Any way to earn a little money somewhere before school starts to take a bite out of that credit card debt? You will need a decent computer so if you could earn a little now, (maybe some summer tutoring or maybe one of your relatives could use a hand with something around the house) to either pay for the computer or pay off the debt, you'll be in good financial shape to start your graduate program.

Here is a loan calculator specifically geared toward student loans you can use to calculate your monthly payments at different total loan amounts.

http://www.finaid.org/calculators/loanpayments.phtml

[ANDS!]

If you have no undergrad debt, taking out grad loans is a good option. FYI, everyone gets the 20K (I have yet to see someone who applied for FA and didn't get the full amount). If this is a masters, 20K for two years is a pretty good deal; of course this is all contingent on what kind of job market your degree has, but on the whole it's not a bad move.

[PrattIAFF]

For all of those concerned with the mounting cost of higher education and the rising necessity of student loans to finance it, please sign this petition:

http://signon.org/sign/support-the-student-loan

Since 1980, average tuition for a 4-year college education has increased an astounding 827%. Since 1999, average student loan debt has increased by a shameful 511%.

In 2010, total outstanding student loan debt exceeded total outstanding credit card debt in America for the first time ever. In 2012, total outstanding student loan debt is expected to exceed $1 Trillion.

In short, student loan debt has become the latest financial crisis in America and, if we do absolutely nothing, the entire economy will eventually come crashing down again, just as it did when the housing bubble popped. Reasonable minds can disagree as to the solutions, they cannot, however, disagree on the existence of this ever-growing crisis, as well as the unsustainable course we're on towards financial oblivion.

As a result of more than 30 years of treating higher education as an individual commodity, rather than a public good and an investment in our collective future, those buried under the weight of their student loan debt are not buying homes or cars, not starting businesses or families, and they're not investing, inventing, innovating or otherwise engaged in any of the economically stimulative activities that we need all Americans to be engaged in if we're ever to dig ourselves out of the giant hole created by the greed of those at the very top.

Now for the good news: there's finally hope on the horizon! Representative Hansen Clarke of Michigan has just introduced H.R. 4170, the Student Loan Forgiveness Act of 2012, in the House of Representatives - legislation designed to lend a helping hand to those struggling under massive amounts of student loan debt.

For a brief summary of H.R. 4170's main provisions, please copy & paste this URL into your browser: http://tinyurl.com/7akydbk

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Student loan debt has an undeniable and significant suppressive effect on economic growth. The Student Loan Forgiveness Act of 2012 directly addresses this enormous boot on the neck of the middle class and represents a glimmer of hope for millions of Americans who, with each passing day, find that the American Dream is more and more out of reach.

Therefore, we, the undersigned, respectfully request that Congress bring H.R. 4170, the Student Loan Forgiveness Act of 2012, up for consideration and commit to holding a straight, up-or-down vote on it this year. Thereafter, we, the undersigned, respectfully request that President Obama sign this legislation into law.

[victor.s.andrei]

-I am planning on working part-time if I can to cover personal expenses and bills

If you can, try and find a relevant part-time job that includes tuition assistance. That may help things just a little bit.

[OregonGal]

$20K debt for a 2-year masters, even for one in the public/NPO career sector, is completely reasonable when you have no undergraduate debt. If it would make you feel better, you can run some pretty simple calculations to figure out what your monthly payment will be and what your take-home pay will be like. You can also use a "snowball" calculator to see how aggressively you can pay back your loans for earlier debt freedom. Also, if you can get that GA position most of them make your in-state tuition disappear as part of the perk--even if you only TA for two semesters, that will cut your debt in half.

I ran some quick numbers for you off of the extensive spreadsheets I've been making on my (much higher) expected graduate school debt. These are unsubsidized loans, so at $20000 taken out, about $2500 in interest will build up while you're in school and be added to the principal (capitalize) if you don't pay it down before your grace period ends. That would make your final debt principal $22500. On a 10-year plan at 6.8%, your monthly payment will be around $260.

Now, for snowballing... if you just pay $140 more for a monthly payment of $400 you'll be entirely paid off in less than six years. At $500/month you pay it off in 4.5 years. If you make more than $30,000 a year in most places with reasonable expenses (for a single person) that's completely manageable.

Congratulations, you're one of the few students I've heard of who will be able to pay off their entire undergraduate and graduate student debt within five years of graduation

[butterfingers2010]

Relax! The loan amount that you estimate is actually ver reasonable, in comparison to what others' often take out. With a master's degree in mental health you should definitely be able to get a job that would allow you to comfortably pay that off. It sounds like you're doing all you can to help pay for school, so there's not much else you can do at this point and you shouldn't worry about it. I think you are definitely doing the right thing and you shouldn't second guess yourself. Education is expensive but it's also the best investment you can make in your future.

[duhnay]

Its been a while since I have been on since I started grad school and have been working I just wanted to tell everyone who responded thank you so much for your advice and it has really helped me! I took out 8,000 this first semester (fall 2012) in order to cover tuition which was 4,000 and to get a computer (1,000) and pay my credit card off (1,000) so that leaves me with 2,000 to pay for books (which are around 400) and have money for my gas and food just in case I do lose my job or an emergency happens (since my schedule will not be flexible due to classes, I am worried about not being able to find another part time job that works around my class schedule if something were to happen) I am still happy with my decision to take out a little more than what I was expecting just because I am planning on paying back immediately any of it that I do not use or save it for next semester and just take out less I am hoping to have at least 1,000 left over that I wont have to use! and next semester I will not be purchasing a computer or paying off my credit card so I will be able to stay within my budget from now on hopefully Thank you again everyone for being so kind and helpful!!!!

[ImGrumpy]

Well played duhnay ! Sounds like you have figured this just right and set yourself up to be covered financially under most circumstances without mortgaging your future. Best of luck in both your studies and your future job search.