Unsubsidized Stafford Loan - good or bad?

[alaskagirl]

Hello!

So I recently checked my financial aid and found that I've been awarded the Unsubsidized Stafford Loan. It's a lot of money for the first year, it would go a long way to help me pay for it, and I wouldn't have to pay it back until I'm done with school. 

 

But I'm wondering if it's worth it. Which sounds horrible, I know, but I already have a loan with my car that I need to pay off. And I'm not entirely sure how the loans work - I know they'll automatically pay off my school payments and then give the rest to me, I know it'll have interest as soon as it pays the school, I know I don't have to pay it back until I'm done with school. But really, is it that simple? 

 

And is this loan a good one or should I try for a different one?

 

What have others done?

 

Thanks!

[GeoDUDE!]

i personally wouldnt go into any debt to go to graduate school. So worth it is a subjective term.

[Bleep_Bloop]

While federal education loans are better than commercial loans from a bank, you should still be wary of unsubsidized loans because, like you mentioned, they'll begin accruing interest immediately and that won't stop even if you're in deferment (unlike subsidized federal loans). If you can, obviously try for a subsidized loan. It's been a while since I've had to deal with applying for educational loans (since my senior year of high school), but I would assume that the earliest you'd be able to get a subsidized loan would be next year, assuming your finances change. And I agree with GeoDude, I personally wouldn't take out loans for grad school in the first place, but if you have to...what you described would be better than taking a loan from a bank, but that's not saying much.

[Between Fields]

IIRC, grad students aren't eligible for subsidized loans. (I googled it, before posting, and I was right: http://www.usnews.com/education/best-graduate-schools/paying/articles/2012/03/13/grad-students-to-lose-federal-loan-subsidy)

 

I have some unsubsidized loans. My undergraduate debt was very small, and I needed them for various reasons. It is what it is. Better than private, but still a loan. It -is- as simple as you understand it, mostly. You have a six month grace period from the first point you graduate or drop under half-time status to begin repayment, and there are a number of different payment plans you can look into.

[hnotis]

On top of what everyone else has said, I'd just like to chime in and say that, at this point, an unsubsidized loan is essentially the best you can get (aside from not taking loans out period).  The interest rate is better than private loans and it's even better than a Grad plus loan would be.  In terms of loans, Staffords are the way to go if you have to go that way.

[geographyrocks]

On top of what everyone else has said, I'd just like to chime in and say that, at this point, an unsubsidized loan is essentially the best you can get (aside from not taking loans out period).  The interest rate is better than private loans and it's even better than a Grad plus loan would be.  In terms of loans, Staffords are the way to go if you have to go that way.

This. If you need money for school, this is your only option if you aren't awarded an assistantship, scholarship, or grant. But start applying for those three things.

[bioo]

If you have the opportunity to not take out loans for grad school, goog for you! But you guys really need to stop emphasizing the "I wouldn't take out loans for grad school bla bla" Some people have NO other choice at all than to take the loans. Because, the option of not going to grad school is probably worse. SO, it's not like anybody would take loans just for the fun of it. After all, we would all like to be able to say "I have no student loans", but newsflash; not all of us can say that! I just thought to say this out there as many people are always very obnoxious when talking to people that have opted to take loans for grad school. I assume we are adults and know the responsibility we are getting ourselves into. 

  Instead, advice people to take loans responsibly but talking about how you would never take loans for grad school is just a waste of your time. People who need to would definitely do.

[redheadacademic]

Bioo, I understand the sentiment but I have a feeling what people are trying to say (and a lot of people don't know this, I did not when I started thinking about PhD programs) that you should not go to an unfunded PhD program. A PhD program will offer full tuition and a stipend of some sort to the students they really want in their programs, and in the vast majority of cases an unfunded PhD acceptance is little more than a rejection by another name. GradCafers, please correct me if I am wrong here. Master's degrees are different though - obviously funded would be ideal, but there are very few funded master's degrees out there, and in quite a few fields you need a master's degree in order to be accepted into a PhD program. I took out loans for my master's (and I did get almost half of those as subsidized Stafford loans, about two years ago) - I am now in a fully funded PhD program with a stipend. 

[RBWilliams]

I agree with Bioo.  Not "Everyone" can afford to pay for grad school and loans are their only options.  Obviously, if folks can get subsidized, grants, scholarships, stipends or whatever, they will.  If you are determined on Grad School, do what you have to do loan wise.  Definitely better than a regular loan, plus, it is good debt on your credit report.  

[seeingeyeduck]

I think it's highly dependent on the amount. It may be a good idea to take on $20k of debt for grad school, but $100k is a whole other matter. Yes, some have no choice if they want to go to school but then they have to get a job that pays enough to handle that amount of debt after.

While that's possible for some, it's not likely for most. People are just trying to point that out. If you're going to school to try to better your life and you come out with unmanageable debt, that isn't going to better your life, so what's the point? In fact it may make your life more stressful than it would be if you just hadn't gone to school. Student loans aren't even forgiveable in bankruptcy, am I right? The debt will really be with you forever if it's a lot of money.

There isn't any one general way to think about it. It all comes down to whether you think you can really afford to pay it back after.

[alaskagirl]

Thank you for all the thoughtful responses! I really appreciate them! I hope I don't have to take out a loan, honestly, but I may have to down the line.

[Vene]

If you have the opportunity to not take out loans for grad school, goog for you! But you guys really need to stop emphasizing the "I wouldn't take out loans for grad school bla bla" Some people have NO other choice at all than to take the loans. Because, the option of not going to grad school is probably worse. SO, it's not like anybody would take loans just for the fun of it.

The issue is that most graduate degrees have funded options even if they are more competitive. Also this is not like undergrad where your option is working fast food. Everyone applying to graduate school either has or will have a bachelor's degree and professional level jobs should be an option. A graduate degree primarily teaches people to be academics and this is not something where a loan makes good fiscal sense especially considering that graduate tuition is often double undergrad rates. Add into this that the academic job market is harsh if you can't get into a funded program you are not likely to get a tenure track job afterwards.

If you are looking at a field where the pay outside of academia really is that high then by all means go for it, but that's pretty rare. Those trend to be professional degrees which are a very different beast.

Edited July 14, 2014 by Vene

[GeoDUDE!]

Bioo, I understand the sentiment but I have a feeling what people are trying to say (and a lot of people don't know this, I did not when I started thinking about PhD programs) that you should not go to an unfunded PhD program. A PhD program will offer full tuition and a stipend of some sort to the students they really want in their programs, and in the vast majority of cases an unfunded PhD acceptance is little more than a rejection by another name. GradCafers, please correct me if I am wrong here. Master's degrees are different though - obviously funded would be ideal, but there are very few funded master's degrees out there, and in quite a few fields you need a master's degree in order to be accepted into a PhD program. I took out loans for my master's (and I did get almost half of those as subsidized Stafford loans, about two years ago) - I am now in a fully funded PhD program with a stipend. 

 

 

Most of the masters students at my pervious department were funded (waiver + stipend) and all of the students (masters and PhD) are funded at my new department. This is the case with many programs. The difference is that the amount of people applying to some subjects is high, so only the best admitted students get funded, and the rest is used as a cash cow. 

 

In my opinion, an unfunded MA/MS, non professional degree, is a rejection just like like an unfunded PhD.