maximising student loans

[ouchitburns]

I have a technical question for anyone who may know the answer. I will phone BCSAP if it is not known here:

 

Say I have $10000 in the bank and a $10000 outstanding student loan. In order to get the most in students loans should I:

 

a) maintain the status quo?

pay off the student loans bringing my savings to zero?

 

Thanks

[Olu]

either way your net value in the eyes of the bank is effectively zero.

 

If you pay off the loan right away you will incur less cost of lending (interest) fees.

 

The bank smiles on those with little debt (especially with today's credit markets). If you maintain the status quo, the bank has no guarantee taht the 10k cash you have will not go towards a vacation in vegas blown on hookers and craps. I would think paying the loan is definitely the way to go

 

Speak with an actual financial advisor of some kind before you do anything however.

 

just my humble opinion

[ouchitburns]

Thanks for the reply.

 

I am not all that interested in the bank. I assume that they will think more about my situation. I am concerned about the government student loans. They may not think about it but just see the $10000 in bank and so "no loans for you."

 

Or not, maybe they will subtract off the outstanding debt? I would rather keep the money so that I don't have to use the LOC until the last possible minute but I also want as much in student loans as possible.

 

I should just phone BCSAP.

[Olu]

When it comes to credit, the government and the bank will generally look at similar considerations - there's a pretty standard formula for all of this.

 

Credit is essentially based on three things

1)Your credit history

2)Your net worth

3)Your total debt services - how much of your income goes toward replaying other liabilities.

 

The government will likely look at your 10k cash and your 10k loan and also say that you effectively have zero money.

 

I would phone BCSAP anyway, but its just something to think about

[avenir001]

hmm...i think they add all your resources vs all your expenses and calculate the balance u should get...i think on your govt loan application you have to say how much you have in bank accounts and they will count it as a resource and subtract it from the total u would get. but ask to be sure.

[ouchitburns]

just called BCSAP.

 

the person on the phone said that they look at the money in the bank as a resource and DO NOT take into account outstanding loans.

 

That sucks.

[MillerTime]

I posted this link in another section earlier today, but I'll post it here too because there's some stuff in it that may help you or others.

 

It is a thread in another forum regarding OSAP tips/advice/questions where there's a guy who used to work for them a few years ago who answers most questions people have.

http://www.redflagdeals.com/forums/showthread.php?t=324149&highlight=osap

 

It would not be beneficial to pay off the $10,000 with your savings, because then when whatever loans you get run out, you're paying interest on money from a LOC. If you leave the $10,000 in student loans (gov't loans i'm assuming), they're not accumulating any interest until after you're done school, so why bother rushing to pay them off when it will lead to you spending more from a LOC which definitely isn't interest free while you're in school.

 

The best thing in this situation would be for you not to have $10,000 in your name, but to still have access to the funds so that you can use them when needed, such as a joint account with a parent or something, where you can put that money, and then there is no way for someone to say that that money is definitely yours. Nothing wrong with a monetary gift to someone close who you would trust to hold a joint account with, and then they can claim the interest for tax purposes or whatever, and then you don't have $10,000 in your name (but you still have access to it).