Borrowing Money After College
Many students form addictions in college, and I had a bad one. Everyone around me was doing it too; it was so easy. So accessible. I started to want it more, to need it. I’d get one supply and run through it in a night, leaving me begging for another dose the next day.
So what was my drug of choice? Borrowed money. And it’s one of the most dangerous things to become dependent on, especially in college. Pushers love to throw money at students like they’re a pack of starved hyenas. Everyone’s primed to borrow hugely irresponsible amounts in the name of “education,” and few are above pocketing the “leftovers.”
But what happens when you graduate? Take it from me—banks are not lining up to loan you the $20,000 you want to pimp out our new pad with a flat-screen TV, surround sound, mirrored ceilings, and a bidet .
However, if you need to borrow money wisely (like to pay that broker’s fee and security deposit on your new apartment), there are resources out there to help you. Here are some options to check out:
The Fam
Like your naked baby pictures, loans are best kept in the family. A banker probably won’t love you like a brother, and if your family is capable and willing, you probably won’t find better terms anywhere else. Don’t be too proud to ask for help. Your family might prefer that you borrow from them rather than get suckered into a high interest deal with a sheisty lender. Just make sure to follow the IRS rules on loans to family members.
Bank Loan
This early in the game, it isn’t likely that recent grads will need (let alone qualify for) a bank loan.
But if we want to start a business or buy a car, it’s worth looking into. Just be prepared to answer a lot of questions and be scrutinized intensely. Traditionally, you don’t apply for bank loans the way you do for credit cards. No “instant approvals” or easy online applications. Instead, you have to sit down with a banker who assesses our credit, collateral, and character before handing out a dime.
Non-traditionally, you could visit a site like LendingTree.com to see how you fare amongst lenders who “compete” for your business. The process is easy and free, so it's a good starting point to see if you get any bites. However, the site sets minimum benchmarks for certain loans so you might not even be able to use it, and bare in mind that you may still get better terms somewhere else.
Peer to Peer Lending Sites
P2P networks are no longer just useful for pirating the new Lil Wayne album. Now there are P2P lending sites like Prosper.com. Prosper is part Myspace, part eBay. Borrowers create personal profiles (with pics!) that tell their personal story of why they need a loan. Then lenders, if moved, bid to help them out! Also, borrowers can have multiple lenders, not just one. Just say you are stuck in Nigeria trying to save millions of dollars from a corrupt government and people will be fighting over you before you know it!
- Say no to credit cards – When at all possible, avoid using credit cards as a line of credit (of course, buying stuff is fine if you can pay off the balance each month). The interest that you have to pay on most cards is about what you’d expect if you borrowed money from the Mob.
- Suitable borrowing options – While we don’t recommend carrying debt on credit cards, lines of credit from a bank such as Wells Fargo and Commerce are a good alternative. P2P lending sites like Prosper.com and LendingClub are another option. And for loans on cars, businesses, and other big-ticket items, check out traditional bank loans.
- Help from the ‘rents – Don’t be ashamed to ask your family to bail you out when you’re in a jam. No other source will be as generous with terms. Just be sure to follow the IRS family lending guidelines.
- Maintain your credit – An important element of borrowing money is ensuring that you have good credit. Get a free credit report at from Equifax, Experian, or TransUnion. Then, learn how to build your credit so that you’ll be able to get that mortgage down the line.
- Start saving – The easiest way to stop borrowing is to begin saving. Get into the habit of putting even a small sum of your paycheck into some type of savings account or investment portfolio every month. Learn more about the power of investing and let your money work for you.
Like Perkins loans, subsidized Staffords are need-based. Loans disbursed for the 2008-09 academic year carry a fixed 6% interest rate. The feds pay the interest until repayment begins, six months after your student leaves school. Borrowers can choose among several 650-175 examw repayment options. nsubsidized Staffords Any student who applies for federal financial aid can get these loans, but interest starts accruing as soon as the loan is disbursed. The rate is fixed at 6.8%. As with subsidized Staffords, borrowers can defer repayment until six 000-330 exam months after leaving school and choose among several repayment plans. Parent Plus You have to pass a basic credit check to get one of these loans, which carry a fixed interest rate of 8.5%. 642-533 exam Repayment begins within 60 days of disbursement, but some lenders let you defer repayment until after your student graduates.
Borrowing money after college is what other people doing especially those who doesn't have their own money to start putting up business. But of course borrowing money have the tendency to encounter defaults on a mortgage or obligation and some will called this a deadbeat. When billionaires or a company supposedly setting high standards like Morgan Stanley does it, it's called strategic default. They decided to simply default on their secured loans for business properties, and return the property to the lenders. Granted, there's a reason for it – if you owe more than a property is worth, there's no point to keeping it, but that being said, if consequences for a normal citizen aren't comparable or less than those for the richest of the rich, then something is definitely wrong.