How to decide which private student loan is right for me?
"I speak from a position of experience, My BS and MS are both in Comp Sci. I know very little about loans or finances. That is very unfortunate as you are obviously an intelligent human being.  Perhaps this is a good time to pause your formal education and get educated in personal finance.  To me, it is that important. I study computer science, and am thus confident that I will be able to find work after I finish school. This kind of attitude can lead to trouble.  You will likely have a high salary, but that does not always translate into prosperity.  Personal finance is more about behavior then mathematics.  I currently work with people that have high salaries in a low cost of living area.  Some have lost homes due to foreclosure some are very limited in their options because of high student loan balances.  Some are millionaires without hitting the IPO/startup lotto.  The difference is behavior. It's possible that someone in my family will be able to cosign and help me out with this loan. This is indicative of lack of knowledge and poor financial behavior.  This kind of thing can lead to strained relationships to the point where people don't talk to each other.  Never co-sign for anyone, and if you value the relationship with a person never ask them to co-sign. I'll be working as a TA again for a $1000 stipend. Yikes!  Why in the world would you work for 1K when you need 4K?  You should find a way to earn 6K this semester so you can save some and put some toward the loans you already acquired.  Accepting this kind of situation ""raises red flags"" on your attitude towards personal finance.  And yes it is possible, you can earn that waiting tables and if you can find a part time programming gig you can make a lot more then that.  Consider working as a TA and wait tables until you find that first programming gig. I am just about done with my undergraduate degree, and will be starting graduate school at the same university next semester. To me this is a recipe for failure in most cases.  You have expended all your financing options to date and are planning to go backwards even more.  Why not get out of school with your BS, and go to work?  You can save up some of your MS tuition and most companies will provide tuition reimbursement.   Computer Science/Software Engineering can be a fickle market.  Right now things are going crazy and times are really good.  However that was not always the case during my career and unlikely for yours.  For example, Just this year I bypassed my highest rate of pay that occurred in 2003.  I was out of work most of 2004, and for part of 2005 I actually made less then when I was working while in college.  In 2009 my company cut our salaries by 5%, but the net cost to me was more like a 27% cut.  In 2001 I worked as a contractor for a company that had a 10% reduction in full time employees, yet they kept us contractors working.   Recently I talked with a recruiter about a position doing J2EE, which is what I am doing now.  It required a high level security clearance which is not an easy thing to get.  The rub was that it was located in a higher cost of living area and only paid about 70% of what I am making now.  They required more and paid less, but such is the market.  You need to learn about these things! Good luck."
Student loan is a class of unsecured loan.  The characteristics that define a student loan are, primarily, that it is a loan that is intended to be used by someone who is currently a student.  Beyond that, though, there are many variations. The different kinds of requirements usually have to do with who is eligible for the loan, and with what the loan is allowed to be used to pay.  Some loans have other limitations, such as only being allowed to be directly paid to the institution. Some student loans are federally guaranteed (meaning the Federal Government will repay the bank if you default).  Those have a lower interest rate, typically, and often have more stringent requirements, such as only full-time students being eligible, being need-based, and limitations on what the loan's funds can be used for.  See studentaid.ed.gov for more information. Many private student loans have quite lax limitations. Some for example have nearly no limitation as to what they can fund; many are allowed to be taken out by part-time students and even non-degree-seeking students in some cases.  Private loans usually have somewhat higher rates (as they're entirely unsecured) to go along with the lower restrictions and higher borrowing limits.  You'd have to see the specific details of any particular loan to know what it's allowed to pay for, so if you choose this route, know what you plan to use it to pay for before you go looking. "I've been taking all the cheap fixed-rate debt banks would like to give me lately. What Rate? In practice I find the only way I get a low-enough rate on a longish-term fixed-rate loan is to use collateral. That is, auto loans and home loans. I haven't seen any personal loans with a low enough fixed rate. (Student loans may be cheap enough if they're subsidized, I guess.) Here's how I think of the rate: If you look at https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations , the average annual return on 80% bonds / 20% stocks is 6.7%, with worst year -10.3%. That's a nominal return not a real return. If you subtract taxes, say your marginal rate (the rate you pay on your last dollar of income) is 28% federal plus 5% state, then if you have no tax deferral the 6.7% becomes about a 4.5% average, with reasonably wide variation year-by-year. (You can mess with this, e.g. using tax-exempt bonds and tax-efficient stock funds, etc. which would be wise, but for deciding whether to take out debt, getting too detailed is false precision. The 6.7% number is only an average to begin with, not a guarantee.) Say you pay 4.5% on a loan, and you keep your money in very conservative investments, that's probably at least going to break even if you give it some years. It certainly can and sometimes will fail to break even over some time periods, but the risk of outright catastrophe is low. If your annual loss is 10%, that sucks, but it should not ruin your life. In practice, I got a home loan for close to 4.5% which is tax-deductible so a lower effective rate, and got an auto loan subsidized by the manufacturer for under 3%. Both are long-term fixed-rate loans with collateral. So I was happy to borrow this money paying about a 3% effective rate in both cases, well below my rough threshold of 4.5%. I do not, however, run a credit card balance; even though one of my cards is only 7% right now, 7% is too high, and it's a floating rate that could rise. The personal loans I've seen have too-high rates also. Thoughts Overall I think using debt as a tool requires that you're already financially stable, such that the debt isn't creating a risky situation. The debt should be used to increase liquidity and flexibility and perhaps boost investment returns a bit. Where you're likely to get into trouble is using debt to increase your purchasing power, especially if you use debt to buy things that aren't necessary. For me the primary reason to use debt is flexibility and liquidity, and the secondary ""bonus"" reason is a possible spread between the debt rate and investment returns." You should really talk to a lawyer about criminal concerns. There may be some. Does USA credit score transfer to other countries? The USA doesn't do anything with credit scores. In the USA credit records are maintained by private companies who provide the information to your creditor. There's no legal limitation for the creditors to be within USA, only that you allow access. So bottom line - technically it is possible for foreign creditors to get that information. If you don't have local credit score, it is likely that they will. Will someone come after me? Depends on the loan managers. Civil suite is possible, since you cannot discharge student loans in bankruptcy. How likely is it? Probably not very likely. Could I be extradited? Only if a criminal complaint is filed and the country you're at has an extradition agreement with the US. Would I be arrested if I ever came back to visit a family member? I'm not sure on this. I believe it is possible for a lender to have your passport taken by a court, but I don't think you can be actually arrested unless there's a criminal charge. But as I said - I believe your passport may be taken away from you when you come to the US, to prevent you fleeing without paying the debt. Would someone go after my family to collect the debts? Can they do that? Unless they co-signed, or they have control over your assets - unlikely. Could the USA somehow garnish my pay in another country? Yes, if a court decides so. That would have to be a court in that country though. In addition: The US can freeze your assets abroad if you keep them in a FATCA-compliant institution (which is almost any bank, nowadays). Also, when you die, the US may (and probably will) demand a portion of your estate to pay the debt. Talk to a lawyer about additional issues and concerns. "This is the best tl;dr I could make, [original](http://www.reuters.com/article/us-usa-consumers-loans/u-s-cracks-down-on-debt-collection-of-private-student-loans-idUSKCN1BT26G) reduced by 73%. (I'm a bot) ***** &gt; WASHINGTON - The U.S. consumer financial watchdog on Monday ordered National College Student Loan Trusts and its debt collector, Transworld Systems Inc, to pay at least $26.1 million for attempting to collect on possibly non-existent or out-of-date loans.  &gt; According to the CFPB, the collection of 15 trusts purchased and securitized more than 800,000 private student loans, and then sold notes to investors.  &gt; Last summer the CFPB, charged with guarding individuals against predatory lending, proposed toughening regulation of debt collection industry after fielding thousands of complaints from people contacted about debts they did not owe or illegally harassed by collection agencies.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/70z1th/us_cracks_down_on_debt_collection_of_private/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~212498 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **debt**^#1 **Loan**^#2 **CFPB**^#3 **Trusts**^#4 **collection**^#5" "Let me run some simplistic numbers, ignoring inflation. You have the opportunity to borrow up to 51K. What matters (and varies) is your postgraduation salary. Case 1 - you make 22K after graduation. You pay back 90 a year for 30 years, paying off at most 2700 of the loan. In this case, whether you borrow 2,800 or 28,000 makes no difference to the paying-off. You would do best to borrow as much as you possibly can, treating it as a grant. Case 2 - you make 100K after graduation. You pay back over 7K a year. If you borrowed the full 51, after 7 or 8 years it would be paid off (yeah, yeah, inflation, interest, but maybe that might make it 9 years.) In this case, the more you borrow the more you have to pay back, but you can easily pay it back, so you don't care. Invest your sponsorships and savings into something long term since you know you won't be needing to draw on them. Case 3 - you make 30K after graduation. Here, the payments you have to make actually impact how much disposable income you have. You pay back 810 a year, and over 30 years that's about 25K of principal. It will be less if you account for some (even most) of the payment going to interest, not principal. Anything you borrow above 25K (or the lower, more accurate amount) is ""free"". If you borrow substantially less than that (by using your sponsorship, savings, and summer job) you may be able to stop paying sooner than 30 years. But even if you borrow only 12K (or half the more accurate number), it will still be 15 years of payments. Running slightly more realistic versions of these calculations where your salary goes up, and you take interest into account, I think you will discover, for each possible salary path, a number that represents how much of your loan is really loan: everything above that is actually a grant you do not pay back. The less you are likely to make, the more of it is really grant. On top of that, it seems to me that no matter the loan/grant ratio,  ""borrow as much as you can from this rather bizarre source"" appears to be the correct answer. In the cases where it's all loan, you have a lot of income and don't care much about this loan payment. Borrowing the whole 51K lets you invest all the money you get while you're a student, and you can use the returns on those investments to make the loan payments." You need to protect from two types of disasters. You need to set a goal. In 5 years I will have X months of emergency funds. Then start building it. You can also make sure that any found money (birthday check from your grandmother or bonus check at work) goes into building the fund.  While is seems a waste to pay all that interest for the student loans, you may decide that having an emergency fund is more important. Note: don't mix the two types of emergency funds. It is less confusing to have two sub accounts, because it avoids the double counting of the funds. Strictly from an ROI perspective, this is likely very dependent on your field.  Some masters degrees (quant finance, business, engineering) will be well worth the debt, since a degree from the right university will yield a respectable ROI, whereas other degrees/fields (philosophy, fine arts, etc) will be basically a waste of money. Regardless of the field you can input your information into an ROI calculator and see what you get.  I typically err on the side of using the lowest average reported salary for the degree programs you're considering (self reported salary data is notoriously inflated). "The rate difference between your student loans and the historical yearly average growth in the S&P500 isn't large enough for me to play the ""pay minimums and invest the rest"" strategy.  If your loans were 2%, I might think about it. However, the 4% loans are guaranteed and mandatory expenses; discharging them even in bankruptcy is unlikely.  The quicker you pay them off, the sooner you won't have them hanging over your head in case of a ""financial setback"" (job loss, large expense uncovered by insurance, etc). (One good reason to pay the minimums, though, is to build up a $1K emergency fund.  When your debts are paid, then you can increase its size.)"