$10k from Student Loans

[liebo11]

Hi I'm J I'm new to this forum and have a few questions...hope i'm placing them in the right section...ok so I have around $80k in student loans out after finishing my masters and right now have $10k of it in my savings account just sitting there...right out of college I worked for a private equity trading firm (basically day trading on their dime) and did this for around 7-8 months...My question is...should I try to be trading with this money to make back what I owe in student loans? should i be investing it in something right now to get interest on it? remember on the $80k of debt I have there's an average of about 6%-7% APR...Or I can just send it back to the bank but I will basically have no emergency fund whatsoever or spending money because right now I'm not working while going to school full time (trust me i'm looking for employment its not easy right now in this economy :-/ ) So what to do what to do...do i take the risk of trying to make some money back in the market? invest it? send it back? i'm really not sure what to do but i do know i'm pretty nervous/pissed that i have to pay around $300 a month for the next 25 years to pay back my loans...thanks in advance

[adstalker]

You dont need us to tell you that day trading is risky. Are you getting paid a salary or only from trading profits? If you dont have an steady income, you should definitely keep some money in savings as an emergency fund.

[liebo11]

no i'm not trading currently for a firm...i'm not even trading for myself...i just feel like the $10k sitting in my savings is a complete waste right now so i should either try to do something with it or send it back i dunno?

[liebo11]

yeh thanks for the advice i know i definitely need a job but my question really is what to do with this $10k thats just sitting there?

[gambler2075]

Originally Posted by liebo11

My question is...should I try to be trading with this money to make back what I owe in student loans?

What Can I Use My Loan Money For - Is it Illegal to Invest My Student Loans - Can I Use Mortgage Dollars for Anything

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[liebo11]

yeh i already looked into that and spoke to people...they said my type of loans are perfectly legal to do whatever i want with the money cause its 100% my money...i just am not sure what to do and no one seems to have any real opinion haha...i feel like i'm the first person ever in this situation

[jpg7n16]

Originally Posted by liebo11

i feel like i'm the first person ever in this situation

You're saying that you're the first person who ever considered whether they should pay down debt or invest to earn a higher rate of return??

I see that post like every other day.

That's your question in a nutshell - you just happen to have a very aggressive and risky investment strategy.

Technically, you did not borrow the money under false pretenses, claim school expenses and instead use the money to gamble in the stock market, so you're legal there. The funds were originally used to pay for schooling, and you have built up excess above the required payment. There's nothing illegal about building up assets beyond your required payments.

But....

In order to daytrade, you have to have a margin account with $25k minimum equity in it, so you're out of luck there.

You should probably just keep a portion liquid to have some sort of a cash buffer, and use the excess to start paying down the debt.

From: FINRA - Day Trading Margin Requirements: Know the Rules

Summary of the Day-Trading Margin Requirements

The rules adopt a new term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades. The required minimum equity must be in the account prior to any day-trading activities. If the account falls below the $25,000 requirement, the pattern day trader will not be permitted to day trade until the account is restored to the $25,000 minimum equity level.

[papa_squat]

Originally Posted by liebo11

Hi I'm J I'm new to this forum and have a few questions...hope i'm placing them in the right section...ok so I have around $80k in student loans out after finishing my masters and right now have $10k of it in my savings account just sitting there...right out of college I worked for a private equity trading firm (basically day trading on their dime) and did this for around 7-8 months...My question is...should I try to be trading with this money to make back what I owe in student loans? should i be investing it in something right now to get interest on it? remember on the $80k of debt I have there's an average of about 6%-7% APR...Or I can just send it back to the bank but I will basically have no emergency fund whatsoever or spending money because right now I'm not working while going to school full time (trust me i'm looking for employment its not easy right now in this economy :-/ ) So what to do what to do...do i take the risk of trying to make some money back in the market? invest it? send it back? i'm really not sure what to do but i do know i'm pretty nervous/pissed that i have to pay around $300 a month for the next 25 years to pay back my loans...thanks in advance

Welcome! Just curious if I'm reading this right... you say you've completed your masters degree, but you're currently in school full time? Are you pusuing a different career path?

Anyway you slice it, you need an emergency fund, especially if you are currently unemployed. I'd think that $10K should go to any expenses not currently covered by student loans; otherwise, you could put some toward a Roth IRA or something to get a jump on retirement. Definitely try to supplement student loans with any income you can (I worked at Subway during college and saved a fantastic bit of money working there--they even offered IRAs for part-time employees and a free sandwich each shift).

EDIT: Now that I reread your statement, you're saying that $10K is leftover from your student loan disbursement? A lot of this sounds fishy. I would think there would be some restrictions on how you can use the money if you can deduct the interest on student loan payments, but I'm not positive.

[emanon1501]

You know the risk and why you should do whats right. However, you are young and you are allow to make mistakes and take risks. You have your whole life to make more money and pay off the student loan.

[liebo11]

I am in the midst of graduation from grad school after this summer...They send you a check for the left over amount from your "maximum loan." So yes...I have $10k thats just sitting there which i can either a) send back b) continue doing nothing with or c) try to make money off of it by investing it in anything (trading, savings account, c/d etc.) What would you guys do?

[JoshuaHeckathorn]

Since you have no EF, I would keep about $5K or so in an online savings account until you're able to secure a job and at least build a modest EF of your own. Then I would use the rest as soon as possible to begin paying down your debt.

[jpg7n16]

Originally Posted by liebo11

I am in the midst of graduation from grad school after this summer...They send you a check for the left over amount from your "maximum loan." So yes...I have $10k thats just sitting there which i can either a) send back b) continue doing nothing with or c) try to make money off of it by investing it in anything (trading, savings account, c/d etc.) What would you guys do?

Originally Posted by jpg7n16

...You should probably just keep a portion liquid to have some sort of a cash buffer, and use the excess to start paying down the debt.

I like Joshua's recommendation for $5k kept in cash, and $5k used to start paying down the debt.

[snafu]

To re-state, you mortgaged your life by choosing to borrow $ 85,000. to fund a university degree to Masters level. Thus far you've been unsuccessful obtaining employment and are 'pissed' that you will be paying $300. a month for the next 25 years. You worked as a day trader for commission or mrely bet your own $$$? What work did you do over the past 5 summers that would lead to career employment? What work are you willing to do to cover your expenses and money borrowed? Where are you willing to live to gain employment?

[alac1980]

i'm just curious and forgive me for asking...but what is up with the 25 year repayment term on the student loan?! mine is set up to be repayed in a term of approx 120 months, which is nowhere near 25 years. i live in canada, and i think 120 months is nationwide on federal loans.

[liebo11]

there are several different options that i saw when i looked for the repayment plan...one was 10 years, one was 15 years, and then there is another that is 25 years...i'm definitely gonna find out more about it soon but so far i'm pretty sure only 1 or 2 people answered my immediate questions haha...i'm not quite sure what snafu and others are trying to say...i understand exactly what i did and didn't do i'm just curious as to what you guys would do with the question i asked...thanks for whoever answered