School is great. I have been in school for 27 out of my 34 years of life and have another 4 to go. But what is greater about school if you are smart and maybe had some money problems in the past is student loans.

Why?

Because they are low interest rate debt that you can defer until you are done going to school provided you are going full time (undergraduate) or half time (graduate).

Student loan rates are now between 4% to 6%, some of the cheapest debt you can fine. The average credit card rate is about 12% to 18% depending on your credit. The average state school provides us broke folks with enough student loan money to pay for both the cost of school as well as a surplus back.

For example, as a graduate student with all my kids and my income I am eligible to receive the full amount of financial aid back. This is $20,000 per school year. The total cost of my books and education for the year is about $5000. This means I am eligible to receive $15,000.00 back in student loan refunds on a 20 year loan, that is about 4% interest, and I won't have to make a payment on it for four years when I graduate...hummmm....

Student loans (federal) are not credit based, so you don't have to go through credit reporting anguish.

So let us do the math. Let us say you had some credit problems in the past and some high debt. You have $4,000 in charge offs, $6,000 in credit card debt and you are struggling making your month to month payment. In my scenario where I will be receiving a student loan surplus of $15,000 if I want it, I could pay off the $10,000 in debt to improve my credit score and not have to make the payments till later (which increases my monthly cash flow) and utilize the additional $5,000 for living expenses.

Is this mortgaging your future by accruing long term debt? Yes and no. Some would say you are avoiding paying now by waiting to have to pay it in the future. But theoretically if you are intelligent about your education, and you control your spending you should come out of college with much stronger earning power. In addition, the interest rate you will be paying in the future will be lower than what you would be paying in the present.

If used right, this can be a good strategy to help your credit problems and get an education to help you increase your earning potential.

Ha!

If you are not politically correct and don't toe the government line, they can call your student loan due in the middle of your education and kick you out of college!

Then suddenly all those student loans come due!

Let's get real!

Not going to happen bud. The process is totally legal, and as long as your are completing your course obligations you will be perfectly fine.

Been there...done that...

And I still don't have an undergraduate degree...

And probably never will...

Not that it matters much any more...

I don't mean to say that it can't be done. But be careful to toe the line of political correctness. The rules can change at any instant. All it takes is an act of congress. Be flexible, and be prepared to compromise your fundamental moral values should the need arise.

Keep all this in mind, and you should be just fine.