Please don't judge me!

[wb.john]

Both the subsidized and unsubsidized federal student loans are basically a same-as-cash deal. If you return the money within a certain time period (I believe 6 months) you are not charged any interest, fees or anything.

I used this to my advantage when I was attending B&M schools. I took the maximum student loan amounts (stafford subsidized and unsubsidized) and I kept the money in a savings account to earn interest then repaid it before the time was up. This had not only the effect of earning me a little extra in interest (which, btw, more than made up for the origination fee*), but also it raised my credit score and my auto and home insurance went down. You can't really do that with a $2,000 limit credit card.

Note that you don't have to make any payments on the student loan during that "free" period, where even with a 0% "introductory" credit card, you will have to start making payments within a short time (probably maximum 60 days) and if you're late or miss a payment, you will incur a fee and a rate hike.

In addition, if you do have to enter a repayment plan on the student loan (and I'd suspect someone poor enough to receive a full Pell has a very high chance of that), your interest is tax deductible later when you do start working. Not so with credit card interest. You also start running into very high fees if you're late or miss payments with credit cards. I suppose on the downside of student loans if you ever declare bankruptcy they are pretty much impossible to discharge.

Also, origination fees on Stafford loans are ridiculously low, like 1%. You'd more than make up for that on the high credit card interest rate in the event you had to enter a repayment plan. I also thought these fees were phased out last year, though I'm not sure on that, I'm not using loans at this point so haven't looked into all the recent changes to them.

This is a small, short-term debt. I wouldn't want to deal with the hassle of getting a student loan when it offers no advantage.

I don't know why I bothered to get involved in this at all, it was a mistake on my part. It won't happen again. If she wants to finance her education with credit cards when she has better options, or change schools because she can't have her heart's desire printed on the diploma, or whatever else it will be tomorrow...well, good luck with that.

I think CS7's primary concern is the legitimacy of the degree, not what is printed on the diploma.

I don't understand why a forum that is usually supportive has turned so sour towards CS7.