I also considered entitling this post, “An Opportunity Cost.” Therefore I believe it would be appropriate to subtitle it as such. Not that this of course is really relevant to the topic at hand, but it’s something that I thought I’d mention, because it might not include the topic of my post tonight but the topic of my post has EVERYTHING to do with decision making and more importantly Opportunity Costs.

I’ll be receiving my associates degree next month and transferring on to finish my bachelors program in Global Management and Leadership at Arizona State University. Thus far in my post-high-school education tuition has been relatively cheap all things considered, however my tuition costs are going to almost triple when I begin my junior year at ASU in the spring. I mentioned earlier in The Worst Years of My (Financial) Life how poor money management and low wages earned me a place in “debt hell” and that I had to use student loans to subsidize my poor income and massive levels of credit card debt. At that point in my life I had no other choice but to take out a loan to consolidate my debt and pay for my tuition expenses that I could not afford on top of my living expenses. Now I come to another point where I am facing student loans, but this time it is not something that must be done, but something that I am considering doing. Let me explain…

Deidre and I have managed to save up enough to pay for my tuition in cash and still manage to keep some money in an emergency fund. Some money is not much money though and I don’t know how comfortable I would be depleting my emergency fund to only a months worth of expenses when I can potentially take out a subsidized student loan and maintain a comfortable emergency fund of 4 to 6 months expenses. I’ll list out the pros and cons of taking out the subsidized loan and then I’d ask for you to share your comments and/or experiences about the subject.

Pros

• Interest is paid for by the government until I graduate, thus potentially giving me an interest-free loan if I pay it off at graduation.
• We would have more cash in our emergency savings to cover any necessary expenses while I’m still in school.
• Cash saved could earn us interest.

Cons

• Debt. I’d have more debt which could potentially negatively affect my credit and my net worth.
• After graduation I’d be responsible for repaying the loans, and any applicable interest which could be a significant amount depending on how much I take out in loans.

What are your opinions on the matter? I’m still a little unsure what I’ll do. Of course I also will be applying to scholarships and other forms of financial aid in the meantime, but I’ve only a month until tuition is due. At this point I’m leaning more towards taking out the student loan, but of course I would only go for this option if the loan was subsidized by the government. If you have any experience with this or an opinion I’d love to hear it. Please leave your comments!

Beware of excess of loans and maintain checks as carelessness might lead one to debt consolidation, not just the cancellation of your travel insurance.