Hi everyone. I'll soon be graduating with a BSME. I've accumulated alot of debt in student loans over the years and I was wandering how common it is for companies to agree to pay off those loans for engineers. I was never comfortable bringin up the subject during interviews but now that I'm getting offers I would like to bring it up but I need to know what to expect. Any advice on this matter would be appreciated.
Tek-Tips is the largest IT community on the Internet today!
Members share and learn making Tek-Tips Forums the best source of peer-reviewed technical information on the Internet!
-
Congratulations cowski on being selected by the Eng-Tips community for having the most helpful posts in the forums last week. Way to Go!
Company paying off student loans 16
- Thread starter redkardz
- Start date
SS makes a VERY good point about 401Ks. While there is a pre-tax contribution limit of around $15,000, some companies will match up to 6% of your salary. Moreover, some companies allow after-tax contributions as well. At one point in time, I was getting about $24K per year deposited into my 401K. If you're doing that diligently from the start, you'll have a pretty nice stash later on.
TTFN
FAQ731-376
TTFN
FAQ731-376
I have always been told dealing with finances is.
A) Pay off credit cards
B) Max out 401K company "match"
C-Z) All other financial concerns, buy land is somewhere in here.
Z) Set bank to auto-pay student loan Minimums.
The student loan is "free" money which establishes a good long term credit history.
A) Pay off credit cards
B) Max out 401K company "match"
C-Z) All other financial concerns, buy land is somewhere in here.
Z) Set bank to auto-pay student loan Minimums.
The student loan is "free" money which establishes a good long term credit history.
- Thread starter
- #63
Yeah, I guess you guys are right. I just never thought debt from student loans had any advantages. I always figured the sooner I pay them off the better. If the interest on the loan is 7% but if I can invest in something that will return more that 7% I could actually make a little more money by not putting it all toward the loans. Is that the thought process behind this? I'm curious to see what kind of tax breaks these will net.
Paying the "normal" repayment plan for my loan would = $1000/month for the next 10 years. That's about 1/4 of my monthly salary after taxes. What is "normal" for most people to pay on their student loans: amount and year?
I'm already planning on having my 6% deducted for the 401K and would like to start putting money into a Roth as soon as possible.
I've been working on building good credit for a few years now. I pay for everything with credit cards but almost always pay off the balance each month. After buying 6 cars with cash, I finally bought one with a loan this summer.
I try to be responsible with money; if I keep that up then it looks like these loans won't be as much of a burden as I had thought.
Thanks for boosting my spirits about money!
Paying the "normal" repayment plan for my loan would = $1000/month for the next 10 years. That's about 1/4 of my monthly salary after taxes. What is "normal" for most people to pay on their student loans: amount and year?
I'm already planning on having my 6% deducted for the 401K and would like to start putting money into a Roth as soon as possible.
I've been working on building good credit for a few years now. I pay for everything with credit cards but almost always pay off the balance each month. After buying 6 cars with cash, I finally bought one with a loan this summer.
I try to be responsible with money; if I keep that up then it looks like these loans won't be as much of a burden as I had thought.
Thanks for boosting my spirits about money!
redkardz,
It sounds like you have a good handle on where you need to be going, financially.
Your student loan interest paid will be deductible for the first 5 years. You do not have to itemize deductions to claim the deduction, either.
7% interest sounds pretty high to me for a student loan. Have you looked at consolidating? Perhaps that is just the loan rates at this point. If you have not looked at consolidating, you should for a fixed (hopefully) lower interest rate. It may be a little harder to come by a consolidation loan due to the financial market turmoil but as a full-time employed engineer, I imagine you are a pretty "safe" risk.
Along with that, I think I remember seeing that you have $70,000 or $100,000 in loans??? Loan amounts that high can be extended up to 30 years. I do not advocate paying for student loans for 30 years but if your payments will take 25% of your salary, you might want to extend out to 15 or 20 years. If you can get a 4% or 5% consolidation loan for 15 or 20 years, then set it up to have your payments automatically deducted, you can improve your situation greatly. Sallie Mae also has a deal that if you make your payments on time for for the first 60 payments (easy with automatic payments), they lower the interest rate by 1%. Your payments stay the same but you pay off your loans earlier due to the lower interst rate.
It sounds like you have a good handle on where you need to be going, financially.
Your student loan interest paid will be deductible for the first 5 years. You do not have to itemize deductions to claim the deduction, either.
7% interest sounds pretty high to me for a student loan. Have you looked at consolidating? Perhaps that is just the loan rates at this point. If you have not looked at consolidating, you should for a fixed (hopefully) lower interest rate. It may be a little harder to come by a consolidation loan due to the financial market turmoil but as a full-time employed engineer, I imagine you are a pretty "safe" risk.
Along with that, I think I remember seeing that you have $70,000 or $100,000 in loans??? Loan amounts that high can be extended up to 30 years. I do not advocate paying for student loans for 30 years but if your payments will take 25% of your salary, you might want to extend out to 15 or 20 years. If you can get a 4% or 5% consolidation loan for 15 or 20 years, then set it up to have your payments automatically deducted, you can improve your situation greatly. Sallie Mae also has a deal that if you make your payments on time for for the first 60 payments (easy with automatic payments), they lower the interest rate by 1%. Your payments stay the same but you pay off your loans earlier due to the lower interst rate.
- Thread starter
- #66
Thanks; monthly take home will be roughly that much. I decided to accept their offer as given after discussing the situation in this thread. They are also giving me 5k for "relocation expenses". The last thing I wanted to do was P/O anyone there and lose this opportunity because it suits my personal interests very well. The position is w/in an engine design team and I'm a huge gear-head. If you’re wandering why I ever considered asking for more, well, one of the other offers was from a direct competitor... For now, I’ll be happy, work hard, and in a year hopefully my review will go well enough to justify a raise.
The financial advice helps. My parents didn't go to college and were in credit card debt until just recently (all the kids finally out of the home for a couple years now). Because of that I've been trying to learn as I go and take advice from wherever I can get it.
I plan on consolidating all the loans once the job thing is solidified.
7% seemed high to me. I'll soon find out if I can do better than that.
The financial advice helps. My parents didn't go to college and were in credit card debt until just recently (all the kids finally out of the home for a couple years now). Because of that I've been trying to learn as I go and take advice from wherever I can get it.
I plan on consolidating all the loans once the job thing is solidified.
7% seemed high to me. I'll soon find out if I can do better than that.
I consolidated in 1997 and got 7.25%. These days you should be able to get significantly lower, probably half that. I went the 30-year route because at the time low monthly payments were essential to my survival; I think I was giving up half my (government) (low) paycheck the first few months of paying to several different lenders. Now I'm too lazy to look at creative ways to refinance.
My credit cards are now cheaper than my student loans.
Also, they changed the law and now you can deduct student loan interest past 5 years. However, if you make too much money (>$70k adjusted gross income) you can't take the deduction, and if you make a little too much money (>$55k AGI) you can't take the full deduction.
Hg
Eng-Tips policies: faq731-376
My credit cards are now cheaper than my student loans.
Also, they changed the law and now you can deduct student loan interest past 5 years. However, if you make too much money (>$70k adjusted gross income) you can't take the deduction, and if you make a little too much money (>$55k AGI) you can't take the full deduction.
Hg
Eng-Tips policies: faq731-376
Double check what I am about to say because I may not have paid too much attention when I read this...But I believe I read just a few weeks ago in some kind of "advice" column that anyone looking to consolidate a student loan should wait until the rates reset in July because they are likely to be lower due to the rate cuts of the Fed. If you consolidate with someone like SallieMae, you final fixed interest rate will be a weighted average of all your student loan rates. If your Federal subsidized/unsubsidized loan reset to a lower rate in July, your final fixed rate would be lower.
If I might offer one other bit of advice that goes against the popular thing right now...if your credit cards are paid off, or close to paid off, get rid of them. Cut them up or at least do not carry them with you. Now that you have a job and will have a significant amount of money coming in, pay cash or debit if you need to use a card. It is far too easy to let that balance carry over and before you know it, you have thousands in credit card debt and you're asking yourself what do you have to show for it? It gets even easier when you start a family. Get in the habit now of not buying something unless you have the money to pay for it and it will be a great gift to your future family. Congratulations on the new job.
If I might offer one other bit of advice that goes against the popular thing right now...if your credit cards are paid off, or close to paid off, get rid of them. Cut them up or at least do not carry them with you. Now that you have a job and will have a significant amount of money coming in, pay cash or debit if you need to use a card. It is far too easy to let that balance carry over and before you know it, you have thousands in credit card debt and you're asking yourself what do you have to show for it? It gets even easier when you start a family. Get in the habit now of not buying something unless you have the money to pay for it and it will be a great gift to your future family. Congratulations on the new job.
I wouldn't cut up all of your credit cards; sometimes, it's handy to be able to book a hotel room, or rent a car, or book plane tickets. You'll find it somewhat challenging to do these things without a credit card, if you do much travelling.
It's not like credit cards can multiple or generate charges on their own.
Besides, which, credit cards form part of the basis for your credit score, too many is bad, too FEW is bad as well.
Put stuff on bill pay, create monthly reminders to ensure that you pay on time. Some credit cards have automatic debiting from your checking account. You do need to show credit history, so have a steady history of on-time payment looks good on your credit score.
TTFN
FAQ731-376
Besides, which, credit cards form part of the basis for your credit score, too many is bad, too FEW is bad as well.
Put stuff on bill pay, create monthly reminders to ensure that you pay on time. Some credit cards have automatic debiting from your checking account. You do need to show credit history, so have a steady history of on-time payment looks good on your credit score.
TTFN
FAQ731-376
Think twice before cutting up or even stopping using your credit cards. Take a look at how credit scoring works.
As far as I can tell you can get a hit for having too much on the card but... if you don't have enough on them that can also be a hit. Cancelling cards can be a hit too.
Ridiculous I know but there are some other things about the US credit rating system that don't seem to make sense either.
I'm gratefull at this point that my student loans were in the UK so were small (about $10k) with very low interest (around 3% as I recall) and I was able to defer them my first 18 months or so after uni because at my Junior Design Engineer rate I was below the threshold to start repayment (with hindsight I probably could & should have started paying them sooner though).
KENAT, probably the least qualified checker you'll ever meet...
As far as I can tell you can get a hit for having too much on the card but... if you don't have enough on them that can also be a hit. Cancelling cards can be a hit too.
Ridiculous I know but there are some other things about the US credit rating system that don't seem to make sense either.
I'm gratefull at this point that my student loans were in the UK so were small (about $10k) with very low interest (around 3% as I recall) and I was able to defer them my first 18 months or so after uni because at my Junior Design Engineer rate I was below the threshold to start repayment (with hindsight I probably could & should have started paying them sooner though).
KENAT, probably the least qualified checker you'll ever meet...
I apparently didn't finish my train of thought. Human behavior is often viewed in a couple of different ways, strict disciplinarian, or disease theory. Those who are baby-boom or older, were raised in environments that held that it was discipline and self-control that were required for life and the elimination of vices like spending, gambling, and smoking, while the current sway is that these are all "diseases," and people can't be held responsible.
So, while cutting up your credit cards eliminates the temptation, it doesn't really help you with the thought process and discipline of delayed gratification. The concern would be that every time you did get hold of a credit card, before cutting it up, you'd spend like maniac.
So, if you really can't control your impulses, then cutting them up might work for you. I tend to be old-school, and think that most people simply need to be more disciplined, both with themselves and with their children. After all, WTF does a 8-yr old need with an iPhone, for crying out loud? Is that really the life lesson one wants to teach their children? My children eat candy maybe once a week; they've never actually consumed their Halloween candy. "It's too expensive," usually stops them in their tracks.
So, I would recommend that you keep at least some of your credit cards, but only use them after serious consideration of whether the use is adequately justifiable.
TTFN
FAQ731-376
So, while cutting up your credit cards eliminates the temptation, it doesn't really help you with the thought process and discipline of delayed gratification. The concern would be that every time you did get hold of a credit card, before cutting it up, you'd spend like maniac.
So, if you really can't control your impulses, then cutting them up might work for you. I tend to be old-school, and think that most people simply need to be more disciplined, both with themselves and with their children. After all, WTF does a 8-yr old need with an iPhone, for crying out loud? Is that really the life lesson one wants to teach their children? My children eat candy maybe once a week; they've never actually consumed their Halloween candy. "It's too expensive," usually stops them in their tracks.
So, I would recommend that you keep at least some of your credit cards, but only use them after serious consideration of whether the use is adequately justifiable.
TTFN
FAQ731-376
SmokinJoeR
Electrical
4K/month after taxes, 401k and medical coverage deductions?
That would mean you would be getting ~70-75K annual salary, right out of college with a BSME?????
I have a MSEE with some experience and I am no where near that.
Make sure you have your calculations right before you start buying things/signing apartment leases or etc.
That would mean you would be getting ~70-75K annual salary, right out of college with a BSME?????
I have a MSEE with some experience and I am no where near that.
Make sure you have your calculations right before you start buying things/signing apartment leases or etc.
- Thread starter
- #74
SmokinJoeR - Its not nearly that much. I just took the percentage I'm used to out for taxes and that's it. I have no experience with what charges will come out in a salary position with benefits. I only stated that to make the point of high monthly loan payments.
- Thread starter
- #75
I like to think of credit cards as a tool.
They can:
- prove your responsibility to lenders (Credit Score)
- help you get over financial humps (college student living paycheck to paycheck)
- allow you to rent a car, hotel room...
- be set up for auto bill-pay
- offer you rewards
- provide 0% apr for X months on stuff like appliances and tires (SEARS)
- take responsibility when dealing with a fraudulent seller
- in summary, be extremely convenient to have on you.
But just as fire is a great tool, they can be just as dangerous when mishandled.
As engineers, I expect us to be more responsible and appreciative of our tools than most people. IRstuff has it right, the key is discipline.
They can:
- prove your responsibility to lenders (Credit Score)
- help you get over financial humps (college student living paycheck to paycheck)
- allow you to rent a car, hotel room...
- be set up for auto bill-pay
- offer you rewards
- provide 0% apr for X months on stuff like appliances and tires (SEARS)
- take responsibility when dealing with a fraudulent seller
- in summary, be extremely convenient to have on you.
But just as fire is a great tool, they can be just as dangerous when mishandled.
As engineers, I expect us to be more responsible and appreciative of our tools than most people. IRstuff has it right, the key is discipline.
Senselessticker
Electrical
The thing that I'm STILL getting used to is knowing that I really only "bring home" a little more than 60% of my salary after medical, life insurance, more life insurance, taxes, more taxes, retirement, more retirement, charitable donations, etc...
Be sure to take advantage early of any 401k offered. Just max it out and keep it that way... you will thank yourself later.. especially if you can jump in now while the market is down...
Be sure to take advantage early of any 401k offered. Just max it out and keep it that way... you will thank yourself later.. especially if you can jump in now while the market is down...
As I said, not a popular opinion at this time in our culture. Perhaps I should have been more clear. Yes, credit cards can be a useful tool when used responsibly and if you have a great amount of self-control. I admit, if you travel more than once a year or fly, credit cards are pretty much a necessity, especially if you rely on company reimbursement for expenses.
The reason I put this out to think about is that it can become easy to charge up a good chunk of money and all it takes is one unplanned event and you might have thousands of dollars sitting on a credit card with 10%-18% interest. This can particularly happen when furnishing your first apartment/house or starting a family. This can also easily happen if you carry your credit cards with you and see something that is a great bargain or something you really "need". If you are forced to think about it some more before you buy, you may find that it is not such a great bargain, or you don't really need it.
Debit cards serve the same purpose of credit cards, except it comes directly from your checking so you have to have the money to pay for something. Makes you think a little harder before you purchase something...and you pay no interest.
I have not had a "general" credit card for several years, and everytime I need a loan, I am greeted with "wow, you have excellent credit! I've never seen a score that high." I do maintain a credit account with a national home improvement chain to help keep my credit history current. In addition, I have built a relationship with my local bank and credit union for home and car loans. I pay loans off early. You do not need several credit cards to maintain a credit history.
If you must keep credit cards, do not carry them with you unless you plan to purchase something ahead of time. If you absolutely must carry a card, set the limit low enough it can easily be paid off every month, even if an emergency comes up that requires extra cash (more common than you want if you own a car or house).
I agree with those who say the key is discipline. I'm just trying to provide some insight, discipline isn't always enough and that's where the troubles start. redkardz, you said yourself your parents were in credit card debt until just recently. I imagine that created some tense moments in your household, I know it did for my parents. I try to prevent that for my children. If you are disciplined enough and responsible to pay off your credit cards every month,then by all means go for it. Most people are not, however, over the long term. Lastly, if you know anyone who is financially independent ask them if they got there by using their credit card rewards or 0% interest for 6 months, or auto bill-pay to save postage?
The reason I put this out to think about is that it can become easy to charge up a good chunk of money and all it takes is one unplanned event and you might have thousands of dollars sitting on a credit card with 10%-18% interest. This can particularly happen when furnishing your first apartment/house or starting a family. This can also easily happen if you carry your credit cards with you and see something that is a great bargain or something you really "need". If you are forced to think about it some more before you buy, you may find that it is not such a great bargain, or you don't really need it.
Debit cards serve the same purpose of credit cards, except it comes directly from your checking so you have to have the money to pay for something. Makes you think a little harder before you purchase something...and you pay no interest.
I have not had a "general" credit card for several years, and everytime I need a loan, I am greeted with "wow, you have excellent credit! I've never seen a score that high." I do maintain a credit account with a national home improvement chain to help keep my credit history current. In addition, I have built a relationship with my local bank and credit union for home and car loans. I pay loans off early. You do not need several credit cards to maintain a credit history.
If you must keep credit cards, do not carry them with you unless you plan to purchase something ahead of time. If you absolutely must carry a card, set the limit low enough it can easily be paid off every month, even if an emergency comes up that requires extra cash (more common than you want if you own a car or house).
I agree with those who say the key is discipline. I'm just trying to provide some insight, discipline isn't always enough and that's where the troubles start. redkardz, you said yourself your parents were in credit card debt until just recently. I imagine that created some tense moments in your household, I know it did for my parents. I try to prevent that for my children. If you are disciplined enough and responsible to pay off your credit cards every month,then by all means go for it. Most people are not, however, over the long term. Lastly, if you know anyone who is financially independent ask them if they got there by using their credit card rewards or 0% interest for 6 months, or auto bill-pay to save postage?
I don't have a debit card, and never will. I can't see that paying 25 cents to access my own money is a good deal. Frankly, it smacks of a conspiracy to remove money from the people don't have much to begin with.
It's less of a problem now, but when gas prices were low, there'd be people paying 25 cents to debit 10 bucks of gas. That was a 2.5% carrying charge; pretty damned usurious.
As for the last point, yes there are people who do that. Again, there's nothing magical, just discipline, not spending more than you earn, and saving money everywhere and anywhere. There's nothing incompatible with have cash on hand and still using credit cards; they're both tools to be used accordingly. Look at the statistics: The average person in the US is simply spending TOO DAMN MUCH! As a nation, we're addicted to spending.
TTFN
FAQ731-376
It's less of a problem now, but when gas prices were low, there'd be people paying 25 cents to debit 10 bucks of gas. That was a 2.5% carrying charge; pretty damned usurious.
As for the last point, yes there are people who do that. Again, there's nothing magical, just discipline, not spending more than you earn, and saving money everywhere and anywhere. There's nothing incompatible with have cash on hand and still using credit cards; they're both tools to be used accordingly. Look at the statistics: The average person in the US is simply spending TOO DAMN MUCH! As a nation, we're addicted to spending.
TTFN
FAQ731-376
jpankask, I do not argue about discipline.
I wish my wife hadn't got a credit card (my name's on it too) with as higher limit as she did. While individually we've both historically been very prudent together things seem to go awry!
My point was that credit scores are more complex than one might initially think and before taking any drastic action one should probably take stock of this if they are likely to be affected by their credit score in the near future.
KENAT, probably the least qualified checker you'll ever meet...
I wish my wife hadn't got a credit card (my name's on it too) with as higher limit as she did. While individually we've both historically been very prudent together things seem to go awry!
My point was that credit scores are more complex than one might initially think and before taking any drastic action one should probably take stock of this if they are likely to be affected by their credit score in the near future.
KENAT, probably the least qualified checker you'll ever meet...
Ah, now I see. I would not use a debit card if my bank charged for it either. Banks in my area do not charge for debit cards (at least the small-town banks don't). If they did, I probably would get a credit card with a low limit, probably half my monthly take home, to carry with me.
- Status
Similar threads
- Locked
- Question
- Locked
- Question