Dear Dr. Don,
I am about to start Cal State San Marcos this fall. I have been awarded two grants that will cover my tuition, fees and books. I am married with children and live with my husband, who is an active-duty Marine. I have been offered two loans to help with living expenses, which in my case are gasoline and child care. Since I currently don't work, it's my husband's sole income that gets us by every month, though it doesn't cover these new expenses.
Another option available to me is using my husband's GI Bill education benefits, but it will mean he'll need to take on more of a commitment to the military. He is OK with that, but I have heard people say the bulk of money paid is the housing allowance, which we can't get because he is currently on active duty. If I used his GI Bill, it would cover my tuition, fees and books, and I could use my grants as a cushion against our new expenses associated with going to school, such as gas and child care.
My last option is to use my grants for my tuition and fees, not use his GI Bill, and accept a student loan at an interest rate of about 6 percent. Is it better to use my husband's GI Bill benefits but lose so much by not being able to receive the housing allowance, or to take out a loan for $5,500 a year at 6 percent? The student loan interest will be paid by the government while I'm in school.
-- Marisa Matriculant
You've done a great job in lining up your options in financing your college costs. I'd suggest checking with your school's financial aid office to ensure the grants can be used as you see fit to finance your college expenses. You want to make sure you have the flexibility to use the money as needed, including for gas and child care.
Having your husband take on more of a commitment to the military so you can use his GI Bill benefits seems like a pretty big sacrifice if you've already got everything but commuting expenses and child care covered. You're correct in that you are not eligible for the monthly housing allowance while your husband is serving on active duty, but you should be able to receive the annual books and supplies stipend of up to $1,000. That's paid proportionately based on how many credit hours you're enrolled in, and it's on top of the GI Bill's full tuition and fees paid to a public college.
You've qualified for a subsidized student loan, meaning that the loan is interest-free while you're in college. That's the route I'd suggest you take to cover these incidentals and to use the grants for tuition, fees and books.
Whether to count on the GI Bill or the student loans depends on your husband's military career aspirations and whether he's giving up any of his education goals, or the financing of your children's education, to finance your college costs. I'd lean toward the student loans because it keeps those other options open -- but that's me. You need, as a family, to make the decision that's right for you.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.
Ask the adviserTo ask a question of Dr. Don, go to the "Ask the Experts" page and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.