accepted to medical school, current financial situation question

[premed91]

Hi, I just wanted to ask a question about my current situation as Iv recently been accepted to medical school.

For the second half of undergrad, I needed to take out money to pay. I was young and didn't really know anything about loans (don't know much now either) and my parents didn't really know much about loans either. I wound up taking out a sallie Mae loan and currently have about $15,000 of debt. It took some time to get accepted into medical school and Iv expended my one year deferent after graduation and forebareance options. Now that Iv been accepted, how does the process work? Will I be able to get a federal loan and consolidate or pay off the private loan? Or will I have to do something else?

I'm sorry if I sound naive about this process, I'm just excited about being accepted but nervous about what happens next with respect to the financial situation.

Thanks for the help and responses.

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[RangerBob]

It really depends on your specific loan, as all private loans differ. You'll want to read over you master promissory note (MPN--the document you signed) which should specify any in-school deferment. If you're eligible, your lender typically gets automatically updated by the national student clearinghouse (or something with a similar name--I forget). However, some private loans just enter repayment without any further in-school deferment options. I had one loan like that--maybe a $5k one. I just made payments while I was a medical student, making sure I took out enough federal loans to cover the monthly payments.

Unfortunately you can't consolidate private loans with a federal consolidation loan--all you can do is just borrow the max and use that loan money to cover your monthly payments. If things are really tight, many medical schools will allow for a budget increase to cover your monthly payments. This is something you would talk with your financial aid department about.

Basically:
1) Read over your repayment terms, paying specific attention to any future in-school deferment options. Also note the maximum while you're at it. That's what actually got me--basically my loan gave me up to 4 years of in school deferment/max of 4 years to start repayment from the date of disbursement. Since I did two years of glide years, I ended up starting repayment 2 years into medical school.
2) If you do need to start repayment when you get to medical school, talk with your medical school's financial aid department. If they do not allow for a budget increase, then you'll need to figure out how to live on less (or borrow from family, work over the summer, etc.)

 

[Smart Money MD]

I remember that I had about $10k of college private loans that I carried over into medical school. They were at a higher rate than a few of my federal loans. I borrowed the maximum allowed through the federal loan and school loan programs, and ended up paying off the college loans during medical school.

 

[premed91]

It really depends on your specific loan, as all private loans differ. You'll want to read over you master promissory note (MPN--the document you signed) which should specify any in-school deferment. If you're eligible, your lender typically gets automatically updated by the national student clearinghouse (or something with a similar name--I forget). However, some private loans just enter repayment without any further in-school deferment options. I had one loan like that--maybe a $5k one. I just made payments while I was a medical student, making sure I took out enough federal loans to cover the monthly payments.

Unfortunately you can't consolidate private loans with a federal consolidation loan--all you can do is just borrow the max and use that loan money to cover your monthly payments. If things are really tight, many medical schools will allow for a budget increase to cover your monthly payments. This is something you would talk with your financial aid department about.

Basically:
1) Read over your repayment terms, paying specific attention to any future in-school deferment options. Also note the maximum while you're at it. That's what actually got me--basically my loan gave me up to 4 years of in school deferment/max of 4 years to start repayment from the date of disbursement. Since I did two years of glide years, I ended up starting repayment 2 years into medical school.
2) If you do need to start repayment when you get to medical school, talk with your medical school's financial aid department. If they do not allow for a budget increase, then you'll need to figure out how to live on less (or borrow from family, work over the summer, etc.)

Thank you very much for taking the time to help and write a thorough response

 

[premed91]

I remember that I had about $10k of college private loans that I carried over into medical school. They were at a higher rate than a few of my federal loans. I borrowed the maximum allowed through the federal loan and school loan programs, and ended up paying off the college loans during medical school.

Thanks for the response. Makes me feel much better. I was (still am a little) nervous about this whole situation.

 

[akathisian]

You likely won't be able to get forbearance or deferment if you're already paying on your Sallie Mae loan. Do you currently have job? If you do, try to refinance the loan through SoFi or another bank that specializes in student loan refinance before you quit your job. I did not realize that I could have done this until it was too late. I had to take out loans from Sallie Mae and Citizens Bank to pay for my postbac. I made interest payments on my Sallie Mae loan from the get-go, and they would not allow me to enter into deferment when I started med school. My Citizens loan is in deferment, but rapidly accumulating interest. I wish I had refinanced these while I was working during my glide year, as I'd be making reasonable payments with a 1-3% interest rate instead of 20%. Now I have to wait until residency to refinance these.

 

[premed91]

You likely won't be able to get forbearance or deferment if you're already paying on your Sallie Mae loan. Do you currently have job? If you do, try to refinance the loan through SoFi or another bank that specializes in student loan refinance before you quit your job. I did not realize that I could have done this until it was too late. I had to take out loans from Sallie Mae and Citizens Bank to pay for my postbac. I made interest payments on my Sallie Mae loan from the get-go, and they would not allow me to enter into deferment when I started med school. My Citizens loan is in deferment, but rapidly accumulating interest. I wish I had refinanced these while I was working during my glide year, as I'd be making reasonable payments with a 1-3% interest rate instead of 20%. Now I have to wait until residency to refinance these.

Il make sure to look into this. Thanks for the advise, I really appreciate it.

 

[Student Loan Planner]

Thank you very much for taking the time to help and write a thorough response

Your medical school won't ask any questions if you take out a little extra on the federal loan program to payoff the private loan. You'll get up to the full cost of attendance through the federal loan program as rules currently stand

 

[premed91]

Your medical school won't ask any questions if you take out a little extra on the federal loan program to payoff the private loan. You'll get up to the full cost of attendance through the federal loan program as rules currently stand

Thanks so much for the response. What do you mean by i will get the "full cost of attendance through the federal loan program"? So let's say for instance, a medical program is $50,000 a year, based on current rules, the federal loan program will cover this all 4 years, no matter what my current private loan debt is?

 

[Student Loan Planner]

Thanks so much for the response. What do you mean by i will get the "full cost of attendance through the federal loan program"? So let's say for instance, a medical program is $50,000 a year, based on current rules, the federal loan program will cover this all 4 years, no matter what my current private loan debt is?

Under current rules yes it would be covered by the Grad Plus program, however there are significant changes to the program being discussed. My view is that folks going to med school will not have significant problems getting financing. It'll be people seeking veterinary , psychology, and other degrees that will have significant trouble

 

[premed91]

Under current rules yes it would be covered by the Grad Plus program, however there are significant changes to the program being discussed. My view is that folks going to med school will not have significant problems getting financing. It'll be people seeking veterinary , psychology, and other degrees that will have significant trouble

Thanks so much for the help and reassurance. I feel a lot better.