anything better than unsub. stafford

[benkev68]

so just starting med skool in august, gonna have to pay all by loans and was hoping to find something better than unsub. staf. which is 6.8% annually, acrueing while in skool, w/ first payment 6 months after school. Any tips?

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[Tired]

so just starting med skool in august, gonna have to pay all by loans and was hoping to find something better than unsub. staf. which is 6.8% annually, acrueing while in skool, w/ first payment 6 months after school. Any tips?

1) There are no loans under 6.8% interest right now. Period. Expect private loans to be on the order of 8.5% right now. Only subsidized Staffords and Perkins are better. I'm guessing since you didn't mention these that you don't qualify for them.

2) Because the Staffords are fixed rate loans now, you are locked into that rate forever, and do not have to worry about it going up over time. That's a good thing, and will keep you from getting screwed like I did.

3) Do not worry about the "start paying 6mo after graduation" thing. There are a million ways to defer it, and almost all of us won't ever start paying on them until we are attendings. You can defer thema all the way through residency, and even through fellowship.

 

[Critical Mass]

so just starting med skool in august, gonna have to pay all by loans and was hoping to find something better than unsub. staf. which is 6.8% annually, acrueing while in skool, w/ first payment 6 months after school. Any tips?

The Perkins has a better interest rate, but schools choose how that is awarded. It also has a much lower maximum.

Staffords are the best I've seen. Just don't consolidate without a good reason.

 

[njbmd]

Moving to Financial Aid for expert opinion.

 

[blanche]

in the grand scheme of things, 6.8% is still a *good* rate, it's just that for us old bats who started med school 4 years ago when rates were at an all time low (2.7%), it seems like alot . You should take it though, unless like has been said, you can get subsidized staffords. or perkins

A friend who graduated a few years ago has 4 years of staffords consolidated at 2.8%, which makes me green with envy. however my parents talk about interest rates back in the 1970s being like 12-14% on mortgages, so borrowing money today could definitely be worse...

 

[dpmd]

3) Do not worry about the "start paying 6mo after graduation" thing. There are a million ways to defer it, and almost all of us won't ever start paying on them until we are attendings. You can defer thema all the way through residency, and even through fellowship.

This is not really true. You can try for an economic hardship deferment for up to three years during residency, but this depends on how much you took out and how much you get paid. After the three years you are on your own, unless you want a forbearance (interest accrues on subsidized loans, interest rates on variable loans are higher). Just something to keep in mind when deciding how much you want to borrow.

To the OP, you could always try for outside scholarships. Otherwise you just have to suck it up and take the loans.

 

[okbye]

All federal loans come with 3 years of deferal and 3 years of forbearance. Deferal can be made for economic hardship, unemployment, some fellowships or of course while in school. In school deferal doesn't take off from the 3 years given as long as you do not enter repayment at any time. Forbearance doesn't need a reason but the interest does add up. This is a possible scenario where you might want to wait to consolidate - when you do consolidate your years of deferal and forbearance are renewed so if you run out of deferal time then you consolidate and you get to start over. This will cost you more money in interest though, so weigh your options carefully.
The good news is they are trying to pass a bill to lower the interest rates on federal loans taken out over the next 5 years. It has passed the house, were waiting on the senate to get in gear. If it passes the rates for the next 5 years will be -

the rate will be 6.12% for loans first disbursed on or after July 1, 2007 and before July 1, 2008;
the rate will be 5.44% for loans first disbursed on or after July 1, 2008 and before July 1, 2009;
the rate will be 4.76% for loans first disbursed on or after July 1, 2009 and before July 1, 2010;
the rate will be 4.08% for loans first disbursed on or after July 1, 2010 and before July 1, 2011; and
the rate will be 3.40% for loans first disbursed on or after July 1, 2011 and before January 1, 2012.

This will not affect any loans already disbursed, your current rates will not be going down on loans you already have.

I've posted this before I think but this is a great search site for scholarships
http://www.fastweb.com/?

 

[Lesley]

All federal loans come with 3 years of deferal and 3 years of forbearance. Deferal can be made for economic hardship, unemployment, some fellowships or of course while in school. In school deferal doesn't take off from the 3 years given as long as you do not enter repayment at any time. Forbearance doesn't need a reason but the interest does add up. This is a possible scenario where you might want to wait to consolidate - when you do consolidate your years of deferal and forbearance are renewed so if you run out of deferal time then you consolidate and you get to start over. This will cost you more money in interest though, so weigh your options carefully.
The good news is they are trying to pass a bill to lower the interest rates on federal loans taken out over the next 5 years. It has passed the house, were waiting on the senate to get in gear. If it passes the rates for the next 5 years will be -

the rate will be 6.12% for loans first disbursed on or after July 1, 2007 and before July 1, 2008;
the rate will be 5.44% for loans first disbursed on or after July 1, 2008 and before July 1, 2009;
the rate will be 4.76% for loans first disbursed on or after July 1, 2009 and before July 1, 2010;
the rate will be 4.08% for loans first disbursed on or after July 1, 2010 and before July 1, 2011; and
the rate will be 3.40% for loans first disbursed on or after July 1, 2011 and before January 1, 2012.

This will not affect any loans already disbursed, your current rates will not be going down on loans you already have.

I've posted this before I think but this is a great search site for scholarships
http://www.fastweb.com/?

Great info. If passed, will this be applicable to graduate Stafford loans as well?

 

[okbye]

No, it's just for undergrad loans. Bush is opposed to the bill so who knows if it will pass, congress is mostly for it though.
Also, Bush's 2008 budget proposal calls for eliminating Perkins loan funding, so don't count on those at this time. He does want to increase Pell grants so thats actually better if you qualify for them.

 

[dpmd]

In school deferal doesn't take off from the 3 years given as long as you do not enter repayment at any time.

I entered repayment in undergrad and had no trouble deferring my loans when I returned to undergrad, and when I was in med school (more than three years before I ended up consolidating). I don't think in school deferment is restricted in length (regardless of whether you enter repayment in between attending school), or affects your eligibility for other deferments.

 

[UserNameNeeded]

No, it's just for undergrad loans. Bush is opposed to the bill so who knows if it will pass, congress is mostly for it though.
Also, Bush's 2008 budget proposal calls for eliminating Perkins loan funding, so don't count on those at this time. He does want to increase Pell grants so thats actually better if you qualify for them.

Pell Grants aren't available for medical students, are they?

I really hope Perkins loan funding is not cut. Bush bites!

 

[UserNameNeeded]

All federal loans come with 3 years of deferal and 3 years of forbearance. Deferal can be made for economic hardship, unemployment, some fellowships or of course while in school. In school deferal doesn't take off from the 3 years given as long as you do not enter repayment at any time. Forbearance doesn't need a reason but the interest does add up. This is a possible scenario where you might want to wait to consolidate - when you do consolidate your years of deferal and forbearance are renewed so if you run out of deferal time then you consolidate and you get to start over. This will cost you more money in interest though, so weigh your options carefully.

Wait a minute...did you just say if you do not consolidate after you graduate, you can defer for 3 years (0% interest on subsidized Staffords) and then if you consolidate at the end of the 3 years, you can defer again? So you may potentially get *6* possible years of deferment?! That'd be awesome.

 

[Tired]

This is not really true. You can try for an economic hardship deferment for up to three years during residency, but this depends on how much you took out and how much you get paid. After the three years you are on your own, unless you want a forbearance (interest accrues on subsidized loans, interest rates on variable loans are higher). Just something to keep in mind when deciding how much you want to borrow.

Fine, I said defer when I should have said defer/forebearance. Either way, you don't see a lot of residents making payments on their loans, and I have never met one who was paying when they didn't want to be. You start paying after residency when you actually make money.

 

[blanche]

Wait a minute...did you just say if you do not consolidate after you graduate, you can defer for 3 years (0% interest on subsidized Staffords) and then if you consolidate at the end of the 3 years, you can defer again? So you may potentially get *6* possible years of deferment?! That'd be awesome.

that's what i've been told by the lenders, i could do a 3 year ehd (economoic hardship deferral), consolidate, and then do another 3 hears of ehd. it'd be better than forbearance, where you are accruing interest on everything.

when you have ehd you can still pay w/o penalty, at least with my lender (i.e., i may try to pay some interest on the unsub. loans before they capitalize it. i'm just not sure how often they do that--maybe every year?)

also, it's easy to get confused by the terminology. one thing about forbearance is that you may lose your consolidation/loan benefits depending on the lender (ie interest rate reductions) if you do it. deferral you keep it.

 

[Doctor Bagel]

Isn't the difference between deferral and forebearance pretty inconsequential if the majority of your loans are unsubsidized? The interest still accrues on the unsubsidized loans during deferral. Since the subsidized loan amount is so amazingly inconsequential, most of us are going to wind up with a very small percentage of subsidized loans.

As for the entering repayment affecting later deferrals, I know that's not true. I was in repayment and have had no problem getting an in-school deferral for my loans.

So loan issues are a big area where the lawyers and doctors should get together. We're the two groups most screwed by graduate school loans, and both groups have a lot of political clout. Why can't they work together and make something happen?

 

[dpmd]

Deferment versus forbearance can make a difference in a couple of ways.

1. If you have a variable interest rate, the interest rate is about about half a percent higher in forbearance

2. You may disqualify yourself from certain on time payment incentives (depends on the company)

2. If you have perkins loans or other loans that don't accrue interest during deferment that could increase the savings from not accruing interest

So, deferment is better and is worth the effort to apply for (its a few peices of paperwork, but can save you a decent amount of money).

But forbearance is infinitely better than not making your payments on time. Default is bad.

 

[Doctor Bagel]

Deferment versus forbearance can make a difference in a couple of ways.

1. If you have a variable interest rate, the interest rate is about about half a percent higher in forbearance

2. You may disqualify yourself from certain on time payment incentives (depends on the company)

2. If you have perkins loans or other loans that don't accrue interest during deferment that could increase the savings from not accruing interest

So, deferment is better and is worth the effort to apply for (its a few peices of paperwork, but can save you a decent amount of money).

But forbearance is infinitely better than not making your payments on time. Default is bad.

Yeah, I actually know all of that. I guess I was trying to make a comment more than ask a question. For those of us borrowing predominately unsubsidized staffords (which is going to be most of us), the difference between forbearance and deferral is pretty small because those unsub loans are still accruing interest. As for variable interest, those days are long gone.

 

[UserNameNeeded]

While I agree with you that the subsidized portion of our medical school loans is small, it still should add up to around $26,000 for many of us. So proportion-wise, it's small, but it's still a fairly large loan in and of itself (even though it would scarcely cover even 1 year out of 4 of US medical education-- but that's another issue).

 

[okbye]

Wait a minute...did you just say if you do not consolidate after you graduate, you can defer for 3 years (0% interest on subsidized Staffords) and then if you consolidate at the end of the 3 years, you can defer again? So you may potentially get *6* possible years of deferment?! That'd be awesome.

Sure can. Deferal and forbearance benefits are renewed with consoldation.

 

[okbye]

Pell Grants aren't available for medical students, are they?

I really hope Perkins loan funding is not cut. Bush bites!

That depends on how far in you are,they're pretty much for undergrads. Once you get a degree you're usually not eligible.

 

[Doctor Bagel]

That depends on how far in you are,they're pretty much for undergrads. Once you get a degree you're usually not eligible.

Perkins or Pell? Pell is ugrad only, but I've heard mythical tales of people getting Perkins loans from med school. I haven't gotten one in spite of submitting my FAFSA super early -- not that that makes me angry or anything.

 

[okbye]

I entered repayment in undergrad and had no trouble deferring my loans when I returned to undergrad, and when I was in med school (more than three years before I ended up consolidating). I don't think in school deferment is restricted in length (regardless of whether you enter repayment in between attending school), or affects your eligibility for other deferments.

Thats true, you can take in school deferal as long as you want and it doesn't come off your three years, and you shouldn't have any trouble reinstating it. The differences are mainly on our end with the classification if you go into repayment first, it changes some of the rules, and you won't have a grace period on those loans when you do graduate. It probably doesn't make much sense if you have never looked up your account on the NSLDS, but if you are in school your loans are designated IA status, if you have entered repayment or even your grace period then go back to school they are put in DA status.

 

[okbye]

Perkins or Pell? Pell is ugrad only, but I've heard mythical tales of people getting Perkins loans from med school. I haven't gotten one in spite of submitting my FAFSA super early -- not that that makes me angry or anything.

Sorry, thats Pell. I've seen quite a few Perkins loans in the medical field. We always have to find out what the student's degree is in when they have Perkins loans to see if they're eligible for forgiveness and medical is one of the areas that can be. I'm not sure at what stage of schooling they took them out, that's not info that matters in a consolidation so we don't ask.
From www.ed.gov (DOE) -
Who May Apply: (specifically) IHEs may apply for an allocation of funds to be awarded to undergraduate, vocational, and graduate students enrolled or accepted for enrollment at participating schools.

Basically your school asks the government for some money then they decide who they give it to. You can appeal your financial aid award letter, tell them you want your Perkins loan, dammit!

 

[dpmd]

I got a $1750 perkins loan one of my med school years (I think second because I had income before first year that put me out of the running, and I got married at the end of second year to someone with an income which made my financial need even less). I think you have to file your FAFSA early AND be broke otherwise the funds can run out quickly, depending on the school I suppose. It did work out nicely that I got 20% of it cancelled when I got deployed in the army as a nurse for 14 mths. Too bad they don't give credit for part time work (like requiring two years, or just cancelling 10% a year).

Also, just checked the site and for perkins you could get up to 6k a year as a grad student up to a max of 40K (including undergrad). But your school has to be a participating institution, and they are supposed to give preference for the extremely needy (and they may use most of their funds for their undergrads).

 

[puertovallartaf]

Great info. If passed, will this be applicable to graduate Stafford loans as well?

thanks for the info

 

[puertovallartaf]

All federal loans come with 3 years of deferal and 3 years of forbearance. Deferal can be made for economic hardship, unemployment, some fellowships or of course while in school. In school deferal doesn't take off from the 3 years given as long as you do not enter repayment at any time. Forbearance doesn't need a reason but the interest does add up. This is a possible scenario where you might want to wait to consolidate - when you do consolidate your years of deferal and forbearance are renewed so if you run out of deferal time then you consolidate and you get to start over. This will cost you more money in interest though, so weigh your options carefully.
The good news is they are trying to pass a bill to lower the interest rates on federal loans taken out over the next 5 years. It has passed the house, were waiting on the senate to get in gear. If it passes the rates for the next 5 years will be -

the rate will be 6.12% for loans first disbursed on or after July 1, 2007 and before July 1, 2008;
the rate will be 5.44% for loans first disbursed on or after July 1, 2008 and before July 1, 2009;
the rate will be 4.76% for loans first disbursed on or after July 1, 2009 and before July 1, 2010;
the rate will be 4.08% for loans first disbursed on or after July 1, 2010 and before July 1, 2011; and
the rate will be 3.40% for loans first disbursed on or after July 1, 2011 and before January 1, 2012.

This will not affect any loans already disbursed, your current rates will not be going down on loans you already have.

I've posted this before I think but this is a great search site for scholarships
http://www.fastweb.com/?[/quotenice thanks for all the info its will really come in handy

 

[Doctor Bagel]

Basically your school asks the government for some money then they decide who they give it to. You can appeal your financial aid award letter, tell them you want your Perkins loan, dammit!

I wonder if that would work. I'm actually pretty po'd about not getting any perkins money just because I specifically submitted my FAFSA early just to get some. Also, I have to borrow more than most students at my school because I'm oos, so you think they'd give a little extra friendlier loans my way, but I guess not. I did send them an email asking about the criteria for perkins loans, and they didn't respond. And I know someone with an EFC that was like 3 times my EFC who still got perkins loans. So I guess my school is just smoking crack and giving 'em to whoever they randomly feel like.

 

[TMP-SMX]

I wonder if that would work. I'm actually pretty po'd about not getting any perkins money just because I specifically submitted my FAFSA early just to get some. Also, I have to borrow more than most students at my school because I'm oos, so you think they'd give a little extra friendlier loans my way, but I guess not. I did send them an email asking about the criteria for perkins loans, and they didn't respond. And I know someone with an EFC that was like 3 times my EFC who still got perkins loans. So I guess my school is just smoking crack and giving 'em to whoever they randomly feel like.

The financial aid office said my EFC was too high to get any campus-based aid. My personal EFC was 0 and I think I estimated my parents' EFC at around 19k. So I don't know how little you/parents have to make to get some.

 

[okbye]

Part of my job is to deal with school financial aid offices to get payoff amounts on school held loans such as Perkins so I have dealt with quite a few and I tell you some financial aid offices are a real mess. Many of them have no idea what they're doing. There shouldn't be any excuse for not answering an email though, unless they are out for the summer. You have to keep bugging them, ask for the director. Either way it doesn't hurt to try.
I have talked to directors who had no idea how badly their officers were handling their jobs, like the one school that never responded to a faxed request for payoff info because I didn't call and tell them there was a fax on the way. "There are at least a hundred pieces of paper on that machine every day, I couldn't possibly look at them all". The director was appalled.