Question about Private Loan

[reluctantoptimism]

I'm going to have to borrow approx. $20,000 from Sallie Mae (2 separate loans) to finish my B.S. but I'm really, let's face it, ignorant when it comes to student loans. I plan to go to medical school following undergrad so my understanding is that my loan would then be deferred for an additional 4 years (until residency). If I fail to be accepted to medical school initially, my tentative payments (from Sallie Mae and federal loans) would be approx. $460 a month which I think would be manageable. Would someone with more financial literacy/ wisdom care to give me any further considerations?

My plan is to get the loan, finish undergrad, start medical school and enter residency but I don't want my cosigner's credit to be affected throughout that whole process just cause they want to help me. If I someone had excess money in medical school and did prepayments, how would that work out? Prior to the release of the cosigner, how would their credit be affected?

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[RangerBob]

The loan isn't necessarily deferred during medical school. It depends on the conditions of your loan. I took out two small private loans for my post bac, one of which entered repayment 6 months after finishing the degree/program they were for (with no further in-school deferment). I didn't know it at the time I took out the loans. So while I was able to put one in in-school forbearance, the other I had to start paying in medical school. It was only about $80/month, but it was still something. So make sure you read the fine print.

There's not much you can do about not affecting your cosigner's credit--the loan will show up on their credit report. Just make timely payments and there shouldn't be too much impact to the cosigner.

One thing to keep in mind is if you apply with a cosigner, typically if you enter a forbearance hardship (such as what you might consider while in residency), then you are no longer able to release your cosigner. Usually if you make 12 on-time payments you can get your cosigner released, so my recommendation is if you plan to do a hardship forbearance during residency, work something out so you and your cosigner together make payments for 12 months, then get them released from the loan. After that you can put the loan in a hardship forbearance (at the discretion of the lender of course) and you pay back the cosigner slowly during residency or maybe after you're an attending.

Currently you can also consolidate your loans with DRB while you're a resident, so if that option is still around when you're a resident, that's another option.

As someone who already had a decent amount of debt when I started medical school, I highly recommend you borrow the absolute minimum possible (live with friends, share a room, walk/bike to school, get a job, etc.) The loans really add up and if you end up at an out of state school or private school you will owe a ton of money, which them puts some limitations on which specialty you go into, where you practice (ie., if you owe $350k you're probably not going to be an FP or psychiatrist for the VA in CA, for example.)