Private loans, loans, options...

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So, I've researched this Q on here and I can't find a direct, not over 5 years old answer, that applies to my situation. So heres the skinny, I'm pre-med and finding my job overwhelming for my school schedule. Between classes, HW, studying, MCAT studying, shadowing, research, honors program studies, etc. I haven't been able to balance my working life. I know I need to talk to a financial aid advisor at my school, so don't bother pointing that out to me. This thread is to ask anyone who has ever taken out a private loan, or seeked out other loan options, what they did, who they went through, how was it, advice, anything. If you haven't looked into this process, or gone through it then don't reply, I want answers not someones opinion. Thanks!

Originally Posted by biomaj

So, I've researched this Q on here and I can't find a direct, not over 5 years old answer, that applies to my situation. So heres the skinny, I'm pre-med and finding my job overwhelming for my school schedule. Between classes, HW, studying, MCAT studying, shadowing, research, honors program studies, etc. I haven't been able to balance my working life. I know I need to talk to a financial aid advisor at my school, so don't bother pointing that out to me. This thread is to ask anyone who has ever taken out a private loan, or seeked out other loan options, what they did, who they went through, how was it, advice, anything. If you haven't looked into this process, or gone through it then don't reply, I want answers not someones opinion. Thanks!

Wow, where do I begin? Ok, to start off, why are you stuck on taking out a private loan? If you are in an accredited school, you should be able to take out a federal loan. All you have to do is fill out the FAFSA with all your financial info (and your parents if you're dependent).

FAFSA calculates your EFC (expected family contribution) and based on that, will give you either a Pell Grant (money that you will never have to pay back) and/or a subsidized loan and/or an unsubsidized loan. The max Pell grant is $5,500 per year which is probably too little if you are in a 4-year university. So the rest of your tuition would be the subsidized loan (if eligible) which is up to $3,500/year for freshman, $4,500/year for sophomores, and $5,500/year for juniors and seniors. If that's still not enough, you may take out an unsubsidized loan for another $2,000/year.

If you are not eligible for the subsidized loan (which means you are for sure not eligible for the grant because you need a really low EFC to be eligible for the grant), then you can take out $5,500/year of unsubsidized loans for freshman, $6,500/year for sophomore, and $7,500/year for juniors and seniors.

There are two main difference between subsidized and unsubsidized loans: for subsidized loans, the government pays the interest for you while you are in school so no interest accrues until you are done school. Unsubsidized loans accrue interest even whie you are in school.
The second difference is interest rates. As of right now, subsidized loans have a fixed rate of 3.4% (will be going up shortly), and unsubsidized loans have an interest rate of 6.8%.

If for some reason you NEED to take out a private loan (not sure why you would need that), than there are so many different options and it would really depend on you situation.

The reason why you should always try to take out a federal loan first is mainly because of lower fixed interest rates with federal loans. Private loans tend to have higher variable interest rates.

I went through the whole process and did tons of research on this stuff, so I know a nice amount about financial aid. Good luck!

Btw, the whole process for the federal loans and grants can only be done through your school's financial aid office. However, sometimes those that work in the office just don't know what they're talking about (much like pre-med advisors ) so do your homework.

If you're stuck with a private student loan, you don't have to go through the school. Most/some schools won't help you at all. If you are stuck with a private loan, let me know; I'll give you your options.

OP, take Chem4ever's advice and run with it. Even my school's financial aid department doesn't give this much info lol. Also, to much of my knowledge, his/her info is correct.

lol

Yea, I'm talking on addition to my federal loans, thats why I'm asking about private loans. My grant and fed loans will cover tuition, I need private loan to cover bills and life.

The problem with non-federal loans (private loans + other loans) is they are generally not fixed rate. Variable rate loans can look good (especially right now when the economy is kinda iffy) but in the long run you generally end up paying more than with a fixed rate loan. Try to see if you can find a loan that has a fixed rate, even if it seems initially higher than the variable ones that you are presented with. You always want to stick with institutional loans if you can get them, because of this. Dont get discouraged, a lot of people find that going to school and working to be extremely overwhelming! You can get through it, and once you are a doctor you will be able to pay everything off. Just focus on your studying and do well! Good luck!

Try googling private loans, compare some rates. Check out your local banks, see if you can talk with some of them. If not, the Sallie Mae Smart Option loan is a pretty good choice (I have one). In my case, they sent the money to my financial aid office, and then the office sent me a check, but I've seen posts by people who apparently had the money sent right to them, so it depends on the person, I guess. Make sure you have a cosigner! You'll probably need one, and you can usually get a better rate if you have one, anyway.

Originally Posted by biomaj

Yea, I'm talking on addition to my federal loans, thats why I'm asking about private loans. My grant and fed loans will cover tuition, I need private loan to cover bills and life.

So you maxed out on your federal loans? Because if you haven't reached the maximum numbers that I mentioned before, then you can still (usually) max out for what FAFSA calls "cost of living".

If you really do need a private loan, then I suggest looking at this chart at http://www.finaid.org/loans/privatestudentloans.phtml which compares all private loans and their interest rates and whether they are fixed or variable. And you should try to get fixed interest rate (even though are very few of them out there) as mentioned.

You will need to be credit approved before you can take out a private loan. You just fill out an application with your information.

If you are like me (young with not much credit history), chances are, you will only be approved with a credit-worthy cosigner. So find a cosigner that has good credit (maybe one of your parents?) because the interest rate is based (for the most part) on your and your cosigner's credit.

I, personally, had to take out a Citibank loan but I do not recommend them anymore than any other bank. I had no choice but to use them for reasons that are not relevant to you (at least I don't think so).

Yea... I support myself entirely through college, so my grant and $5,500 total loans that I've been eligible for up to this point, haven't covered my approx. $10k a year school tuition and fees plus books, not to mention my rent aint' cheap.. So I've just been looking into what my options are, I checked out most of the private loans available to me, I was just curious how others felt about taking them out.
What I don't understand is why I've only been able to take out $5,500 through sub/unsub total for a school year. Shouldn't I be eligible for like $5,500 alone in one, and an additional $3,500-$8,500 in another? I qualify for full pell grant amount and loan amount, yet I've only been able to recieve $5.5k..

Thanks for the insight you all.

Originally Posted by biomaj

Yea... I support myself entirely through college, so my grant and $5,500 total loans that I've been eligible for up to this point, haven't covered my approx. $10k a year school tuition and fees plus books, not to mention my rent aint' cheap.. So I've just been looking into what my options are, I checked out most of the private loans available to me, I was just curious how others felt about taking them out.
What I don't understand is why I've only been able to take out $5,500 through sub/unsub total for a school year. Shouldn't I be eligible for like $5,500 alone in one, and an additional $3,500-$8,500 in another? I qualify for full pell grant amount and loan amount, yet I've only been able to recieve $5.5k..

Thanks for the insight you all.

You can only take out a max of $5,500 in federal loans during freshman year. (This includes subsidized and unsubsidized.)

Listen, you don't really have a choice. Every one of us will eventually need to take out loans. Some of us get lucky and can wait it out until medical school. I am not one of the lucky ones. I had to take out a private loan and owe a nice amount of money with one more year of undergrad. Not much I can do about it.

Just take out exactly what you need and live very frugally.

Just some stats to make you feel good

The average medical student graduates in debt of $157,000.
25% of medical students owe more than $200,000 in debt.

HOWEVER, the average doctor pays up his debt within seven years. Pretty good for someone with such a large debt.

In short, it sucks to take out so much money. But the payoff (not just financially) is awesome!

Originally Posted by chem4ever

You can only take out a max of $5,500 in federal loans during freshman year. (This includes subsidized and unsubsidized.)

Listen, you don't really have a choice. Every one of us will eventually need to take out loans. Some of us get lucky and can wait it out until medical school. I am not one of the lucky ones. I had to take out a private loan and owe a nice amount of money with one more year of undergrad. Not much I can do about it.

Just take out exactly what you need and live very frugally.

Just some stats to make you feel good

The average medical student graduates in debt of $157,000.
25% of medical students owe more than $200,000 in debt.

HOWEVER, the average doctor pays up his debt within seven years. Pretty good for someone with such a large debt.

In short, it sucks to take out so much money. But the payoff (not just financially) is awesome!

The government no longer offers subsidized loans. Since you are in undergrad, you should qualify for the Perkins and Pell Grants. See if you qualify as an "independent" on FAFSA so you won't have to put your parents information. I believe you can protest the 24 year old age minimum to be independent if you can prove that you support yourself without your parents.

Originally Posted by Optomchick

The government no longer offers subsidized loans. Since you are in undergrad, you should qualify for the Perkins and Pell Grants. See if you qualify as an "independent" on FAFSA so you won't have to put your parents information. I believe you can protest the 24 year old age minimum to be independent if you can prove that you support yourself without your parents.

Optomchick, we are talking undergrad here. They are only stopping subsidized loans for graduate/professional school. Besides for the fact that it's only taking effect on July 1 (which I guess means that you're outta luck for next year).

For undergrad subsidized loan, they made a few changes that will take effect on July 1 but they definitely did not abolish it.

The first (and most important) change is the interest rate. As of now, it will double to 6.8% (although that is still being fought over in court).

Another change is that interest will start accruing during the 6-month grace period. Interest used to not accrue until after the grace period.

Just to be clear, if you took out a loan before July 1, then the old rules (3.4% interest and no interest during grace period) will still apply. The new rules are only for loans disbursed for payments for after July 1.

Anyways, sorry for going off on a tangent there. All I was really trying to say is that subsidized loans are and will still be available for undergrads.

Originally Posted by chem4ever

Optomchick, we are talking undergrad here. They are only stopping subsidized loans for graduate/professional school. Besides for the fact that it's only taking effect on July 1 (which I guess means that you're outta luck for next year).

For undergrad subsidized loan, they made a few changes that will take effect on July 1 but they definitely did not abolish it.

The first (and most important) change is the interest rate. As of now, it will double to 6.8% (although that is still being fought over in court).

Another change is that interest will start accruing during the 6-month grace period. Interest used to not accrue until after the grace period.

Just to be clear, if you took out a loan before July 1, then the old rules (3.4% interest and no interest during grace period) will still apply. The new rules are only for loans disbursed for payments for after July 1.

Anyways, sorry for going off on a tangent there. All I was really trying to say is that subsidized loans are and will still be available for undergrads.

ah, I didn't know it was still available for undergrads- lucky ducks! lol I never took out loans in undergrad so I'm researching all this loan stuff now for Opt school. I'm currently debating whether private loans are better than the unsubsidized federal loans.

Advice for private loans:

1. Never deal with Sallie Mae. I've heard horror stories and they are quite ruthless.
2. Stay away from your local bank if it's a national chain - again, paying their shareholders is most important for them.

Which leads to.... Credit unions!! Always check credit unions first because they are CUSTOMER OWNED and thus the bottom line is less important. Example: for undergrad I was able to get 40k, fixed at 5%, with a 30 year repayment. That's a super low monthly payment if if I pay the minimum. Is a better deal than unsubsidized federal loans in fact..

The reason why private loans have such high interest rates is due to the lack of a tangible collateral asset. You're not taking out a loan for a house that can be seized upon default, so the APR reflects that.

Originally Posted by Praefectus

The reason why private loans have such high interest rates is due to the lack of a tangible collateral asset. You're not taking out a loan for a house that can be seized upon default, so the APR reflects that.

but in this case the APR is 3.5 variable for the Professional Health Loan from some banks, which is lower than the 6.8 for unsub loans.

Originally Posted by MyOwnPath

Advice for private loans:

1. Never deal with Sallie Mae. I've heard horror stories and they are quite ruthless.
2. Stay away from your local bank if it's a national chain - again, paying their shareholders is most important for them.

Which leads to.... Credit unions!! Always check credit unions first because they are CUSTOMER OWNED and thus the bottom line is less important. Example: for undergrad I was able to get 40k, fixed at 5%, with a 30 year repayment. That's a super low monthly payment if if I pay the minimum. Is a better deal than unsubsidized federal loans in fact..

hmm I haven't considered credit unions...do they have the 6 month deferment after grad?

Originally Posted by MyOwnPath

Advice for private loans:

1. Never deal with Sallie Mae. I've heard horror stories and they are quite ruthless.
2. Stay away from your local bank if it's a national chain - again, paying their shareholders is most important for them.

Which leads to.... Credit unions!! Always check credit unions first because they are CUSTOMER OWNED and thus the bottom line is less important. Example: for undergrad I was able to get 40k, fixed at 5%, with a 30 year repayment. That's a super low monthly payment if if I pay the minimum. Is a better deal than unsubsidized federal loans in fact..

Really?! How do I get involved? Any specific credit unions that I should be looking at?

Originally Posted by Optomchick

but in this case the APR is 3.5 variable for the Professional Health Loan from some banks, which is lower than the 6.8 for unsub loans.

That rate is variable. For fixed rates, it wouldn't be uncommon to see at least 8% loans from a private lender.

Originally Posted by Praefectus

That rate is variable. For fixed rates, it wouldn't be uncommon to see at least 8% loans from a private lender.

Also the federal loan has a 1.5% origination fee...I don't see it going to 8% given our economy.

No origination fee, 6 month deferral after graduation, but based on your credit score. I got 5%. 20 year repayment if under 40K total balance, 30 yr if over.

Apply to all credit unions at once through Student Choice.

really basic question here - i'm from canada so this concept of accruing interest after graduation is a little unclear for me - so when a bank says "no payments during school" does that mean that interest still builds up starting day 1 at school, during grace period or after grace period? when does the interest start to build?

Originally Posted by perigirl

really basic question here - i'm from canada so this concept of accruing interest after graduation is a little unclear for me - so when a bank says "no payments during school" does that mean that interest still builds up starting day 1 at school, during grace period or after grace period? when does the interest start to build?

Interest will start accruing day 1 at school. "No payments during school" just means that you won't have to start paying until after you graduate.

The only loans that I have heard of that don't charge interest during school are the federal subsidized loans.

Originally Posted by Praefectus

That rate is variable. For fixed rates, it wouldn't be uncommon to see at least 8% loans from a private lender.

Originally Posted by Optomchick

Also the federal loan has a 1.5% origination fee...I don't see it going to 8% given our economy.

I have one form undergrad with 3.something interest. However, my credit is over 730 and my father cosigned (he has very very high credit).

If you have good credit (which you probably do as long as you make payments on anything) than check out the private loan and see what they have to offer.

Originally Posted by MyOwnPath

No origination fee, 6 month deferral after graduation, but based on your credit score. I got 5%. 20 year repayment if under 40K total balance, 30 yr if over.

Apply to all credit unions at once through Student Choice.

Maybe this is a dumb question, but what is Student Choice? These loans would still count toward your COA, correct?

Originally Posted by Holy FranZ

I have one form undergrad with 3.something interest. However, my credit is over 730 and my father cosigned (he has very very high credit).

If you have good credit (which you probably do as long as you make payments on anything) than check out the private loan and see what they have to offer.

Turns out I don't qualify for private loans, even with my mom's perfect credit score (789) lol GOVERMENT LOANS IT IS! Looking at 200k at 6.8% unsub, SO excited -___-

Originally Posted by Optomchick

GOVERMENT LOANS IT IS! Looking at 200k at 6.8% unsub, SO excited -___-

Originally Posted by Shnurek

did you just stalk me here from the Optometry forums?!? lmao

Originally Posted by chem4ever

FAFSA calculates your EFC (expected family contribution) and based on that, will give you either a Pell Grant (money that you will never have to pay back) and/or a subsidized loan and/or an unsubsidized loan. The max Pell grant is $5,500 per year which is probably too little if you are in a 4-year university. So the rest of your tuition would be the subsidized loan (if eligible) which is up to $3,500/year for freshman, $4,500/year for sophomores, and $5,500/year for juniors and seniors. If that's still not enough, you may take out an unsubsidized loan for another $2,000/year.

You can actually take out more than $2,000 per year unsub if your school has done their COA calcs right, maybe even higher. I know I'm getting $5,500 Stafford Sub Loan, $7,000 Stafford Unsub, $1,500 Federal Perkins Loan. That's on top of $10,220 in grants and a $3,000 scholarship. Tuition + Fees (including insurance) is ~$12,500 per year (I just love the $500/year athletic fee, lol-but hey, we get tickets to all the games >.<). Basically the grants and scholarship are covering tuition + books and the loans are for living on.

I'm going to have to take out private loans this semester as a Junior and I'm really nervous.

My family's EFC is 0 but I will qualify for Pell Grant, Sub & Unsub loans, I may try to get a Parent Plus Loan, I will also work via Federal Work Study but I see no other way of paying tuition/rent/food without private loans.

I live in the state of PA, what are the best options?