Direct PLUS Loan vs. Others

[Tom4130]

So I will begin my first journey as a PT student this fall. I feel fully ready but lately have beeb dealing with the financial aid end of things and have found myself indecisive about the loan options.

I have to get the Stafford Loan which is an automatic $20,500. After this is dispursed, I will still need even more money for the rest of tuition costs and living expenses. My financial advisor suggested the direct PLUS Loan, which seems to be what most people do. However, this interest rate is 7.9%, whereas another lender, like Discover or Wells Fargo, offers loans at lower interest rates.

My advisor suggested it is not worth it because they usually can not be consilidated with my undergrad loans.

Anyone else in/been through this before or can offer advice??

Thank you in advance!!!

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[Aupa]

The way I understand it, loan forgiveness programs will only work with federal loans. In the case of death, family members may have to pay off private bank loans. It is a high rate, but counselors have told me to continue to use the federal loans.

 

[DocKayEMDEE]

I just got my financial aid packet notice and from my budget calculations, I'm a few thousand dollars short for living expenses, etc... I was also wondering if I should go straight for direct plus loan or just go for private loans.

If anyone has anymore input, I'm all ears!

 

[DPT8387]

I have private loans from undergrad and all I can say, it's DON'T borrow privately unless you have no other options. Private lenders are very unflexible and don't offer anything in the way of payment plans. Pretty much, if you can't pay, be prepared to go into default-- luckily, I've been able to make my payments, but there is no way I would ever take out another private loan. I'm only doing federal loans for my PT school expenses.

 

[kptnau]

To be clear, if you do private AND federal you have to pay two bills for it once out of school?
There is a 20,500 limit for the lower rate unsub'd loans. Is there a limit for the PLUS loans?

 

[jdaniels360]

From what i understand the PLUS loans cover whatever you have left after Stafford that isn't paid for.

 

[Tom4130]

I was told that basically all student receive the $20,500 from Stafford Loans, and almost all student have to do this. After this money is received, the next step is figuring out where to get the rest (the remaining tuition and living expenses).

This money usually comes from a Direct PLUS loan, but you do not have to choose this as you can get a private lender, such as a bank or C.C. company. Which is where I find myself asking who to choose.

The only real benefit from private seems to be slighlty lower interest but based on these comments seems it may also lead to a lot of stress since they don't work with you.

I will probably just go with Direct PLUS. Also you can consilidate these loans unlike the prive lender loans. I am trying to plan ahead to make the best decision for when I have to begin paying off this money.

 

[MBenigno]

I met with my financial advisor about two weeks ago. We went through all the options because I too was concerned about the PLUS loan being at 7.9%. However, after all the research I did in addition to meeting with my counselor the PLUS loan seemed like the only logical choice. Not only can you take out more money with the PLUS than with traditional private loans (most of these max out at 10,000/year or 100,000/life of loan), the interest rate is LOCKED. That means we know we will pay the 7.9% after we graduate. Every private loan I looked into was 5% VARIABLE. With today's ever-changing economy, and not knowing exactly where we will be post-graduation, I don't want to take that kind of chance (yes, it could drop to 3% after we graduate like my undergrad loans did way back when, but what if it is 11%?)... So I went ahead and took the PLUS. My best advice - try to pay off all your debt beforehand although this may be a little late since programs start very soon - and MAKE A BUDGET! I made a plan about last january when I started taking pre-reqs to pay all my debt off except my 1/2 of the mortgage and devised a pretty decent budget to live on. This way I don't need to take out AS MUCH as many other students. Also, my advisor told me to start looking at scholarships for your particular interest (i.e., I want to work in peds and she said to start searching for scholarships that relate directly to this). She said to make a spreadsheet of when all apps are due and a month before a particular app is due, get all the paperwork together. She finds this has helped a lot of students. I also plan to get some federal work study. I believe the minimum is $4500 per year, so for a 3-year DPT, that is $13,500 less in loans you need to take (you may qualify for more based upon financial need). I have put the time in and done the research, so I hope this helps!!!

 

[Bovie21]

I met with my financial advisor about two weeks ago. We went through all the options because I too was concerned about the PLUS loan being at 7.9%. However, after all the research I did in addition to meeting with my counselor the PLUS loan seemed like the only logical choice. Not only can you take out more money with the PLUS than with traditional private loans (most of these max out at 10,000/year or 100,000/life of loan), the interest rate is LOCKED. That means we know we will pay the 7.9% after we graduate. Every private loan I looked into was 5% VARIABLE. With today's ever-changing economy, and not knowing exactly where we will be post-graduation, I don't want to take that kind of chance (yes, it could drop to 3% after we graduate like my undergrad loans did way back when, but what if it is 11%?)... So I went ahead and took the PLUS. My best advice - try to pay off all your debt beforehand although this may be a little late since programs start very soon - and MAKE A BUDGET! I made a plan about last january when I started taking pre-reqs to pay all my debt off except my 1/2 of the mortgage and devised a pretty decent budget to live on. This way I don't need to take out AS MUCH as many other students. Also, my advisor told me to start looking at scholarships for your particular interest (i.e., I want to work in peds and she said to start searching for scholarships that relate directly to this). She said to make a spreadsheet of when all apps are due and a month before a particular app is due, get all the paperwork together. She finds this has helped a lot of students. I also plan to get some federal work study. I believe the minimum is $4500 per year, so for a 3-year DPT, that is $13,500 less in loans you need to take (you may qualify for more based upon financial need). I have put the time in and done the research, so I hope this helps!!!

Thank you, this was very helpful.

 

[9ernation]

Thanks for the help! just a question about work study though, whats the difference between work study and working a part time job?

 

[MFS6]

There is no real difference between work study and a part-time job besides the fact that the work study position has been given federal funding and the employer is only allowed to hire students who have been granted work study money in their financial aid package...so the competition for those positions is probably lower. You have to be careful with how much you work though because once your work study money runs out you may be out of a job, unless they have other money to keep paying you with.

 

[9ernation]

Thanks! Can you still get taxed with work study? or is it tax free?