I hope you guys have more "details" than just the CURRENT rate for these loans. Is there a cap on the interest rate? What outside source are they using to base the variable rate? How often can they adjust the rate? Can these loans be re-consolidated at a later time? What is the minimum time students must carry the loan? Are there penalties for early payments? Variable rate loans in general are VERY risky (do some research and ask a financial advisor if you do not understand how variable rate loans work). The current interest rate looks great, but it can change multiple times (you need to know how much it can change and how often) and over a long period of time- like the time it takes to pay back upwards of $200,000 in medical school loans, it is impossible to predict the future interest rate. This is not the type of loan where you just say "Oh, its like 7.5%!" and sign the papers...
We're supposed to have a school wide info session about the changes in financial aid sometime this month, once the terms are finalized. Here's the email from our president Dr Dubin that we all got:
Student Doctors,
Today I am announcing a new Health Profession Loan program. As a result of changes in the financial and student loan markets, the RVU Board of Trustees has approved a variable rate Health Profession Loan (HPL-V).
Effective spring term 2012 OMS I, II, and III students may apply for either a Sallie Mae Smart Option Loan or the HPL-V program. OMS IV students may continue with the current fixed rate HPL or switch to a Sallie Mae or HPL-V loan for the spring term.
Only OMS IV students may apply for the current fixed rate HPL for spring term.
The HPL-V interest rate will be based on the one-month LIBOR + 7.25%. Todays one-month LIBOR rate is .25% which results in a current interest rate of 7.5%. Students who apply with a credit worthy cosigner will receive a .25% discount. The current HPL fixed rate is at 8.5%, so this is really exciting news.
Importantly, a new addition with this program will permit students to have the opportunity to apply for a Residency or Internship Deferment after graduation.
Kathy Leary is currently working with Cology and the Bank of Lake Mills to confirm the terms of the new HPL-V. You can expect to get more details from Mrs. Leary next week as she receives more specific information. We will be setting up meetings to explain the program in more details.
Dr. Dubin
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Dr. Dubin seems happy about it, since our HPL loan was fixed but at an interest rate decently above federal loan rates. I'm hoping this is actually a good thing. Once I get the details, I'll post a link or copy/paste them for you guys.