Student Loans - How to

[Stoltzfus]

I am an undergraduate junior that will be taking the MCAT in January and applying to medical school in 2014. Despite the cost of my private research college, I have managed to pay for the first 5 semesters without loans outside of federal aid. However, for this year the school dropped 8k of aid per semester, so now I am in a bind and need to take out a loan. My parents are financially stable and willing to help, but do not intend to pay for my schooling directly. I would appreciate advice to one particular issue: what loan makes repayment the most viable? I am currently not worried about fees and interest rates. I believe I can wade through that information myself. However, I am unfamiliar with how I can go about paying back the loan.

Approach: In theory I could take a loan directly from a relative, my parents could take out the loan on their line of credit, or the loan could be under my name with my parents cosigning. My biggest concern here is the viability of paying off the loan. I know that hospitals commonly provide assistance in paying off school debt. Are their guidelines as to what they will help pay off? Does it need to be under my name? Specifically a student loan? (and so forth)

Thanks in advance for any direction you can provide me.

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[Jay K]

I know that hospitals commonly provide assistance in paying off school debt.

This is not true in the slightest; You will be lucky to receive reimbursement for relocation from hospitals in BFE.

 

[RangerBob]

This is not true in the slightest; You will be lucky to receive reimbursement for relocation from hospitals in BFE.

I've heard of some primary care groups offering loan repayment, but often where people don't want to be...

I'd recommend the OP apply for federal loans--they're safer, offer flexible repayment plans, and don't put your family on the hook. In the event the OP qualifies for some kid of loan repayment, it generally has to be student loans (federal or private). And yes, generally the loan has to be under your name.

 

[Jay K]

Additionally, if possible, take your loans from a different bank each year (choose whichever offers the best rate); They often don't tell you, while you're in school, that to later be able to consolidate your loans, one must have loans from at least two different institutions.

 

[dpmd]

Additionally, if possible, take your loans from a different bank each year (choose whichever offers the best rate); They often don't tell you, while you're in school, that to later be able to consolidate your loans, one must have loans from at least two different institutions.

I think the federal student loans are only being offered through Direct Loans (basically the government) and there aren't many benefits to consolidation anymore (since the rates are fixed and there aren't different companies vying for business with consolidation incentives).

 

[dpmd]

I am an undergraduate junior that will be taking the MCAT in January and applying to medical school in 2014. Despite the cost of my private research college, I have managed to pay for the first 5 semesters without loans outside of federal aid. However, for this year the school dropped 8k of aid per semester, so now I am in a bind and need to take out a loan. My parents are financially stable and willing to help, but do not intend to pay for my schooling directly. I would appreciate advice to one particular issue: what loan makes repayment the most viable? I am currently not worried about fees and interest rates. I believe I can wade through that information myself. However, I am unfamiliar with how I can go about paying back the loan.

Approach: In theory I could take a loan directly from a relative, my parents could take out the loan on their line of credit, or the loan could be under my name with my parents cosigning. My biggest concern here is the viability of paying off the loan. I know that hospitals commonly provide assistance in paying off school debt. Are their guidelines as to what they will help pay off? Does it need to be under my name? Specifically a student loan? (and so forth)

Thanks in advance for any direction you can provide me.

The way you go about paying any loan is you make more than you living expenses so you can make payments on the loan. Increasing your income or decreasing your expenses is the necessary. Relying on a third party to pay it off is not a great plan since it isn't common and is specialty and location dependent. Also, nobody is giving anything away for free so it is likely the loan repayment comes with less pay than you would have gotten otherwise. You need to take loans with the understanding you will pay them back (I think that is something that people are often unrealistic about), but realize that if you get into med school it will be difficult to continue working so paying back a loan will be a challenge. That is the benefit of federal student loans (along with the fact that they don't evaluate creditworthiness, and the interest rate is lower than any other unsecured loan for people who usually have no credit history). However, if your family is able to front you the money and wait for you to start making a living in order to pay it back with some agreed upon interest that would possibly be your best route (especially if they are the kind of people who would take pity on you if you run into financial troubles and have the financial ability to not rely on your repayment). For some families it would adversely affect the relationship, so you have to consider that.

 

[Slaol]

I know that hospitals commonly provide assistance in paying off school debt. Are their guidelines as to what they will help pay off? Does it need to be under my name? Specifically a student loan? (and so forth)

Thanks in advance for any direction you can provide me.

Each place is different, but the easiest loans to get paid off are Federal Loans.

As a second year Family Medicine resident, I can say that the vast majority of job offers contain some sort of loan repayment incentive - however, they usually are tied to a 3-5 year commitment AND are taxed as income. The most money I have personally seen offered in one chunk is $200k for a 5 year commitment in rural Minnesota. After taxes and fees, this comes to around $140-$150k. This is also negotiable at the time of contract negotiation.

Another option for primary care is to look into your hospital's HPSA score. Each facility in the US that receives federal dollars is ranked on basis of healthcare need and access to services. There is a program through the NHSC (National Health Science Corps) that will pay up to $60,000 TAX FREE towards your federal loans for every two years you serve at a qualifying site.

https://nhsc.hrsa.gov/loanrepayment/index.html
https://nhsc.hrsa.gov/downloads/lrpataglance.pdf

Even with all these incentives and programs, most people still take many years to pay off their loans. I am personally sitting on a mountain of debt myself. Don't get caught in the trap of thinking that all your worries will be wiped away later by a third party.

Not sure if this helps.

 

[The White Coat Investor]

Plan to pay your loans back. Take out the Federal loans. Live like a resident until they're gone.

 

[Stroganoff]

OP, weren't you asking about undergraduate financial aid as opposed to med school? I thought you were asking how to fund the second semester of junior year + senior year. The answer is still the same: private loans are last resort. 1) Family loan (as dpmd said) is ideal depending on the terms and flexibility; followed by 2) Federal loans starting with subsidized Stafford. Your financial aid office and FAFSA should cover all of this.

Med school finaid is a different but similar game; the same advice applies.

 

[marinevericel]

I am an undergraduate junior that will be taking the MCAT in January and applying to medical school in 2014. Despite the cost of my private research college, I have managed to pay for the first 5 semesters without loans outside of federal aid. However, for this year the school dropped 8k of aid per semester, so now I am in a bind and need to take out a loan. My parents are financially stable and willing to help, but do not intend to pay for my schooling directly. I would appreciate advice to one particular issue: what loan makes repayment the most viable? I am currently not worried about fees and interest rates. I believe I can wade through that information myself. However, I am unfamiliar with how I can go about paying back the loan. Approach: In theory I could take a loan directly from a relative, my parents could take out the loan on their line of credit, or the loan could be under my name with my parents cosigning. My biggest concern here is the viability of paying off the loan. I know that hospitals commonly provide assistance in paying off school debt. Are their guidelines as to what they will help pay off? Does it need to be under my name? Specifically a student loan? (and so forth) Thanks in advance for any direction you can provide me.