Am I wrong about student loans?

[SnowyRox]

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I have always thought that private student loans were to be avoided at all costs unless Uncle Sam stopped lending you money. But I just got a message from my bank offering a student loan for health professionals up to $180,000 at 4.6% interest. What am I missing? This appears much better than the gov't loans. Is the issue that the private loans can increase the interest rate?

 

[Emiloo4]

I have always thought that private student loans were to be avoided at all costs unless Uncle Sam stopped lending you money. But I just got a message from my bank offering a student loan for health professionals up to $180,000 at 4.6% interest. What am I missing? This appears much better than the gov't loans. Is the issue that the private loans can increase the interest rate?

It's probably not a fixed rate... but it's worth looking into.

 

[WhtsThFrequency]

It's probably not a fixed rate... but it's worth looking into.

This.

 

[psilovethomas]

Exactly, Emiloo. Private loans are not at a fixed rate, rates can increase without notice, and there is not ceiling (maximum) on the interest rate. Federal loans are at a fixed rate. I think you can take out up to $42k/year in Stafford federal loans. The rest is in Grad PLUS federal loans. (higher interest rate)

 

[cowgirla]

Agree on the fixed vs variable interest. some private loans are also % interest + a prime rate, making them even higher than advertised.

You also would not be eligible for repayment programs such as IBR.

And what if you decide to go back to school? will the private loan be deferred while you are a student? Say, you decide you need a PhD or whatev.

 

[PppermintTwist]

I have always thought that private student loans were to be avoided at all costs unless Uncle Sam stopped lending you money. But I just got a message from my bank offering a student loan for health professionals up to $180,000 at 4.6% interest. What am I missing? This appears much better than the gov't loans. Is the issue that the private loans can increase the interest rate?

Besides checking on if the rate is variable, also check to see if you are required to pay it back while in school or if its deferred payments like a school loan.

Also...there are a lot more repayment options with student loans. Income based repayment for example... I dont believe you'd be able to defer or postpone payments on a private loan if you fall on some hard times.

Just make sure to read the fine print 🙂 Good luck

 

[SnowyRox]

You definitely don't have to start paying it back until 6 months after graduation. I will call my bank later and talk to them about the offered loan. It doesn't say how long you have to pay it all back... hmmmm.

 

[skinn1212]

Keep in mind also that a bill is going to be voted on in congress that would make Federal Direct Student loans have a fixed interest rate at around 3.4%. This is supposed to be done prior to June 2012.

 

[nordicat]

Keep in mind also that a bill is going to be voted on in congress that would make Federal Direct Student loans have a fixed interest rate at around 3.4%. This is supposed to be done prior to June 2012.

 

[jemappellejane]

OT, Nordi, your avatar rules.

 

[WhtsThFrequency]

Keep in mind also that a bill is going to be voted on in congress that would make Federal Direct Student loans have a fixed interest rate at around 3.4%. This is supposed to be done prior to June 2012.

That's for undergraduate loans, not graduate, I believe.....?