can someone explain to me the benefits of Grad Plus Loans vs Unsub Stafford loan

[slashnroses19]

I was offered both and was wondering if anyone had insight as to which is better to borrow from, Direct Federal Grad Plus Loans or Unsubsidized Stafford Loans? Thanks

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[jol2008]

Good question. Would like to know the answer, too .

 

[Andrea86]

I currently have both Grad PLUS loans and Stafford Loans. Although I think you should call the financial aid office before you make a real decision, I hope this helps:

Stafford Unsub- Interest starts accruing as soon as you take it out/while you are in school. However, you can defer payment until graduation. My interest is 6.8%.

Stafford Sub- Interest doesn't start accruing until you are done with school. I believe you have a grace period as well (6 months?).

Grad PLUS- This loan accrues interest as soon as you take it out, and has a high interest rate. Mine right now is 8.5%.

Obviously you want to choose the loan with the lowest interest rate. Remember that when interest accrues, its on the amount from the previous month. So say you take out $1,000 and you accrue interest that first month of $100. Now the new total is $1100, and for the next month your interest will be charged on the $1100, not the principle of $1000. So as you can see, interest really racks up.

Anyways, hope this helps!

 

[pumpUup]

If tuition is $100,000,
stafford sub gives u $10,000
stafford unsubs gives you $20,000
then there is no choice but to take grad plus that gives u the remainder of $70,000, right?

If you don't take all three diff types of loans, how are you planning to pay for tuition?

And for those of you who will attend MWU, did you guys find a way to apply for loan besides signing MPN?

 

[s2agrado]

If tuition is $100,000,
stafford sub gives u $10,000
stafford unsubs gives you $20,000
then there is no choice but to take grad plus that gives u the remainder of $70,000, right?

If you don't take all three diff types of loans, how are you planning to pay for tuition?

And for those of you who will attend MWU, did you guys find a way to apply for loan besides signing MPN?

That's exactly right (to the best of my knowledge). There are limits to the amounts of stafford loans, so you have to take all three, UNLESS...your school participates in the Health Professions Loan program. This loan has a 5% rate, which is a better option than the Grad Plus. Find out if your school offers this...see link belowhttp://bhpr.hrsa.gov/dsa/hpsl.htm

 

[pumpUup]

That's exactly right (to the best of my knowledge). There are limits to the amounts of stafford loans, so you have to take all three, UNLESS...your school participates in the Health Professions Loan program. This loan has a 5% rate, which is a better option than the Grad Plus. Find out if your school offers this...see link belowhttp://bhpr.hrsa.gov/dsa/hpsl.htm

Didn't Obamacare stop "school as a lender" type of loan?

 

[icedspice]

hey this is one of the excel sheets that a sdner had put up. the numbers he has estimated for each loan is different (higher amount for subsidized loan) but it will give u an idea of your total loan/interest nevertheless.

eeks, nm i dont know if the attachment came through. Here is the link for the guys post:
http://forums.studentdoctor.net/showthread.php?t=680644&highlight=loan+breakdown

 

[slashnroses19]

I feel like those calculations weren't done correctly. Shouldn't interest be higher. For example, does interest on the first loan keep compounding through the 4 years or does it stop after the first year? I guess I should call but its Sunday

 

[s2agrado]

Didn't Obamacare stop "school as a lender" type of loan?

This is a government loan through the US Dept of Health and Human Services. It's based on financial need however and requires your parents AGI on the FAFSA (even though all Graduate level students are considered independent...still requires parents info for this loan).

Obamacare did stop private student loans, although I'm not sure of the complete details. IMO private student loans were always a bad idea

 

[Flipper405]

The program that was axed was the FFELP (Federal Family Education Loan Program):
http://en.wikipedia.org/wiki/Federal_Family_Education_Loan_Program

Essentially, this was federal money that was given to banks which in turn was lent to students. What Obama has done is cut out the middleman by leaving the direct loan program as the only government loan option: http://en.wikipedia.org/wiki/Federal_Direct_Student_Loan_Program

For me, the difference will be paying 8.25% with Discover (they gave me -.25% for signing up for direct deposit) and 7.9% with the direct loan on grad plus. The stafford interest is still 6.8%.

For OP, unsubsidized stafford is definitely better, but sometimes it's not enough if you go to an expensive school.