Canceling Private Loans?

[atomicnugget]

Hello everyone,

I have a question about a potential situation I might face in the upcoming months. As someone who got accepted to a school that requires private loans, but have been fortunate enough to be on several waitlists, I wanted to know what my steps should be to navigate the financial loans portion.

Eventually I will reach a deadline where I need to apply for and start handling the financial aid portion, but once I get approved/and or pay tuition.. if I get taken of WL and decide to go elsewhere, do I get to refund that money from the school or from the bank? Considering the other schools would have federal loans options available?

My gut tells me that I would have to take out private loans initially and if I committed elsewhere, I would either use the approved amount toward the new school and deal with the year of private funding or use the same money to pay back the loan immediately minus any fees or etc involved. But is that really the right or only option available?

And before anyone asks, I’ve had other means of paying undergrad tuition so im not really savvy to the whole school loan process.

Thank you

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[AlbinoHawk DO]

Since you're dealing with a private lender and a specific institution, you need to communicate with both of them. Understand what their policy is for when a student withdraws from a school. Understand if the school will keep that tuition or even a partial tuition. You need to figure out how fast you need to pay the balance before you're indebted with interest. Nobody here can really answer this unless they knew both institutions and their policies

 

[atomicnugget]

Since you're dealing with a private lender and a specific institution, you need to communicate with both of them. Understand what their policy is for when a student withdraws from a school. Understand if the school will keep that tuition or even a partial tuition. You need to figure out how fast you need to pay the balance before you're indebted with interest. Nobody here can really answer this unless they knew both institutions and their policies

Fair point, and this thread wasn’t meant to be anything more than additional perspective along with the things u listed above. But, some things you just can’t expect the school or a lender to tell you.

I just always heard stories of students deciding to change schools sometimes literally days before their start dates, and usually leave out details of how they navigated their loans and more.

 

[RangerBob]

What school requires private loans for medical school? That seems very odd. I would avoid private loans like the plague.

Regardless, ask your school what their tuition/refund policy is, what the deadlines are, etc. If they require private loans, I wouldn't be surprised if tuition is non-refundable after a certain date (even before matriculation) or that they deduct a certain percentage of a refund.

Likewise for the lenders--they'll usually charge a processing/origination fee. You'll also want to verify your loan allows you to pay it off early without penalty. Some

It might even be better to just pay the school late/deal with the late payment penalty if you think you might get off a WL. You'd have to talk with the lender about that, as you'd need the loan approved beforehand, and ready to be dispersed when you say it's time.

 

[atomicnugget]

What school requires private loans for medical school? That seems very odd. I would avoid private loans like the plague.

Regardless, ask your school what their tuition/refund policy is, what the deadlines are, etc. If they require private loans, I wouldn't be surprised if tuition is non-refundable after a certain date (even before matriculation) or that they deduct a certain percentage of a refund.

Likewise for the lenders--they'll usually charge a processing/origination fee. You'll also want to verify your loan allows you to pay it off early without penalty. Some

It might even be better to just pay the school late/deal with the late payment penalty if you think you might get off a WL. You'd have to talk with the lender about that, as you'd need the loan approved beforehand, and ready to be dispersed when you say it's time.

It’s a new school therefore hasn’t qualified for federal loans yet until possibly later in the year after classes start. Your first statement and others echoing it is exactly why I’m hesitant to start the process and holding out till I know where I stand with all my schools.

Don’t get me wrong, I love the school of mention and have no issues actually going there. But I just don’t like the idea of taking out private loans unless I’m a 100% certain I need to, especially if others allow federal loans, which definitely factors into where I decide to go.

Either way, it sounds like there’s no harm in getting pre approved? Being relatively new to this, idk if getting a private loan funds takes several weeks or if it’s a relatively quick couple days process. If it’s the latter I might try to wait till as long as I can.

 

[RangerBob]

It’s a new school therefore hasn’t qualified for federal loans yet until possibly later in the year after classes start. Your first statement and others echoing it is exactly why I’m hesitant to start the process and holding out till I know where I stand with all my schools.

Don’t get me wrong, I love the school of mention and have no issues actually going there. But I just don’t like the idea of taking out private loans unless I’m a 100% certain I need to, especially if others allow federal loans, which definitely factors into where I decide to go.

Either way, it sounds like there’s no harm in getting pre approved? Being relatively new to this, idk if getting a private loan funds takes several weeks or if it’s a relatively quick couple days process. If it’s the latter I might try to wait till as long as I can.

Ah--that makes sense. I guess I didn't realize new schools aren't eligible for federal loans. That's quite a bummer.

Getting per-approved is helpful, but if they do a hard credit pull then that stays on your credit report for a certain amount of time. I don't recall if the US Dept of Ed does a credit pull or not. If they don't, it might make sense not to rush, but I'm the type of person who would want to make sure I have a backup to my backup plan, so I'd plan ahead and probably get pre-approved and all that.

Private loans are typically pretty quick. If you're getting an MD then the lenders will usually make it pretty easy. They know they'll make money off you (and with rates where they're at, they'll probably make a good amount, so shop around if you can). The lenders could tell you how long it takes to do the whole process. I doubt it's weeks if you're on top of the ball and responsive to the documents they request.

Be careful with the loans you get. I don't know if these are specific MD-loans, but private loans are not as favorable as federal loans. They will usually have a max deferral period, higher repayments, and could enter repayment in residency. Read the fine print and make sure you either don't enter repayment in residency, or if you do, if the payments will be manageable.