Cost of Attendance? What's a significant difference?

[hashtagDPT]

I keep hearing on all of these threads that people wish they had looked into cost a lot more when they were deciding on a school. And yes, I understand that when one school costs $22k and the other costs $50k per year, you should probably pick the cheaper school. But what about smaller differences in price? Maybe more like $8-10k per year more? At what point is the price difference "significant?"

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[mccomasg09]

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[jdaniels360]

amen to that! great post, that would be my advice too.

 

[Litlwarrior08]

Don't forget that different locations will have different cost of living........ for example California is higher that NV or AZ. This will play big on the amt you have to take in loans.

 

[Nailey13]

"but a a solid rule of thumb is you are generally going to pay back at least of what you borrow most times more, if you only pay minimum payments."

What amount? Double?

Thanks.

 

[469738]

It probably will not be double, but it is based on the interest rate that you borrow at and what monthly payments you make. If you pay the minimums every month, maybe times this just pays down the interest (not the prinicpal amount). The prinicpal amount is how much you borrowed. The quicker you can pay down the principal amount the less interest you will accrue.

 

[GTT4DPT]

Just to throw out some numbers (if I'm wrong on something, someone please let me know)...

At 6.8% interest--the current stafford rate-- monthly payments on a $10k loan over a (10,15, 25) year time horizon will be ($114, $88, $68). Which maybe doesn't sound so bad. But wait...

Then there's the limit on federal grad school loans to consider. If you're looking at places that will run $20k/year on the low end, then anything above that is going to be coming from private loans. Those will be at a rate higher than 6.8%. At 7.8%, the monthly number above becomes ($119, $93, $74).

So $10k difference per year becomes an additional $30k after three years. The $60k in loans becomes $90k.

60k at 6.8% means you'll be paying back $400 a month for the next 25 years. But $90k where you have to get the additional money at 7.8% means you'll be paying back $630 a month for the next 25 years. Your monthly payments increase by 54% even though the amount borrowed only increased 50%. At 8.8% on private loans (who knows what you'll end up with), it's closer to a 60% increase.

Maybe that doesn't mean much to you, but it's worth considering (especially as you get a clearer sense of what kind of private loans you can get).

It's probably a good idea to really stare at the numbers for awhile and think about what the psychological impact of debt may be on you down the road. Only you know yourself and what will be significant. Maybe with less debt you'll feel more free to take a job you prefer instead of one that lets you keep up with your bills. Maybe it will put you in a better position to start your own practice if that's something you dream of. Or maybe you love the student lifestyle, can live on the cheap and will pay down your debt in 5 years (which would be $1,800/month to cover $90k borrowed at 6.8%/7.8%).

My only point here is that the last dollar you borrow will be the most expensive dollar you borrow. And regardless of how you structure your payments, it will be the last one you pay off.

 

[469738]

Coming from the PT that I observe, she gave me the advice it really does not matter what school you go to as long as you get the degree and get your license. So, try and do it as cheaply as possible or when you graduate and get a job, try and live frugally for a couple years to pay down the debt. Theres nothing like the feeling of paying off that debt.

If you are unsure of what difference it makes far as how much it costs for 5,10,20 year loans and different interest rates and principal amounts, I suggest you seek gudiance from a financial advisor or perhaps a relative, friend or professor that understand finances so you can get a clear understanding of what the numbers mean. It will help you feel better knowing a through understand of how borrowing works.

 

[wjs010]

It's not just tuition. Gotta look into living expenses too. When one total loan is 30,40,50 thousand cheaper it may be wise to pass up an extremely expensive school. I just did that in fact. Probably not a wise choice lol but well see how it works out. Remember, it's about the total loan and the amount you will have accrued in interest that will really **** you.

 

[callmecrazy]

8-10k more per year will translate to 24-30k total over 3 years. As part of a standard 10 year repayment plan at 6.8% interest, that 24k becomes a 33k payback, or 30k becomes 41k. If your loan totals are high and your starting salary is average, you may need to do a 20 or 30 year extended repayment instead of 10, which drives up the total interest paid significantly.

For those doubting it can double. I'm just starting repayment. In a 10 year plan my interest would be about 37% of my principal. A 20 year plan would make it 83%. If I dragged it out to a 30 year plan, I would be paying more interest than principal at a total of 134% of the principal, well over doubling the payback.

It's easy to forget how fast interest accrues, and to remember that those payments are coming out every month, on top of all your other post graduation living expenses. A helpful calculator can be found at www.finaid.org/calculators/loanrepayments.phtml.
It will break everything down for you including loan terms, monthly payments, and recommendations on what your salary would need to be to afford those payments. Play around with it and you'll find out how fast those little cost differences add up.

 

[mccomasg09]

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[mccomasg09]

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[Litlwarrior08]

remember the unsub. direct loan has a cap, especially if you already used it for undergrad. and you can only borrow 20,500 per year, (- the origination fee which you never get to see) the the rest would be Grad Plus or private. Grad Plus can be used for those living expenses. I thought it was 7.4% currently. and the gov loans can be consolidted. there are other postings related to this and info on the gov loan web site, and charts that show payments and total payback. OUCH pay extra towards the principal whenever you can....... Not looking forward to that part of my life. It would be really nice if those interest rates came down or we could refi.like w/ home loans. lol

 

[GTT4DPT]

I was just using 7.8% as an example. It looks like GradPLUS loans are coming in at 7.9% right now. But if you ended up having to rely on a private loan, things could get much worse (I've heard some crazy numbers...better than a credit card, but not much).

Good call on the timing of the loan amounts. I was just using a single lump sum amount taken out at once without any deferral period. So the reality would only be more bleak to the extent your loans accrue interest while in school.

Thanks to others for underscoring that tuition is only one source of debt and that these considerations should really be taking the cost of living into account. Things can get out of hand real quick.

 

[mccomasg09]

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[callmecrazy]

Does anyone know the numbers for stafford loans if you did use themin undergrad? How much you have remaining for grad school?

The current maximum Stafford aggregate loan limit is $138,500.00. The annual limit in grad school is $20,500.00. Even if you borrowed your undergrad max, you won't hit the aggregate threshold in a 3 year PT program.

Scroll down to the loan limit chart.
http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp

 

[mccomasg09]

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[fahimaz7]

You need to go to the cheapest school that you can. This isn't medical school or some phd program in astrophysics. All the DPT's that graduate take the same board exam and get hired for the same jobs. Don't come out of PT school $100,000+ in debt, only to find out that you're going to make $65,000 a year.

 

[DCasey]

Just to throw out some numbers (if I'm wrong on something, someone please let me know)...

At 6.8% interest--the current stafford rate-- monthly payments on a $10k loan over a (10,15, 25) year time horizon will be ($114, $88, $68). Which maybe doesn't sound so bad. But wait...

Then there's the limit on federal grad school loans to consider. If you're looking at places that will run $20k/year on the low end, then anything above that is going to be coming from private loans. Those will be at a rate higher than 6.8%. At 7.8%, the monthly number above becomes ($119, $93, $74).

So $10k difference per year becomes an additional $30k after three years. The $60k in loans becomes $90k.

60k at 6.8% means you'll be paying back $400 a month for the next 25 years. But $90k where you have to get the additional money at 7.8% means you'll be paying back $630 a month for the next 25 years. Your monthly payments increase by 54% even though the amount borrowed only increased 50%. At 8.8% on private loans (who knows what you'll end up with), it's closer to a 60% increase.

Maybe that doesn't mean much to you, but it's worth considering (especially as you get a clearer sense of what kind of private loans you can get).

It's probably a good idea to really stare at the numbers for awhile and think about what the psychological impact of debt may be on you down the road. Only you know yourself and what will be significant. Maybe with less debt you'll feel more free to take a job you prefer instead of one that lets you keep up with your bills. Maybe it will put you in a better position to start your own practice if that's something you dream of. Or maybe you love the student lifestyle, can live on the cheap and will pay down your debt in 5 years (which would be $1,800/month to cover $90k borrowed at 6.8%/7.8%).

My only point here is that the last dollar you borrow will be the most expensive dollar you borrow. And regardless of how you structure your payments, it will be the last one you pay off.

Good news. In a rare show of solidarity, Congress united to pass a Highways-Student Loan Bill today. Stafford loans won't go up to 6.8% interest, remaining at 3.4% instead. That extra few percentage points are big when you're borrowing 100k+!

 

[GTT4DPT]

Good news. In a rare show of solidarity, Congress united to pass a Highways-Student Loan Bill today. Stafford loans won't go up to 6.8% interest, remaining at 3.4% instead. That extra few percentage points are big when you're borrowing 100k+!

I think the 3.4% number may just be for subsidized undergraduate loans. Those of us destined for grad school are holding steady at 6.8%:

http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp

And on top of that, it looks like a PT student could only take out $61,500 total in stafford loans (3 years x $20,500 max per year). For anyone getting into $100k+ territory, they're going to have to borrow a good chunk of that at rates beyond 6.8%.

 

[DCasey]

You're absolutely correct, GTT4DPT. I was excited to hear about congressional action on student loans and didn't realize the bill only affected undergrads.

PTs may be added to the National Health Service Corps (NHSC) Loan Repayment Program list of eligible professions, through passage of HR 1426, S. 975. This is quite overdue. Not to minimize any other health professions, but if dental hygienists are eligible, physical therapists should be too.
http://www.apta.org/PTinMotion/NewsNow/2011/4/8/NHSC/

Govtrack places the odds of that bill passing at 4% (http://www.govtrack.us/congress/bills/112/hr1426), so please contact your local congressperson.

 

[Ashleypredpt]

The current maximum Stafford aggregate loan limit is $138,500.00. The annual limit in grad school is $20,500.00. Even if you borrowed your undergrad max, you won't hit the aggregate threshold in a 3 year PT program.

Scroll down to the loan limit chart.
http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp

So if I went to a school like Wash U that is 30k a year, and cost of living is around 20k a year, would I even have a chance to get that much in private loans to cover everything??

Considering my parents do not help me with anything, and do not have good credit where they could cosign on loans for me.

 

[mccomasg09]

.

 

[DCasey]

I think the 3.4% number may just be for subsidized undergraduate loans. Those of us destined for grad school are holding steady at 6.8%:

http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp

And on top of that, it looks like a PT student could only take out $61,500 total in stafford loans (3 years x $20,500 max per year). For anyone getting into $100k+ territory, they're going to have to borrow a good chunk of that at rates beyond 6.8%.

It seems subsidized Stafford loans won't be available to grad students at all, beginning 7/2012. That's an incredibly frustrating new wrinkle.
http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp