DirectPLUS Loan vs. Private Loan?

[jinsonk42]

Hi! I am Pre-dent and will attend dental school this fall. I need some advice which loan lender I need to choose. Since I have to take out loan 100% , it seems I only have 2 options unless I get scholarships but most likely I have a low chance to get them since they are so competitive. Anyways, I am debating which loan lender would be long run beneficial.

I received Federal Unsubsidized and DirectPLUS to cover tuition with 7.03% interest.
But I also heard that private loan may have a lower interest rate (~4%) if you have a good credit score which I believe I have a pretty decent credit score.

I wonder if anyone has any advice regarding this? If you do a private loan, any recommendation?
Thank you so much for your help in advance

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[Combine33]

Always go with the feds, even if the PLUS loan has a higher percentage. Take the CARES act just signed as an example. People who borrowed from the ED, including Grad PLUS loans, are included in the 0% interest and $0 payments until Sep. This does not apply to any private loan. Food for thought, homie.

 

[BYU4you]

FED for sure. Look at what’s happening now, Im not sure about private loans but I know my federal loan is currently frozen on interest accrued. I also have a family and kids and knowing if anything happens to me having federal loans isnt a death sentence for them too. Or have the options of different payment strategies with federal.

You could always just refinance down the line anyways.

 

[Dynex2013]

you should look into private bank student loans and compare the interest rate. sure the cares package covers federal loans for this year, but that won't last for much longer. if you lock in a private loan, the interest could be close to 2-3% rn.

food for thought - yyou have itme.

 

[beannaithe]

Definitely do the fed loans. I'm paying back loans now and my federal loan is frozen with no interest. They dropped my automatic payments and aren't debiting any money from my account. My private loan is still sending billing statements and expecting to be paid. Federal loans are also covered if you pass away. I don't believe private loans are.

 

[Dynex2013]

Federal loans are also covered if you pass away. I don't believe private loans are.

I would investigate that and check the fine print. Not to say that isn't true but check the facts.

If you have a co-signer, they're still responsible for the loan.

 

[allDAT]

Don’t take out a private loan if you qualify for federal loans. If you don’t qualify for federal loans, really take a hard look at how much you’re borrowing to go to school and if it’s reasonable and/or possible to repay the loans and maintain a modest standard of living.

If you take federal loans up until you have to take the PLUS loan and you take the private loan instead, you’ll be paying 10% of your income under IDR on the fed loans and you’ll also be paying for the private loan. Without knowing your exact numbers, this will likely create a cash flow problem during your first 5 years of practice.

As an aside, with everything going on with COVID and our profession...talk to a dentist about what you’re getting into and talk to a few students at the dental school where you gained acceptance (It may be a really good year to defer acceptance as the schools are going to be a total mess).

 

[batman12345]

you should look into private bank student loans and compare the interest rate. sure the cares package covers federal loans for this year, but that won't last for much longer. if you lock in a private loan, the interest could be close to 2-3% rn.

food for thought - yyou have itme.

Might make sense if you’re only taking out 100-200k. Bad idea for most going to school for 300-400k+

 

[LaughingGas]

I would investigate that and check the fine print. Not to say that isn't true but check the facts.

If you have a co-signer, they're still responsible for the loan.

This is one reason why I haven’t refinanced yet. I am married and if anything were happen to me, didn’t want to pass this to my wife ( I know it’s a lot more complicated than this). But if anything happens to me, fed loan is gone.

 

[allDAT]

This is one reason why I haven’t refinanced yet. I am married and if anything were happen to me, didn’t want to pass this to my wife ( I know it’s a lot more complicated than this). But if anything happens to me, fed loan is gone.

Life insurance would address this issue. Disability is still a challenge though.