does this loan route make sense?

[gshocke]

i graduated Ugr with 15k in loans, all subsidized with about 3-4% intererst rate. my 6 month grace period has recently ended but i was able to defer my payments b/c i dont have a full time job. i work part time.
my sole purpose in taking a gap year was to save money and possibly pay down a good portion of my loans before starting med school and taking on more loans.

however, ive been thinking lately, med school loans are currently at a 6-7% rate and are not subsidized. i am on the path to save 10k during this gap year - should i use that money to pay my ugr loans now or should i continue to keep my loans deferred and put that money towards tuition/living expenses in med school so that is 10k less that i have to take out in med school loans.

it makes more sense to me to use that money to avoid 10k worth of med school loans that are at a higher rate, rather than using that money to pay for ugr loans that are not only at a lower rate, but are also subsidized.

I was just asking in case there is some government catch on student loans that i am not aware of that would counteract my plan.

thanks!

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[Osteoth]

Full disclosure, I graduate UG with no loans so I am not exactly sure of the specifics.

With that being said, however, have you already applied to medical school? Do you have money saved for that process? During my application cycle I spent about $10,000 total, applying to 35 schools (from CA with average stats).

If the answer is no, save this money and pay for your AMCAS + travel expenses + hotels etc, then see how much is left.

 

[chenzt]

That's what I'm doing.

 

[ZymurgySurfer]

i graduated Ugr with 15k in loans, all subsidized with about 3-4% intererst rate. my 6 month grace period has recently ended but i was able to defer my payments b/c i dont have a full time job. i work part time.
my sole purpose in taking a gap year was to save money and possibly pay down a good portion of my loans before starting med school and taking on more loans.

however, ive been thinking lately, med school loans are currently at a 6-7% rate and are not subsidized. i am on the path to save 10k during this gap year - should i use that money to pay my ugr loans now or should i continue to keep my loans deferred and put that money towards tuition/living expenses in med school so that is 10k less that i have to take out in med school loans.

it makes more sense to me to use that money to avoid 10k worth of med school loans that are at a higher rate, rather than using that money to pay for ugr loans that are not only at a lower rate, but are also subsidized.

I was just asking in case there is some government catch on student loans that i am not aware of that would counteract my plan.

thanks!

Full disclosure: I'm no financial advisor. I'd reccommend that you save that money to cover your expenses if you haven't applied yet, otherwise use those savings for something you enjoy before you start med school and then use some as an emergency fund during med school. I'm currently in a gap year with ~30k in student loans, I'm making the absolute minimum payment until I start school (~$70/month) because it wouldn't make much sense for me to pay them off unless I could pay their entirety. I figure that having an extra $30k on top of the $300K+ I will have in 4 years doesn't change much

 

[FedSquarewall]

Full disclosure: I'm no financial advisor. I'd reccommend that you save that money to cover your expenses if you haven't applied yet, otherwise use those savings for something you enjoy before you start med school and then use some as an emergency fund during med school. I'm currently in a gap year with ~30k in student loans, I'm making the absolute minimum payment until I start school (~$70/month) because it wouldn't make much sense for me to pay them off unless I could pay their entirety. I figure that having an extra $30k on top of the $300K+ I will have in 4 years doesn't change much

+1

OP my grace period ended this month. How did you get deferred for working part time? I didn't realize that was a genuine reason for Deferral.
For me, paying anything right now would just be a drop in the bucket. I could work to my hearts content right now but the reality is it won't matter much down the road. $10 vs ~$200 an hour.
Enjoying my free time and saving for a rainy day if it ever comes.

 

[gshocke]

to answer the questions above.

1. srry, i didnt realize my status still says pre-med. just got my first acceptance last week, so yes Ive already financed the application process with the help of my mom and FAP waivers.

Thanks for the advice, i figured there is no point in working myself to death during my last year of freedom just to pay loans that will be minuscule in the greater scheme of things. i appreciate the advice!

@FedSquarewall i have stafford loans through greatlakes (i dont know if that makes a difference) but I am currently classified as an 'unemployment deferment' and to qualify you have to meet this criteria:

' I am diligently seeking but unable to find full-time employment in the United States (as defined in Section 5) in any field or at any salary or responsibility level. I am
registered with a public or private employment agency if there is one within 50 miles of my current address. Further, if I am requesting an extension of an existing
Unemployment Deferment, I have made at least six diligent attempts to find full-time employment in the most recent 6 months.'

full time being classified as a job where you are working at least 30 hours a week.

 

[FedSquarewall]

to answer the questions above.


@FedSquarewall i have stafford loans through greatlakes (i dont know if that makes a difference) but I am currently classified as an 'unemployment deferment' and to qualify you have to meet this criteria:

' I am diligently seeking but unable to find full-time employment in the United States (as defined in Section 5) in any field or at any salary or responsibility level. I am
registered with a public or private employment agency if there is one within 50 miles of my current address. Further, if I am requesting an extension of an existing
Unemployment Deferment, I have made at least six diligent attempts to find full-time employment in the most recent 6 months.'

full time being classified as a job where you are working at least 30 hours a week.

Never knew you could do that, but I routinely work over 30 hours a week so I guess this wouldn't apply to me anyway.

 

[gshocke]

Never knew you could do that, but I routinely work over 30 hours a week so I guess this wouldn't apply to me anyway.

i always work more than 30 hours, sometimes 40 hours, but my hiring contract is for part time and states that im not guaranteed any amount of hours for the week (it can fluctuate from 5 hours to 40 hrs with the average being 25 hours).

ive been lucky enough to be able to pick up hours whenever it is available, but that can be cut at any moment without warning so I guess my loan provider defines that as financially unstable.

 

[laf53221]

I'm pretty much in the same situation. I've had one acceptance so far, to a private school ($$$)..so I've decided to use my savings to fund some of my living expenses for my first year and take out less loans. Sounds like a better route to me!