Financial aid questions

[james6911]

I received my award summary for financial aid from the school of my choice. I was offered two loans, Federal direct unsubsidized and Federal Direct PLUS. My school is a 3-year school and is 30,000 in tuition for the year. Do they remove 30,000 from the federal lender on day 1, or do they take out 10,000 for each semester and summer to keep interest down?

Another question is my parents are willing to help with my tuition, and so i am going to reduce my federal direct PLUS loan to what they can afford to contribute. Do schools ask for the entire year tuition at once? Or do they ask for it per semester and/or summer?

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[TheEarDoc]

Do the federal PLUS loan if you can because they usually have a lower interest rate and used to start accruing interest 6 months after you graduate with your degree. Unsubsidized loans start accruing interest from the first disbursement you receive your first semester. I am not sure if this has changed. I would call your school's financial aid office and ask to speak to a counselor and they will explain to you the pluses and minuses of both loans.

Schools take your first loan disbursement when they bill you for the first quarter/semester of classes and at each subsequent quarter/semester. No school I know of charges you for the entire year up front.

Also it's great that your parents are offering some help because debt piles up quickly and when you finish your degree your first job will pay probably around 50k depending on location. Those loan payments on even an income based repayment plan will be around $500 per month with a salary of about 50k per year for about 70k in loans. That's a pretty decent chunk of cash out of your paycheck each month. Something to think about also is many non profit hospitals and VA hospitals will give you loan forgiveness for Federal unsubsidized and Federal Plus loans after 10 years or 120 payments using an income based repayment plan.

 

[Auddoc13]

Schools usually ask for tuition on a semester-by-semester basis, so they will only ask you to take out whatever you need in loans to pay tuition each semester - you don't need to take it all out at once. You should definitely take out as much in subsidized loans as possible (vs. PLUS loans) because the interest rates are a lot lower (as far as I know).

Oh. It looks like TheEarDoc said the exact opposite of what I said. Definitely go talk with your financial aid adviser!! =P

 

[TheEarDoc]

Schools usually ask for tuition on a semester-by-semester basis, so they will only ask you to take out whatever you need in loans to pay tuition each semester - you don't need to take it all out at once. You should definitely take out as much in subsidized loans as possible (vs. PLUS loans) because the interest rates are a lot lower (as far as I know).

Oh. It looks like TheEarDoc said the exact opposite of what I said. Definitely go talk with your financial aid adviser!! =P

Exactly my advice. I think the loan interest begins accruing from day one of disbursement for either loan type now. I just no subsidized should have a lower interest rate. The loan counselors are the ones to answer your questions. Just be careful what you borrow and how much because you don't want to be saddled with debt your entire life.

 

[james6911]

Do the federal PLUS loan if you can because they usually have a lower interest rate and used to start accruing interest 6 months after you graduate with your degree. Unsubsidized loans start accruing interest from the first disbursement you receive your first semester. I am not sure if this has changed. I would call your school's financial aid office and ask to speak to a counselor and they will explain to you the pluses and minuses of both loans.

Schools take your first loan disbursement when they bill you for the first quarter/semester of classes and at each subsequent quarter/semester. No school I know of charges you for the entire year up front.

Also it's great that your parents are offering some help because debt piles up quickly and when you finish your degree your first job will pay probably around 50k depending on location. Those loan payments on even an income based repayment plan will be around $500 per month with a salary of about 50k per year for about 70k in loans. That's a pretty decent chunk of cash out of your paycheck each month. Something to think about also is many non profit hospitals and VA hospitals will give you loan forgiveness for Federal unsubsidized and Federal Plus loans after 10 years or 120 payments using an income based repayment plan.

Are you sure the bold is true? Under the fact's page, the following is listed about Federal Direct Plus loans:

When do I begin repaying my loan?
Your Direct PLUS Loan enters repayment once your loan is fully disbursed (paid out).

However, if you are a graduate or professional student, your loan will be placed into deferment while you are enrolled at least half-time and for an additional six months after you cease to be enrolled at least half-time.

If you are a parent borrower, you may contact your loan servicer to request a deferment

>while you or your child are enrolled at least half-time and
>for an additional six months after your child ceases to be enrolled at least half-time.

If your loan is deferred, interest will accrue on the loan during the deferment. You may choose to pay the accrued interest or allow the interest to capitalize when the deferment period ends. Your loan servicer will notify you when your first payment is due.

The two bold parts are a bit confusing. Does the bottom bold part only apply to parent borrowers?
On the site, if I hold my mouse over "deferment" it states

Deferment -A postponement of payment on a loan that is allowed under certain conditions and during which interest does not accrue on Direct Subsidized Loans, Subsidized Federal Stafford Loans, and Federal Perkins Loans. All other federal student loans that are deferred will continue to accrue interest. Any unpaid interest that accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s).

So graduate student borrowers in the Federal Direct PLUS loan must pay interest while in school correct?

Also, the interest rate for Federal Direct Plus is 7.9% whereas for Federal Direct Unsubsidized loan it's 6.8

EDIT: Nevermind, i just saw that last sentence on your latest post. Damn paying interest from Day 1!

 

[TheEarDoc]

Yeah I think the government really screwed the pooch for citizens on the hike in loan interest rates and also with charging interest from day 1 on all loans.

It's quite sad that people who want to better themselves must saddle themselves with 20+ years of crushing debt to get an education. The sad thing is where I'm from I have friends and family who make better money than I do working in power plants or on river barges and they have barely a GED and no loan debt. When you factor in what I pay in student loan payments a month and what I made starting out as an Audiologist, I was actually worse off going to school than if I had just took a job for the coal barges or power plants.

I mean education is awesome and a nice salary is awesome but if you are losing 1/4 or more of your yearly income to student loan debt, it's starts becoming a lack of return on investment.

I hope the government fixes the student loan debt crisis before it busts like the housing market busted.