Financial Questions

[8YearsLate]

Hi All,

I need some help regarding the financial situations surrounding med school. Now that I'm getting closer to the realities, the focus has shifted from application/getting into to How the hell am I going to sustain financially? The economic predicaments of the past 6 months really made me see how much time and effort I had to put into juggling my finances and how much I gain security from work. Without true income during medical school, I have some questions:

1) How does Cost of Attendance get factored into the loan process? How do they determine how much you qualify for/receive? Is it a tight process like:

"Hey, we know you're going to X school, X tuition is $Y and X school says you should be able to find an apartment with roommates for $Z, thus we're going to give you $(Y + Z)"

or

is it a little more applicant-driven: "We see that you are a parent who cannot live with roommates and need to cover a dependent's expenses therefore do you want $Y or $Z?" etc.?

2) What do I do about private debt that I rely on "excess" money in my budget to pay? Without getting into too much detail, I was almost out of debt in July 2019 and my life essentially fell to pieces the past year and I am just now gluing them back together. Everything's all well and good, except that it left me with a bunch of compounding debt that I absolutely will not have paid off by the time I enter school (and I will obviously lose my income). Do creditors take this into account? Am I able to file bankruptcy once I enter school? Do I need a co-signer if I do? Can I do it before, or should I avoid in favor of another option? How do I even begin to talk to a medical school about these issues, and WHO do I ask? I spoke with someone at Grad Plus Loans (I think? or the like) and they told me "We don't care about the score, we just need to see that you have no bad debt." i.e. keep paying your bills and you'll be fine. Well, I do, but that's because I have money coming in. How do I do this when I have a rationed loan that's designed for a debt-free 22-year-old?

By the way, absolute kudos to those debt-free 22-year-olds, I commend you, truly. But this post does not exist to invite people to look down their nose and shame me for incurring debt. If you heard what I've been through in the past year, I promise you would eat your words, so just keep them.

Any legit regarding cost of attendance in any way/shape/form help is very, very appreciated!

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[GreenDuck12]

1. Your COA is calculated by each school based on the costs they believe are necessary to live and travel to and from school. Depending on the school and where you are located the COA could be quite generous. At my school the COA is sufficient for a one bedroom apt right near the university in a new building. So a roommate isn’t really factored into it.

You can get adjustments to loans based on special circumstances like having children or needing to pay for childcare.

2. Grad plus is pretty generous with credit scores. If they are concerned with your debt level or credit score they would ask for a co-signer. This usually only comes into play when loan balances are quite high.

 

[8YearsLate]

1. Your COA is calculated by each school based on the costs they believe are necessary to live and travel to and from school. Depending on the school and where you are located the COA could be quite generous. At my school the COA is sufficient for a one bedroom apt right near the university in a new building. So a roommate isn’t really factored into it.

You can get adjustments to loans based on special circumstances like having children or needing to pay for childcare.

2. Grad plus is pretty generous with credit scores. If they are concerned with your debt level or credit score they would ask for a co-signer. This usually only comes into play when loan balances are quite high.

Thank you!!

 

[deleted367183]

You could potentially have a problem with Grad Plus for years 2-4, when you (presumably) stop servicing your other debt. I am on my phone, but google "grad plus adverse credit history" and go to the second result, a pdf. Credit score per se has nothing to do with it. So I would investigate potential cosigners now.

Once you graduate, you can consolidate your cosigned grad plus loans into a Direct Consolidation Loan, which requires no credit check, thereby letting your cosigner off the hook. But in the meantime, it's a Federal debt and they can garnish your Social Security. Not a small obligation.

 

[8YearsLate]

You could potentially have a problem with Grad Plus for years 2-4, when you (presumably) stop servicing your other debt. I am on my phone, but google "grad plus adverse credit history" and go to the second result, a pdf. Credit score per se has nothing to do with it. So I would investigate potential cosigners now.

Once you graduate, you can consolidate your cosigned grad plus loans into a Direct Consolidation Loan, which requires no credit check, thereby letting your cosigner off the hook. But in the meantime, it's a Federal debt and they can garnish your Social Security. Not a small obligation.

So, I'm less worried about post-graduation and more just worried about being able to keep up my loanworthiness while in school (and obviously be able to make ends meet). I will research the doc you're talking about. I hope that I will not have to stop servicing debt but like you mentioned, "presumably" is definitely the ominous word here. Do you know of any proactive measure I can take now, before school begins, or before year 2? I would really only need a cosigner in the event that I file bankruptcy or enter some sort of program, right? I have no bad debt currently, just a lot of it.

 

[GreenDuck12]

So, I'm less worried about post-graduation and more just worried about being able to keep up my loanworthiness while in school (and obviously be able to make ends meet). I will research the doc you're talking about. I hope that I will not have to stop servicing debt but like you mentioned, "presumably" is definitely the ominous word here. Do you know of any proactive measure I can take now, before school begins, or before year 2? I would really only need a cosigner in the event that I file bankruptcy or enter some sort of program, right? I have no bad debt currently, just a lot of it.

What type of debt is it - CC or otherwise? Depending on the size of the debt you likely can continue to make minimum monthly payments.

 

[8YearsLate]

What type of debt is it - CC or otherwise? Depending on the size of the debt you likely can continue to make minimum monthly payments.

With the interest that is accruing though, and the fact that my income took a hit this year, I will likely be paying nearly a grand in minimums alone. (Embarrassing, I know, and would not have happened if the past 6 months hadn't rocked my world). I'd like to get some of it paid down, but regardless, I'm still going to be robbing Peter to pay Paul if I'm relying on the med school loans to cover it, and at the expense of cushioned living expenses. I'm essentially screwed and not denying that, but trying to be proactive and I literally do not know who to ask. Surely I'm not the first "disadvantaged" applicant to be knocking on med school's door with debt, and I need to find out what they're doing about it.

 

[GreenDuck12]

With the interest that is accruing though, and the fact that my income took a hit this year, I will likely be paying nearly a grand in minimums alone. (Embarrassing, I know, and would not have happened if the past 6 months hadn't rocked my world). I'd like to get some of it paid down, but regardless, I'm still going to be robbing Peter to pay Paul if I'm relying on the med school loans to cover it, and at the expense of cushioned living expenses. I'm essentially screwed and not denying that, but trying to be proactive and I literally do not know who to ask. Surely I'm not the first "disadvantaged" applicant to be knocking on med school's door with debt, and I need to find out what they're doing about it.

Definitely a tough situation. With minimum payments that high, I don’t think you’d be able to cover it with extra funds left over from your estimated COA unless you really took some drastic measures to cut costs. You are right that you’ll be robbing Peter to pay Paul, but remember that student loans have lower interest rates than most other loans or lines of credit, which will help. You would likely need to look into private student loans or personal loans for the extra amount but that may be tough to qualify for.
For now, focus on getting as many of your accounts in order and good standing. This’ll increase your credit score and make it easier to qualify for loans down the line. Look into 0% apr credit cards or 0% on balance transfers. Try to consolidate debt on your lowest interest accusing accounts and pay off high interest debt first.

 

[8YearsLate]

Definitely a tough situation. With minimum payments that high, I don’t think you’d be able to cover it with extra funds left over from your estimated COA unless you really took some drastic measures to cut costs. You are right that you’ll be robbing Peter to pay Paul, but remember that student loans have lower interest rates than most other loans or lines of credit, which will help. You would likely need to look into private student loans or personal loans for the extra amount but that may be tough to qualify for.
For now, focus on getting as many of your accounts in order and good standing. This’ll increase your credit score and make it easier to qualify for loans down the line. Look into 0% apr credit cards or 0% on balance transfers. Try to consolidate debt on your lowest interest accusing accounts and pay off high interest debt first.

Thanks, I appreciate the feedback. I hadn't thought about looking into private/personal loans as a way to at least mitigate the interest. I guess I assumed I wouldn't qualify, but if it's between getting a cosigner for that or a cosigner for grad plus, what's the difference, I guess? Thanks again.

 

[deleted367183]

You will need a cosigner for grad plus if you fall behind, not just if you file for bankruptcy. The details are all on the pdf. Become an expert on these loans. Your tuition will likely be covered by Staffords, which have no credit check, but you'll be dependent on grad plus for living expenses.

Definitely try to refinance your debt now, while you presumably have some kind of income from employment. You will not be a good candidate for refinancing when you're a full-time student. I would start at your local community development credit union. When I last looked into it in 2013 or so, debt consolidation loans were going for 14-15%, which may or may not be a better deal than what you're paying now.

 

[8YearsLate]

You will need a cosigner for grad plus if you fall behind, not just if you file for bankruptcy. The details are all on the pdf. Become an expert on these loans. Your tuition will likely be covered by Staffords, which have no credit check, but you'll be dependent on grad plus for living expenses.

Definitely try to refinance your debt now, while you presumably have some kind of income from employment. You will not be a good candidate for refinancing when you're a full-time student. I would start at your local community development credit union. When I last looked into it in 2013 or so, debt consolidation loans were going for 14-15%, which may or may not be a better deal than what you're paying now.

Thank you! I will be stopping into my local credit union this week to do that.

 

[deleted367183]

I would also look into the military and the National Health Service Corps while you're at it. Not to be a downer, but if you can't find a cosigner for Grad Plus, the schools don't have much else to suggest.

 

[8YearsLate]

I would also look into the military and the National Health Service Corps while you're at it. Not to be a downer, but if you can't find a cosigner for Grad Plus, the schools don't have much else to suggest.

I looked into that pretty extensively, as 2 of my brother-in-laws are actually army (one is a recruiter and pretty knowledgable about programs) but my only concern is the lack of flexibility in placement. As a single parent, I try really hard to keep some semblance of consistency in my son's life, and I don't think I'd be okay with taking a gamble on where we move. I'm choosing a school (and their residency locations) very meticulously based on where I'd like to settle down. I will continue to explore it, though. Thanks again!

 

[psydoc80]

the cost for the purpose of school loan is pretty standard but they do have sources if you need more money. You may have to take on additional loans at higher interest rates. I knew people in my med school who ended up borrowing twice what I borrowed so the money is there. you can find ways to pay it after you graduate to a certain amount. As far as the debts that you have now. I think you should take care of it before starting med school. However from your post, I take it that you already are slated to start med school? If that's the case then you can consider 1) filing bankruptcy, make sure to consult an attorney to make sure it's not going to affect your ability to get student loans or 2) work out some sort of manageable payment plan, taking into consideration your med school income. Interest rate is low now so look into that maybe use lower educational rate loan to pay off higher existing debts.
I'm going to be a little preachy here but maybe you need to look into your lifestyle choices. Maybe consider living with roommates, cook your own food, don't go out, don't go shopping, etc...

 

[GreenDuck12]

"Hey, we know you're going to X school, X tuition is $Y and X school says you should be able to find an apartment with roommates for $Z, thus we're going to give you $(Y + Z)"

Not sure what you’re getting at with this? If you would like to elaborate I would be happy to respond if it would be helpful.

 

[jhmmd]

Cost of attendance is pretty simple; tuition + average room and board for your city + a little extra (=/= $200/month or so)
You can take out as much as ~$50k in loans for undergrad
Grants don't count as far as loans
Hope this helped