Grad Plus Loan

[JohnUC33]

I recently talked to my financial aide counselor at school, and she really pushed the Grad PLUS over alternative loans because its set at 8.5%. Anyways, with alternative loans, isn't the interest rate set for the life of that loan? So if I get an interest rate of 5% on an alternative loan, would not that rate be set for that loan life? so how could the grad plus loan possibly be better then?

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[JohnUC33]

bump

anyone please

 

[Kasi]

Okay, since no one replied, I will. I'm not sure if it will be applicable to you because I am a public health student and not a med student. Anyway, I have an alternative loan and the interest is variable. It started at 4% and within two years it has climbed to 7%. It is variable up to an incredible 25%!!! I really want to pay this loan off as fast as possible because it "feels" like it is credit card debt (i.e. variable, high interest). So, I can see why your financial aid person recommended a grad plus loan. I am quite conservative, so I think I would have preferred a grad plus loan with a fixed rate...even if it were initially higher. Variable interest rates really make me nervous. Also, is the grad plus loan considered a gov't loan. I believe there are benefits to gov't loans that private loans simply don't have.

Hope this helps.

 

[JohnUC33]

Okay, since no one replied, I will. I'm not sure if it will be applicable to you because I am a public health student and not a med student. Anyway, I have an alternative loan and the interest is variable. It started at 4% and within two years it has climbed to 7%. It is variable up to an incredible 25%!!! I really want to pay this loan off as fast as possible because it "feels" like it is credit card debt (i.e. variable, high interest). So, I can see why your financial aid person recommended a grad plus loan. I am quite conservative, so I think I would have preferred a grad plus loan with a fixed rate...even if it were initially higher. Variable interest rates really make me nervous. Also, is the grad plus loan considered a gov't loan. I believe there are benefits to gov't loans that private loans simply don't have.

Hope this helps.

Thanks so much for that response. You have really helped me to get a grasp on this "wide-world" of loans.

 

[Kasi]

Glad to help. Of course, check on your specific loan. Maybe you can get an alternative loan with a fixed rate. Believe me, all of this loan stuff is very confusing and stressful...just when I think I have a grasp of it, I realize I don't understand it at all.

 

[Doctor Bagel]

Thanks so much for that response. You have really helped me to get a grasp on this "wide-world" of loans.

Me, too. I'm trying to figure out this grad plus thing as well, and since it's so new, it's hard to find good info on it. From Kasi's comment, it does seem like the fixed interest rate might be a good thing. In the next few years at least, I think interest rates are going to continue to go up.

Anybody else have any thoughts?

 

[JohnUC33]

bump again....I would like to hear more discussion on this topic, pretty please with sugar on top

 

[kilani]

Having a limited credit history (no negative items though) it will be much easier for me to go with the Plus rather than trying my luck with private alternative loans, it's credit-based, but according to my financial aid advisor, approval should not be a problem as long as there are no negative things in the credit history, and that's an advantage in my case, since I'm a new US permanent resident.

 

[ShyRem]

Does the Grad Plus have a cap?? Many private loans have caps of $220,000 TOTAL indebtedness including stafford and undergrad. So basically, if you have to borrow a total of $60K/year for med school you will run out of money if you don't have any other loans. Many students have loans from undergrad (I have $28K), so this means I can only borrow a total of $192K for med school. This means I can only borrow a total of $48K/year -- not enough for many schools if they're private or OOS. So the cap thing is a big deal.

 

[wolv4ine]

I just got off the phone with my school's FA office. I was told that they didn't have much information on Grad PLUS loans, but will make it available to us as they find out more. I was, however, directed to the following page which compares Grad PLUS vs alternative loans: http://www.northstar.org/downloads/GRADPLUSMar2006.pdf

 

[Raven Feather]

Does the Grad Plus have a cap?? Many private loans have caps of $220,000 TOTAL indebtedness including stafford and undergrad. So basically, if you have to borrow a total of $60K/year for med school you will run out of money if you don't have any other loans. Many students have loans from undergrad (I have $28K), so this means I can only borrow a total of $192K for med school. This means I can only borrow a total of $48K/year -- not enough for many schools if they're private or OOS. So the cap thing is a big deal.

No, there is no cap. You must, however, use all your annual subs/unsubsidized loans and for me, with my tuition being 36k, that won't be hard to do!

I went to Sallie Mae and here is more info on it for those interested:

Finance your graduate degree with a Federal Graduate PLUS Loan

The Graduate PLUS Loan is an affordable, accessible way to cover the entire cost of your graduate school education. You can get a Graduate PLUS Loan even if you have no credit history.


Am I eligible for a Graduate PLUS Loan?

US citizen or non-citizen permanent resident
Attending school at least half-time
Credit-ready. No credit is ok


How much can I borrow?
With Sallie Mae's Graduate PLUS Loan, there are no annual or aggregate loan limits. You may borrow up to the cost of attendance less any other financial aid received, as certified by your school.
What are the Rates and Fees?


Federal PLUS Loans disbursed beginning July 1, 2006 carry a fixed interest rate of 8.5%. However when you borrow from Sallie Mae Education Trust, you will receive an interest rate that may go as low as 7% with loan balance credits as high as 2.5%.
A 3% federal origination fee and a guarantee fee of up to 1% of the loan amount, deducted from each loan disbursement. Many guarantors that work with Sallie Mae Education Trust waive all or a portion of the guarantee fee (previously called “guarantee fee or insurance fee”).
What are the benefits of Sallie Mae's Graduate PLUS Loan?
The Graduate PLUS Loan from Sallie Mae Education Trust features:

Easy qualification—no income or collateral requirements
Fast and easy online application and account management
With a .25 percentage point interest rate reduction at disbursement, your interest rate is guaranteed to never exceed 8.25%
No payments while you are in school
Align repayment of your Graduate PLUS loans with your Stafford loans
A wide range of repayment plans
Interest may be tax deductible
Savings in school and throughout repayment
Interest rate reductions that start when you are in school and last throughout repayment.
A 0.25 percentage point interest rate reduction that starts at first disbursement.
A 0.75 percentage point interest rate reduction that starts when you begin repaying your Graduate PLUS loan.*
A 0.50 percentage point interest rate reduction that starts when you make your payments through automatic debit.*
Loan credits that are earned early in repayment to help you save even more.
A 1% loan credit when you make your first 12 payments by the due dates as initially scheduled.*
A 1.5% loan credit after you make your first 36 payments by the due dates as initially scheduled.*
A $500 credit on closing costs on a new loan from Sallie Mae Home LoansSM.
__________________

 

[theresa83]

is the sally mae Grad Plus loan different from the Grad Plus that was mentioned by the financial aid office?

 

[rg2000]

I just recently decided to go with the Grad PLUS loan after much debate. In my opinion, there is too much instability in the world right now and alternative loan interest rates seem dangerous. There is a chance that interest rates will stay below 8.5% but I will sleep better knowing my rate is fixed. Also, as mentioned before, you can borrow up to the cost of attendance which is especially useful if your attending a private school. In regards to the origination fee, some lenders (T.H.E. for instance) will reimburse you that money at the end of each year. So in the long run you will get 100% of your loan money. Just some stuff i've learn along the way. Good luck.

 

[Raven Feather]

is the sally mae Grad Plus loan different from the Grad Plus that was mentioned by the financial aid office?

No, it should not be any different. All the Grad Plus loans are federally funded, however, I think (what I've gathered from the research I have done) you can borrow them from different lenders like how you choose which lender you want to go with for subs/unsubs loans in undergrad.

 

[rg2000]

No, it should not be any different. All the Grad Plus loans are federally funded, however, I think (what I've gathered from the research I have done) you can borrow them from different lenders like how you choose which lender you want to go with for subs/unsubs loans in undergrad.

This is true. You can go through any lender to receive the PLUS loan just like sub/unsub loans. However, in my experience there was only a couple of lenders who had enough information on these loans to sell me on them. I highly recommend T.H.E.. They are on top of their stuff and already have a website dedicated to the PLUS loans. They also have very good repayment options. Hopefully other lenders will follow their footsteps soon.

 

[heech]

Alright folks, this is all new to me too... (at least, as of a week ago). When I went through this with my fiancee, we just sort of filed FAFSA, closed our eyes, and luckily everything else worked out.

Now with my new-found interest in personal loans, I want to take the time out to really understand this. I'm also hopeful this will be a helpful reference for others trying to analyze their options.

Please take a look at this link. Please, please help me out by telling me if I'm missing anything here.

http://drs2be.blogspot.com/2006/05/current-loan-rates.html

 

[It'sElectric]

Please take a look at this link. Please, please help me out by telling me if I'm missing anything here.

http://drs2be.blogspot.com/2006/05/current-loan-rates.html

You listed the Stafford Subsidized/Unsubsidized loans as being variable 6.3% interest rate. All disbursements after July 1, 2006 will be at a FIXED 6.8%.

Just thought I'd let you know. The Fixed part is obviously the biggest difference.

 

[heech]

Thank ya sir, change being made as we speak.

 

[md10]

thanks everyone! this is great.

 

[deezballas]

I just recently decided to go with the Grad PLUS loan after much debate. In my opinion, there is too much instability in the world right now and alternative loan interest rates seem dangerous. There is a chance that interest rates will stay below 8.5% but I will sleep better knowing my rate is fixed. Also, as mentioned before, you can borrow up to the cost of attendance which is especially useful if your attending a private school. In regards to the origination fee, some lenders (T.H.E. for instance) will reimburse you that money at the end of each year. So in the long run you will get 100% of your loan money. Just some stuff i've learn along the way. Good luck.

It all depends on your credit. My credit is well established with a credit score close to 720 therefore alternative loans will be better than GRAD PLUS. I have already been approved for an alternative loan with a variable interest rate set at whatever prime is. Prime rate changes every month (or quarterly, can't remember) according to the Fed but from 1996-Now there were only 11 out of 125 months when the prime rate went above 8.5% (top rate reached 9.5%). From 2002-2004 the average rate was 4.5%. The math speaks for itself.

 

[rg2000]

It all depends on your credit. My credit is well established with a credit score close to 720 therefore alternative loans will be better than GRAD PLUS. I have already been approved for an alternative loan with a variable interest rate set at whatever prime is. Prime rate changes every month (or quarterly, can't remember) according to the Fed but from 1996-Now there were only 11 out of 125 months when the prime rate went above 8.5% (top rate reached 9.5%). From 2002-2004 the average rate was 4.5%. The math speaks for itself.

That is a good point and for you a private loan may be the best option. However, since Oct. 2004 the prime rate has slowly but steadily risen and, by most peoples projections, should continue to rise. No one can say how high it will go and for how long but I think there is a good chance it will climb to at least 8.5%. It just seems to me that with all the instability in the world these days, a fixed rate of 8.5% is tough to pass up.

 

[Doctor Bagel]

That is a good point and for you a private loan may be the best option. However, since Oct. 2004 the prime rate has slowly but steadily risen and, by most peoples projections, should continue to rise. No one can say how high it will go and for how long but I think there is a good chance it will climb to at least 8.5%. It just seems to me that with all the instability in the world these days, a fixed rate of 8.5% is tough to pass up.

As a person with supposedly excellent credit (just shows you this credit stuff is weird ), this is my thought, too. Consequently, I'm opting for the gradplus loans. You definitely can't look at the 2002 to now period because we've been seeing historically low interest rates in the last several years.

 

[rg2000]

This is a great link to put in perspective the volitility of the Prime Rate and more specifically the uncharacteristically low rates in the last few years. I would rather not have to worry about it.

http://mortgage-x.com/general/indexes/prime.asp

 

[Doctor Bagel]

This is a great link to put in perspective the volitility of the Prime Rate and more specifically the uncharacteristically low rates in the last few years. I would rather not have to worry about it.

http://mortgage-x.com/general/indexes/prime.asp

All I can say is wow! So there was a big inflation worry in the late 70s/early 80s, right, which I guess explains those unbelievably high interest rates. 21%!!

 

[heech]

It all depends on your credit. My credit is well established with a credit score close to 720 therefore alternative loans will be better than GRAD PLUS. I have already been approved for an alternative loan with a variable interest rate set at whatever prime is. Prime rate changes every month (or quarterly, can't remember) according to the Fed but from 1996-Now there were only 11 out of 125 months when the prime rate went above 8.5% (top rate reached 9.5%). From 2002-2004 the average rate was 4.5%. The math speaks for itself.

I assume you're using the MEDLOANS Alternative loan, as all other private loans are prime + some surcharge.

The prime rate is now forecast by some to be 8.5% by August of 2006 (I have a link on my blog). The odds are better than 50/50 that they'll be above 8.5% for the next 3-4 years. No one is concerned about global deflation at this point; but there's still plenty of concern about possible inflation, which suggests growing interest rates.

Bottom line, at this particular in time, the GRAD Plus looks like the best bet.

 

[jellibelli]

I assume you're using the MEDLOANS Alternative loan, as all other private loans are prime + some surcharge.

The prime rate is now forecast by some to be 8.5% by August of 2006 (I have a link on my blog). The odds are better than 50/50 that they'll be above 8.5% for the next 3-4 years. No one is concerned about global deflation at this point; but there's still plenty of concern about possible inflation, which suggests growing interest rates.

Bottom line, at this particular in time, the GRAD Plus looks like the best bet.

Uhm.. I definitely need to take out a grad plus loan, but I was wondering if it matters which lender you choose. my school offers the grad plus through bank of america, edameria, and nellie mae. has anyone had any experience with any of these? not just for grad plus but for other loans?

I appreciate your help very much!!

 

[Doctor Bagel]

Uhm.. I definitely need to take out a grad plus loan, but I was wondering if it matters which lender you choose. my school offers the grad plus through bank of america, edameria, and nellie mae. has anyone had any experience with any of these? not just for grad plus but for other loans?

I appreciate your help very much!!

I took out law school loans through edamerica, and they were immediately sold to sallie mae once I graduated. Sallie Mae seems a bit questionable, so I wouldn't go through them again. In general, I'd prefer my lender not to sell my loans anyway. Also, I believe you can get the loans through any lender -- they just won't be preferred through your school. I doubt that really means anything.

 

[rg2000]

Uhm.. I definitely need to take out a grad plus loan, but I was wondering if it matters which lender you choose. my school offers the grad plus through bank of america, edameria, and nellie mae. has anyone had any experience with any of these? not just for grad plus but for other loans?

I appreciate your help very much!!

You can go through any lender to receive the grad PLUS loan. Your school has recommended these lenders because they are setup to efficiently recieve funds from them. I have no personal experience with any of these lenders but I am sure they are all competitive or your school would not recommend them. Just make sure you compare the fees and repayment benefits.

 

[deezballas]

I assume you're using the MEDLOANS Alternative loan, as all other private loans are prime + some surcharge.

The prime rate is now forecast by some to be 8.5% by August of 2006 (I have a link on my blog). The odds are better than 50/50 that they'll be above 8.5% for the next 3-4 years. No one is concerned about global deflation at this point; but there's still plenty of concern about possible inflation, which suggests growing interest rates.

Bottom line, at this particular in time, the GRAD Plus looks like the best bet.

I don't think my alternative loan is MEDLOANS, but it could be. I just went to a preferred lender from my school which was Citi Bank. The medical loan rate for me is prime + 0% with no origination fees. The only downside I could see is that they will only let me defer payments up to one year after medical school whereas with goverment loans, they will defer up through residency I believe. I recently listened to an audio program from an economist (graduated from Harvard, now teaching at a SoCal univeristy) and one of the points I got from his lessons was that speculations 3-4 years of how the economy will be or where the prime rate will be set at is ridiculous because the economy is much too volatile to predict. I can just as easily foretell a terrorist attack in the next few years (and even more likely if Hillary wins) which would cause the prime rate to plummet. Fixed 8.5% isn't too bad, infact I will be getting the Grad Plus loan, but with a wife and baby I will probably need a litte more to cover expenses, and I am definitely not adverse to getting additional alternative loans. Bottom line: To each his/her own.

 

[JohnUC33]

I don't think my alternative loan is MEDLOANS, but it could be. I just went to a preferred lender from my school which was Citi Bank. The medical loan rate for me is prime + 0% with no origination fees. The only downside I could see is that they will only let me defer payments up to one year after medical school whereas with goverment loans, they will defer up through residency I believe. I recently listened to an audio program from an economist (graduated from Harvard, now teaching at a SoCal univeristy) and one of the points I got from his lessons was that speculations 3-4 years of how the economy will be or where the prime rate will be set at is ridiculous because the economy is much too volatile to predict. I can just as easily foretell a terrorist attack in the next few years (and even more likely if Hillary wins) which would cause the prime rate to plummet. Fixed 8.5% isn't too bad, infact I will be getting the Grad Plus loan, but with a wife and baby I will probably need a litte more to cover expenses, and I am definitely not adverse to getting additional alternative loans. Bottom line: To each his/her own.

 

[95439]

It all depends on your credit. My credit is well established with a credit score close to 720 therefore alternative loans will be better than GRAD PLUS. I have already been approved for an alternative loan with a variable interest rate set at whatever prime is. Prime rate changes every month (or quarterly, can't remember) according to the Fed but from 1996-Now there were only 11 out of 125 months when the prime rate went above 8.5% (top rate reached 9.5%). From 2002-2004 the average rate was 4.5%. The math speaks for itself.

For those of you with bad credit, if you can get a cosigner, you're still in luck...

 

[heech]

I don't think my alternative loan is MEDLOANS, but it could be. I just went to a preferred lender from my school which was Citi Bank. The medical loan rate for me is prime + 0% with no origination fees.

...
Fixed 8.5% isn't too bad, infact I will be getting the Grad Plus loan, but with a wife and baby I will probably need a litte more to cover expenses, and I am definitely not adverse to getting additional alternative loans.

I agree with you, to each his own as long as you're informed about the risks. Hell, I play craps, so I understand playing the odds... even when they're technically against you. But you know, there are literally billions (if not trillions) of dollars around the world spent on guessing/hedging against the prime rate... so these aren't uninformed guesses. Interest rates are a huge part of every day business, and predictions are more right than wrong.

By the way, make sure you double-check with your fin aid office. As far as I know, anything with rates as low as ~prime will likely need to be certified by your fin aid office. In other words, I don't know if you can use your Citi Bank private loan to go beyond the education budget.

 

[deezballas]

I agree with you, to each his own as long as you're informed about the risks. Hell, I play craps, so I understand playing the odds... even when they're technically against you. But you know, there are literally billions (if not trillions) of dollars around the world spent on guessing/hedging against the prime rate... so these aren't uninformed guesses. Interest rates are a huge part of every day business, and predictions are more right than wrong.

By the way, make sure you double-check with your fin aid office. As far as I know, anything with rates as low as ~prime will likely need to be certified by your fin aid office. In other words, I don't know if you can use your Citi Bank private loan to go beyond the education budget.

Yes, the loan does need to be certified by the school but the fin office will up my budget. My budjet is the same as a single student paying $500/mo for rent but I will be paying three times that.

Trillions on guessing the prime? Yikes, that seems a bit high. Quarterly prime rate estimations are probably quite accurate. But I still don't buy 3-4 year speculations. Economic policy can change with the sign of a pen