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Grad PLUS vs Discover Loans

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TheRealJohnDorian


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Right now I am looking into getting a Discover Health Professions loan instead of a Grad PLUS loan to cover COA over the Stafford limit. The interest rates are approximately the same except the Discover loan has no fees (my understanding is Grad PLUS is currently at 4.72%) and Discover also gives 1% cash back on the total loan which is kind of nice. In my opinion, Discover seems to have better terms than Grad PLUS and offers similar forbearance and repayment options. Does anyone have strong feelings about going with Grad PLUS over Discover? If so, why?
 

younggunner94

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I am also interested in this. The discover loan seems to have a higher interest rate, but looks like with a credit worthy cosigner it has the potential to drop below the grad PLUS loan


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ncide

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During residency you can apply for income based repayment with federal loans. Go for grad plus.
 
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ChrisMack390

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Avoid private loans unless you have no other option.
 

sazerac

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Federal loans come with important benefits like forgiveness upon death and disability. Does discover offer that?

Also, if you join the federal REPAYE program, the government will pay half of the interest under certain conditions (usually in residency). This benefit is HUGE. Free money! Does discover offer that?

Federal loans don't capitalize the interest (except once when you graduate), so you never pay interest on interest like you would on normal loans. Does discover offer that?
 
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TheRealJohnDorian

Avoid private loans unless you have no other option.
Why? I know that's the conventional wisdom and some of the private loans have variable interest rates that can totally screw you over, but this particular loan seems better than the Grad Plus.
Federal loans come with important benefits like forgiveness upon death and disability. Does discover offer that?

Also, if you join the federal REPAYE program, the government will pay half of the interest under certain conditions (usually in residency). This benefit is HUGE. Free money! Does discover offer that?

Federal loans don't capitalize the interest (except once when you graduate), so you never pay interest on interest like you would on normal loans. Does discover offer that?
All good things that I was unaware federal loans offered. I'll need to look into this. Thanks!
 

ChrisMack390

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Why? I know that's the conventional wisdom and some of the private loans have variable interest rates that can totally screw you over, but this particular loan seems better than the Grad Plus.

All good things that I was unaware federal loans offered. I'll need to look into this. Thanks!

Because of all of the things Sazerac mentioned. Government loans are fairly flexible and have different payment plans and options to help you make reasonable payments at different stages of your career. Private loans do not.
 
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Doctor Strange

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Government loans are much safer. Not only are they eligible for income driven repayment options during residency, but they also have things such as death terms that terminate your loan if you die. Most private loans will push that amount onto your next of kin or cosigner.
 
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ChrisMack390

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What are you reading from discover is essentially a bait and switch advertisement. Just yesterday the CEO of whatever Sallie Mae is called now confirmed that they "are under no obligation to act in the interests of the consumer." Maybe that's just business, but if you can avoid that why not avoid it?
 
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TheRealJohnDorian

What are you reading from discover is essentially a bait and switch advertisement. Just yesterday the CEO of whatever Sallie Mae is called now confirmed that they "are under no obligation to act in the interests of the consumer." Maybe that's just business, but if you can avoid that why not avoid it?
I get that Discover and other private lenders are selling a product. At the same time I don't trust the federal government to act in the interest of the consumer any more than I trust private lenders.
 
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TheRealJohnDorian

Government loans are much safer. Not only are they eligible for income driven repayment options during residency, but they also have things such as death terms that terminate your loan if you die. Most private loans will push that amount onto your next of kin or cosigner.
I'll definitely take this into account. I'll compromise on the loan terms if it means that my next of kin won't assume my debt if I die.
 
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ChrisMack390

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I get that Discover and other private lenders are selling a product. At the same time I don't trust the federal government to act in the interest of the consumer any more than I trust private lenders.

That's fine to say for whatever philosophical/political reason you may have, but it doesn't explain why the government loans actually do have multiple layers of protection built in and the private loans do not.
 

sazerac

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I'll definitely take this into account. I'll compromise on the loan terms if it means that my next of kin won't assume my debt if I die.
The next of kin won't assume any of your debt, of any type, from any lender, when you die, unless they are cosigners to the loan. That is not how loans work.

Your estate would owe the balance of a discover loan when you die. If the principle exceeds your estate, then discover would only be partially repaid and eat the difference.

On a federal loan, the principle would be forgiven (although this would be considered taxable income to your estate and you'd pay taxes on your final income tax returns).
 
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Josayah

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Hey guys

I will start dental school by July and I'm new for grad plus loan application. Is there anybody know when we gonna apply for this loan. I will appreciate any comments.

Thank you
 

MDPhD4me

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I’m a non traditional accepted student with 3 teenagers and a husband. For scholarship purposes with my two oldest we can’t all move. I’ll be moving alone and we will be maintaining two households during my time in medical school. Any advice on how to go from two incomes to one and one set of house expenses to two? Did any of you meet with school and ask to change COA etc???
 

libertyyne

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I’m a non traditional accepted student with 3 teenagers and a husband. For scholarship purposes with my two oldest we can’t all move. I’ll be moving alone and we will be maintaining two households during my time in medical school. Any advice on how to go from two incomes to one and one set of house expenses to two? Did any of you meet with school and ask to change COA etc???
Schools wont care. They will only give you money for taking care of yourself and what the COA would be for a single person. They will not increase the COA to cover your dependents or your SO in insurance let alone give you money to run two households. They will give money for daycare expenses.
 

Dares Dareson

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I would highly recommend against private loans. You have no options for deferral during residency, income-based repayment, or loan forgiveness, public service or otherwise. And I'd wager the interest will be higher too. The only reason to get private loans is if you cannot get federal loans.
 

Gormegil

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I get that Discover and other private lenders are selling a product. At the same time I don't trust the federal government to act in the interest of the consumer any more than I trust private lenders.
The government has a vested interest in your success. They offer these terms and benefits so that it is feasible and attractive for citizens to obtain higher education, thereby adding to the highly-skilled workforce, which has potential for increasing innovation, creating new jobs and types of jobs, which fuels the economy. Crippling debt slashes your financial participation in the market (bad for the economy) and the relatively mild interest rates are not like a huge asset to the federal budget; interest creates accountability. The government gives you these loans SO THAT you can pay them off and that money can be used to fuel the economy. Private lenders give you loans so that they can make a profit off of you.
 
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