How much to borrow?

[yyd]

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Could not find the financial aid forum, so I'm posting here. I am about to start med school this fall and I am contemplating to reduce the amount of my unsubsidized Stafford loan, currently ~ $15,000 (by the way, is Perkins also unsubsidized?). I am struggling with uncertainty of how much I will spend once in med school: on one hand, I don't want to find myself short of money, but I also don't want to have a surplus in the bank knowing that I should have borrowed less. How do you guys deal with the situation? I am thinking just to sign up for the package as it is, knowing that I am likely to have a surplus, see how it goes for a semester (how much extra money I have), and maybe adjust my loan afterwards. Does this sound like an okay plan?

 

[Critical Mass]

Perkins is subsidized methinks. Correct me if I'm wrong.

Here's what I do... I borrow the freakin' max that Staffords/Perkins will allow. Since I work, I have a bunch left over. It sits in a money market or CD at about 5.5%.

I tend to get flamed for doing this because the unsub Staffords are at 6.8%, but the amount that is subsidized is enough to make the actual interest accrual while I'm in school to break even.

And let me tell you something, my friend. Even if a little bit does leak through and cost me a smidgeon over the next few years, there is no substitute for peace of mind.

If things go well for me, all educational debt shall be paid off within a couple of years of completing residency.

 

[colbgw02]

I'm sure each school is different, but when I wanted to borrow more money it was just one phone call. It was extraordinarily easy. I think they may have asked for my SSN, but maybe not. Actually, if you think about it, it was probably too easy...any number of people could have just called up and maxed out my loans.

 

[deleted77919]

I'm sure each school is different, but when I wanted to borrow more money it was just one phone call. It was extraordinarily easy. I think they may have asked for my SSN, but maybe not. Actually, if you think about it, it was probably too easy...any number of people could have just called up and maxed out my loans.

But even if they did this . . . the money would still have gone to you, correct? So it's not really stealing, just impersonating and inconveniencing.

 

[colbgw02]

But even if they did this . . . the money would still have gone to you, correct? So it's not really stealing, just impersonating and inconveniencing.

Yeah, but if they could increase my loans so easily, I doubt it would have taken much to change the account and routing numbers my school had on file.

 

[Doctor Bagel]

But even if they did this . . . the money would still have gone to you, correct? So it's not really stealing, just impersonating and inconveniencing.

Good point -- they have your signed request telling them where to send the money, so you'd have to forge that, too, to stage a real ripoff.

Getting back to the topic, I've heard at my school that it is easy to get extra money if you decline part of your award and decide you need it later. I don't know, though, it's nice to have some extra money sometimes, so borrowing more to be able to go to the movies or out to eat occasionally isn't such a bad idea. We're already all borrowing so much just to pay for tuition and basic expenses that a few extra thousand dollars isn't really going to kill you. You're not a robot, and you've got to have a life in these next four years, and having that life sometimes costs some extra money.

So I guess I'm advocating living large and taking it'll all out. 🙂

 

[njbmd]

Moving to Financial Aid forum.

 

[dpmd]

Could not find the financial aid forum, so I'm posting here. I am about to start med school this fall and I am contemplating to reduce the amount of my unsubsidized Stafford loan, currently ~ $15,000 (by the way, is Perkins also unsubsidized?). I am struggling with uncertainty of how much I will spend once in med school: on one hand, I don't want to find myself short of money, but I also don't want to have a surplus in the bank knowing that I should have borrowed less. How do you guys deal with the situation? I am thinking just to sign up for the package as it is, knowing that I am likely to have a surplus, see how it goes for a semester (how much extra money I have), and maybe adjust my loan afterwards. Does this sound like an okay plan?

If you borrow as little as you need at first, then a few months in decide that the money isn't cutting it, it is very easy and fast to get more. Only you can decide what type of money person you are. I am frugal and enjoyed myself more when I wasn't adding unecessarily to my debt (especially at 6.8% interest). Taking all of it now, then reducing how much you take later will end up costing you a bit more (more months of interest accrued). Perkins is subsibized, and fixed at 5% with several ways to defer, and even cancel. Take all the perkins you can get your hands, on before you get unsub loans.

 

[yyd]

If you borrow as little as you need at first, then a few months in decide that the money isn't cutting it, it is very easy and fast to get more. Only you can decide what type of money person you are. I am frugal and enjoyed myself more when I wasn't adding unecessarily to my debt (especially at 6.8% interest). Taking all of it now, then reducing how much you take later will end up costing you a bit more (more months of interest accrued). Perkins is subsibized, and fixed at 5% with several ways to defer, and even cancel. Take all the perkins you can get your hands, on before you get unsub loans.

What about the opposite? Is it just as easy to cut down on your loan?

 

[WhoisJohnGalt]

What about the opposite? Is it just as easy to cut down on your loan?

Yup, it's the same phonecall. There are really no disadvantages to either strategy; it all depends on your personality. Personally, I'd be more anxious thinking that some emergency might come up and I wouldn't have a financial cushion, but many people would be more anxious thinking about the interest their cushion was racking up. In the end it doesn't really matter-- you can always take out more or less, depending on what you find you need, and taking more loans out this semester and less next semester isn't going to make an appreciable difference in terms of interest. So do whichever makes you happy 😀

It might be a good idea to check with the finaid office at your school though to be sure it works the same way as it does as most schools (where a phonecall will take care of you either way). Certainly, if one or the other is easier at your school in particular, take that into account.

 

[dpmd]

My problem with doing it the opposite (calling later to cancel a portion of the loan), was the hassle involved with getting it to be reflected correctly (taken off first semester instead of reducing second semester loans). As for the interest that accrues, it depends on how much we're talking about. I returned a loan for 10K (due to the school forgetting to apply my scholarship). That saved me about $200. Not much I know, but it would have capitalized and I would have paid an extra $100 or so on the capitalized interest over 10 yrs. If you return just a coupld of hundred then the interest is going to be really small (but still there for those who are frugal minded like myself). But then again, I am also the kind of person to pay all the bills I can by credit card, so it is like I get to earn an extra month of interest on the money I pay it with.

 

[t33sg1rl]

Before you try to scrimp on student loans, make sure you have a decent emergency fund in a savings account-I'd guess between 3 and 5K depending on your area of the country. If you already have this in the bank, you're very safe going low on student loans. If not, I think you should borrow enough in Med 1 so that you can have an emergency savings fund for Med 2 through 4.

Another point to consider-at your school, is tuition the same all four years? At my school, Med 3 costs more than the other years because you are paying tution for 12 months, and if you try to only borrow federally, then you end up paying a little-hence it was prudent to borrow my full 38500 in Med 2 so that I don't have to resort to private loans in Med 3.

 

[WhoisJohnGalt]

But then again, I am also the kind of person to pay all the bills I can by credit card, so it is like I get to earn an extra month of interest on the money I pay it with.

I'm just being dense I'm sure, but I don't understand this? Why do you earn an extra month of interest this way? 😕

 

[Anastasis]

I'm just being dense I'm sure, but I don't understand this? Why do you earn an extra month of interest this way? 😕

Because all the cash you would have spent sits in your savings account for another month (until the bill becomes due).

I do this too. Works out well for me 🙂

 

[Doctor Bagel]

Because all the cash you would have spent sits in your savings account for another month (until the bill becomes due).

I do this too. Works out well for me 🙂

And you get the credit card incentives. But if you're like me, you occasionally forget to transfer money from savings to checking in time to pay off the cc bill, and then you get screwed on cc interest. Needless to say, I'm not a detail-oriented person.

 

[dpmd]

You could be like me and forget to transfer money, but have electronic payments so instead of cc interest you have overdraft charges (and before you suggest overdraft protection, I checked into it and the fees for an overdraft are remarkably close to just having the overdraft at my bank). I have switched to a different bank that pays interest on the checking, so maybe that won't happen anymore.

 

[Doctor Bagel]

You could be like me and forget to transfer money, but have electronic payments so instead of cc interest you have overdraft charges (and before you suggest overdraft protection, I checked into it and the fees for an overdraft are remarkably close to just having the overdraft at my bank). I have switched to a different bank that pays interest on the checking, so maybe that won't happen anymore.

I am actually amazed that that hasn't happened to me yet. It'll come.

 

[Anastasis]

And you get the credit card incentives. But if you're like me, you occasionally forget to transfer money from savings to checking in time to pay off the cc bill, and then you get screwed on cc interest. Needless to say, I'm not a detail-oriented person.

I actually have a bank that gives me about 6 free transfers out of savings a month so I just pay my cc bills straight out of savings.