Loan Confusion (How Unusual, Right?)

[Glimmer1991]

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Okay, folks. I feel like there is a lot of misinformation out there (or on SDN, I guess I should say) about school loans, and I am just trying to make my way through the murky waters to figure out what I need to be doing to finance my education.

I am trying to figure out just how, exactly, the FAFSA will work for me. I'm not sure what loans will be an option for me, and I'd greatly appreciate any guidance you all can give me.

A little background (I think my situation probably applies to more than just me):
I am still technically a dependent, but my parents are not paying for my dental school other than helping with my living expenses.
My parents make a good bit of money--their EFC for my undergraduate degree was quite high.
I definitely do not make a lot of money.
I have a good credit score.
If this has any bearing on it, I am looking to take out ~100k in loans.

Do I have to use my parents' financial info for the FAFSA?

Is there any possibility of me getting subsidized loans?

What are the best loan options (or just which ones are available)?

With a good credit score (and a cosigner if needed), is it ever a good option to go with a private loan, such as the Discover Student Loan? Also, is there any way that either of these things could help me get a better rate on a government loan? https://www.discover.com/student-loans/health-professions-loans.html

Hopefully, I'm at least asking good questions... I have never had to really deal with my own finances before, but I am learning! 🙂

 

[brosenba]

Any professional student is considered independent of their families and do not have to put their parents financial information into FAFSA unless it is into specific programs, I don't remember the specific name. Also there are NO subsidized loans for graduate school, that was terminated a few years ago. So every loan you take, private or public, is unsubsidized. You may want to check out private banks that sometimes are able to beat the federal loan rate by a couple of percentage points. However, those loans are ineligible for PAYE or IBR or any other types of loan forgiveness. I would talk to your intended school's financial aid office to really further this discussion.

 

[sacapuntas]

You aren't borrowing enough to need anything more than unsubsidized stafford loans thru your schools financial aid office. This year they were 5.5% and are eligible for many repayment programs that private loans are not. Unless they head considerably north of 7%, you probably will be best off taking them and nothing else.

 

[Glimmer1991]

@sacapuntas @brosenba Thank you both very much! That sounds easy enough.

The interest rate of the stafford loan is fixed, right? So, if I were to get a loan for the 2014-2015 school year at an interest rate of ~5.5%, would the loans I took out for the next three years of dental school be at the same rate?

 

[rudspan]

It can change every year now. The interest rate is linked to the financial markets now. Next year could be 4% or 7.5%......just depends on the economy. I think its capped at 9%. Anybody know for sure?

 

[rudspan]

Cap is 8.25 for undergrad loans and 9.5 for grad loans. Hopefully they don't climb that high.

 

[TheWeeIceMan]

@sacapuntas @brosenba Thank you both very much! That sounds easy enough.

The interest rate of the stafford loan is fixed, right? So, if I were to get a loan for the 2014-2015 school year at an interest rate of ~5.5%, would the loans I took out for the next three years of dental school be at the same rate?

The interest rate is variable from year to year, but will not change once you have taken the loan.

 

[csafizadeh]

Any professional student is considered independent of their families and do not have to put their parents financial information into FAFSA unless it is into specific programs, I don't remember the specific name. Also there are NO subsidized loans for graduate school, that was terminated a few years ago. So every loan you take, private or public, is unsubsidized. You may want to check out private banks that sometimes are able to beat the federal loan rate by a couple of percentage points. However, those loans are ineligible for PAYE or IBR or any other types of loan forgiveness. I would talk to your intended school's financial aid office to really further this discussion.

If you intend to apply for FASFA even if you are independent...99% of the time schools will require parental information to be submitted. I don't know how UNC works but this how the system generally works. In terms of interest rates federal loans are not the best & tied to the financial market now so if the economy keeps improving we are looking at rates going up to 9% which is very high. Whatever the rate is for that year you take you loans out is the rate at which you will be repaying. So if 1st year rate is 7% and 2nd year is 8% then 1st year loans will be at 7% and 2nd year at 8%.

If your looking to take out just 100k in loans there is not too much to worry about honestly. I'm taking out $200,000 and still feel very lucky.

 

[Glimmer1991]

Ah... so each year, when I take out more money, I will get the newly adjusted rate for that yearly amount. This means that I will essentially have 4 loans (one per school year), each with a different interest rate. Makes sense.

Thanks again! 🙂

I hope some newly accepted folks will read this thread... Last night, I was in the "predent" chat room and a few people thought that our loans didn't start accruing interest until AFTER we graduated. I knew that wasn't the case, but it made me wonder about some of the other details.

 

[brosenba]

I am a little surprised that that misconception exists. Didn't the schools you interviewed at give you a financial aid brief where they went over all of this?

 

[sacapuntas]

If you intend to apply for FASFA even if you are independent...99% of the time schools will require parental information to be submitted. I don't know how UNC works but this how the system generally works. In terms of interest rates federal loans are not the best & tied to the financial market now so if the economy keeps improving we are looking at rates going up to 9% which is very high. Whatever the rate is for that year you take you loans out is the rate at which you will be repaying. So if 1st year rate is 7% and 2nd year is 8% then 1st year loans will be at 7% and 2nd year at 8%.

If your looking to take out just 100k in loans there is not too much to worry about honestly. I'm taking out $200,000 and still feel very lucky.

This is only the case if you are applying for need based aid in addition to the Stafford or Grad Plus loans. You won't need to provide parents financial information for the Stafford loans, however if you need a cosigner due to bad credit you may need to provide info for the Grad Plus loans. I am fairly certain on this unless there is variance state to state, which I don't think there is given these are federal loans.

 

[Ferneezy]

I am a little surprised that that misconception exists. Didn't the schools you interviewed at give you a financial aid brief where they went over all of this?

if it's even given at all it's either at the end of the day or directly following lunch when our eyes are at their glassiest.

with the possibility of many of us having four different loans at four different rates once we complete dental school, does anyone know if we can consolidate them somewhere down the line?