Loans question... PLUS loan.. Take it?

[dentwannabe]

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Okay, so I realize that I should maximize the federal stafford loans (subs. and unsubs., they max at about 30,000 at one year). On my NYU letter, they suggest you get the rest from Citibank. They charge the prime rate minus 1%. So if the prime is 7.5 - 1 = 6.5 %. It sounds like a good deal. But what about the PLUS loan? Right now its rate is 6.10% for loans filed before July 1. I guess I'm going to be after right? So then I'd be 8.5%. So then citibank would be 8.5 - 1 = 7.5%. So i get the better deal with citibank?

somebody check my logic and let me know if i'm looking at it all wrong.

 

[dentalman]

You are looking at it correctly. The only thing you should consider is that the PLUS loan is fixed, citibank is variable. Granted, even if the fed chairman decides to put brakes on the economy and curb inflation, (by raising rates), it would still take a year or two to get to a prime rate of 9.5%, and I and many others hope he doesn't, but I don't think even he knows. Many companies offer 1-2% off interest once in repayment, but that puts 8.5% at your 6.5% level, and it would be accruing interest at 8.5% for your four years.

 

[NileBDS]

......... now its rate is 6.10% for loans filed before July 1. ..........

You must be confusing GRAD PLUS loans with something else.
GRAD PLUS loans are not even available yet as we speak. The first time it will become available will be July 1st, 2006, hence it would be impossible for a GRAD PLUS loan to have been dispersed before that date.
Filing/applying for a GRAD PLUS prior to July 1st 2006 will, however, not give you any break on the APR (from %8.5 down to %6.1).
That only PLUS loans that would have been dispersed before that date would have been undergrad PLUS loans (for parents of undergrad students).

 

[NileBDS]

You are looking at it correctly. The only thing you should consider is that the PLUS loan is fixed, citibank is variable. Granted, even if the fed chairman decides to put brakes on the economy and curb inflation, (by raising rates), it would still take a year or two to get to a prime rate of 9.5%, and I and many others hope he doesn't, but I don't think even he knows. Many companies offer 1-2% off interest once in repayment, but that puts 8.5% at your 6.5% level, and it would be accruing interest at 8.5% for your four years.

.Right on.

Here are some more GRAD PLUS LOAN options;

A fixed %7.9 for the life of your loan, even during the period of your education, ie; you would still benefit from the %7.9 while in school. I think it was 'WACHOVIA EDUCATION'.
- I think short term loans would benefit most from this one.

A %2.0 reduction in APR once you enter re-payment, provided that you sign up for "auto-pay" from a banking account. Interest still accrues at %8.5 while in school. I think this was a 'Student loan Xpress' loan.
- This is a better option for long term re-payment.

A %1.3 interest reduction, by rebate over 12 monthly payments to your principal account. Offered by 'T.H.E/Northstar'. They also offer the same re-payment incentive on your ..Stafford.. loans, as long as your payments remain on time. So all in all you would be paying %8.5 GPL and %6.3 Staff while in school, and %7.2 and %5.5 once entered re-payment.
They also rebate the %3 origination fee 6 months after the last loan disbursement.
- I think this is a great way to go for both short and long term re-payment plans.

Good Luck.