Med Loan Interest To Compile Immediately

[futuredoc15]

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WASHINGTON -- In his 2011 State of the Union address, President Obama promised that investment in education and getting the next generation of Americans ready to face their own "Sputnik" moment would be a focus of his administration. But at least one component of his FY 2012 budget, which will be released tomorrow, will likely pile more debt upon students who decide to pursue graduate school, potentially making the dream of higher education even more unattainable for many Americans. The move, say administration officials, is needed to ensure that a popular financial aid award stays available at current levels.
In an interview on CNN's "State of the Union" on Sunday, Office of Management and Budget Director Jacob Lew said that interest on graduate school loans will begin building up while students are still in school. Currently, interest does not begin compiling until after students graduate.



full article here:
http://www.huffingtonpost.com/2011/02/13/graduate-students-higher-debt-obama-budget_n_822603.html

Ouch - this really hurts!

 

[WingedOx]

This sucks, but Subsidized Staffords are such a drop in the bucket compared to the total cost of school, that losing them isn't going to make THAT big of a deal. Probably a couple grand total in increased interest.

 

[DrBowtie]

Yeah, its only 8500 per year. Its nice to get it subsidized but not really a game changer.

 

[WingedOx]

Yeah, its only 8500 per year. Its nice to get it subsidized but not really a game changer.

Much like Matthew Stafford represents only a fraction of QB snaps for the Lions, Subsidized Staffords represent only a fraction of the cost of attending med school.

 

[45408]

Never thought I'd agree with so many comments on a HuffPo article.

 

[circulus vitios]

A bit of the ol hope and change.

 

[NickNaylor]

The Huffington Post hardly passes as journalism.

 

[mdeast]

$8500/year at 6.5% is about $500 in extra interest a year. Most (if not all) med students take out this loan every year (so 4 loans in total). Overall, it'd add about $5000 to your total med school debt over 4 years. Not really THAT bad considering how much med school costs, but significant. They're thinking of getting rid of other grad school programs too.

 

[addo]

great, this just messed up my whole intricate financial planning...

 

[raltima07]

great, this just messed up my whole intricate financial planning...

Now I'm going to have to go to plan B

 

[BenjaminT]

This proves it: Obama=antichrist.

 

[movax]

Much like Matthew Stafford represents only a fraction of QB snaps for the Lions, Subsidized Staffords represent only a fraction of the cost of attending med school.

:golfclap: Well done.

 

[RogueUnicorn]

i'm ok with this, but they should also significantly reduce the interest rate for US medical students - i would bet a stafford loan that doctors default at a significantly lower percentage than the rest of the population

 

[MDMDJDJD]

great, this just messed up my whole intricate financial planning...

Also, the FY 2011 budget still hasn't passed yet. It's highly unlikely, with the toxic partisan state of our govt., that FY 2012 will pass any time in the near future.

 

[DoctwoB]

i'm ok with this, but they should also significantly reduce the interest rate for US medical students - i would bet a stafford loan that doctors default at a significantly lower percentage than the rest of the population

Agreed. We get the same interest rate as the guys at Devry, ITT tech, and the university of phoenix.

When reputable banks are willing to good fixed-rate mortgage loans with 0 down payment to first year residents, you have to think we're a safer investment than most other students, especially these days when interest rates are so low.

 

[BBender716]

Thank god for the law fixing the interest rates of student loans to protect us from "market forces". We might be having problems handling these ridiculously low interest rates...

 

[Mindscrew]

low interest wont last forever but should for the next few years

 

[BBender716]

low interest wont last forever but should for the next few years

We know it won't last forever, but it's what allows private lenders set such high interest rates as well (granted, they are obviously unsubsidized). But since the base level is set at 6.8%, private lenders can say "hey, we can set it at 8%!" without considering what the graduate program is (compare ancient french pottery PhD to MD in terms of risk/future predicted income).

I'd say a better approach (and intermediate) would be to be locked in at the interest rate that you take out your first student loan at for each level of education (undergrad, grad, etc.). This allows for better mirroring of market conditions and better private lender mirroring of conditions but with some stability still present.

 

[WingedOx]

low interest wont last forever but should for the next few years

I just need them to hold on until 2012 so I can buy a house before the start of PGY2....

 

[DoctwoB]

I just need them to hold on until 2012 so I can buy a house before the start of PGY2....

Or until 2014 so I can refinance my student loans post graduation . . .

 

[WingedOx]

Or until 2014 so I can refinance my student loans post graduation . . .

ugh... let's not remind me that I'm 150k in debt.