Perhaps a stupid question, but i am failing to understand how loans work.

[stoopidmonkeycatdog]

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I will be attending dental school this fall and was wondering if i could receive some information regarding how student loans work.

My schools cost of attendance is around 220K i believe, Now if i wanted to take the maximum amount of loans possible it would obviously eclipse the 40K yearly government subsidized loans i'm allowed to take, at which point the rest of my COA will be covered by PLUS loans, correct?

Second question is, is it possible to borrow above the COA of my school through different loans? and if so, how would i go about doing that. I just think 25k would be cutting close where i live, and don't mind taking out a little bit extra in loans. I'm just wondering if this is possible.

Thanks!

 

[Typical Average Student]

For TX schools, you won't need to take out all those loans... trust me.... unless you really want to live lavishly.

See below for UT Houston (disregard the scholarship):
So pretty much how it works is you are allowed to borrow ~37k/yr at around 5.84% interest, if you need more, you are allowed to take out Grad PLUS loans at a slightly higher interest rate of ~6.84% (I believe). If you need even more, you can go out and get a private bank loan at a much higher % rate (usually around 7-11%). Since we are dental students, we get the awesome privilege (#sarcasm) of accruing interest as soon as we take out the loans instead of after graduation. If you note below, there are some programs for disadvantaged students that offer 5% interest and the interest will not accrue until 1 year after graduation. The grants below are usually offered to all TX grad students (I believe), this is money that you don't have to pay back, it's essentially free money.

You are given the option to pay back any extra loans that you may have taken out without the loan origination fee of 1.069% (this is the amount of money you need to pay for taking out an amount of loans) and without the added accrued interest 2 weeks after taking out the loans.

Overall, it notes that I took out 53k for this school year, but I'm pretty thrifty so I ended up saving and returning 12k that I did not need, so my COA this year, including housing, is around 40k. I recommend plotting out your budget to see exactly how much you need.

 

[stoopidmonkeycatdog]

For TX schools, you won't need to take out all those loans... trust me.... unless you really want to live lavishly.

See below for UT Houston (disregard the scholarship):
So pretty much how it works is you are allowed to borrow ~37k/yr at around 5.84% interest, if you need more, you are allowed to take out Grad PLUS loans at a slightly higher interest rate of ~6.84% (I believe). If you need even more, you can go out and get a private bank loan at a much higher % rate (usually around 7-11%). Since we are dental students, we get the awesome privilege (#sarcasm) of accruing interest as soon as we take out the loans instead of after graduation. If you note below, there are some programs for disadvantaged students that offer 5% interest and the interest will not accrue until 1 year after graduation. The grants below are usually offered to all TX grad students (I believe), this is money that you don't have to pay back, it's essentially free money.

You are given the option to pay back any extra loans that you may have taken out without the loan origination fee of 1.069% (this is the amount of money you need to pay for taking out an amount of loans) and without the added accrued interest 2 weeks after taking out the loans.

Overall, it notes that I took out 53k for this school year, but I'm pretty thrifty so I ended up saving and returning 12k that I did not need, so my COA this year, including housing, is around 40k. I recommend plotting out your budget to see exactly how much you need.

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Thank you so much! that is very helpful, also if you don't mind could you tell me about the disadvantaged students info?

 

[Typical Average Student]

Thank you so much! that is very helpful, also if you don't mind could you tell me about the disadvantaged students info?

For the disadvantaged students loan, I'm not sure what the exact requirements are to get it since I kinda just found it in my e-mail, I would definitely talk to the financial aid adviser to see what kinds of loans are out there that you qualify for. If I remember correctly, the loan requirements were that your family needed to make less than 45k/person in your household but you needed to input your family's income information in FAFSA when you filed it (I'm sure you can edit it and submit again if you didn't).

 

[Kareful]

@stoopidmonkeycatdog I believe this is what is being referred to: https://bhw.hrsa.gov/sites/default/files/bhw/hpsl.pdf

 

[hopefuldentist123]

Do you take out loans yearly or semesterly? For example, if you say take out 5k extra in loans your first year, would it be better to give it back and pay the loan origination fee and the interest that accrued or save the 5k for the following semester or year? Thanks in advance.

 

[Kareful]

Do you take out loans yearly or semesterly? For example, if you say take out 5k extra in loans your first year, would it be better to give it back and pay the loan origination fee and the interest that accrued or save the 5k for the following semester or year? Thanks in advance.

Why would you want to borrow money on interest if you just save it (i.e. Don't need it)? That would seem like a waste to take extra. Unless you just want that financial security throughout the year then maybe. However, one should try to have a little savings that would cushion them in case of a personal financial crisis. I think loans are disbursed semesterly like undergraduate loans. Though, who am I to talk, I haven't taken out a loan yet!

 

[hopefuldentist123]

Why would you want to borrow money on interest if you just save it (i.e. Don't need it)? That would seem like a waste to take extra. Unless you just want that financial security throughout the year then maybe. However, one should try to have a little savings that would cushion them in case of a personal financial crisis. I think loans are disbursed semesterly like undergraduate loans. Though, who am I to talk, I haven't taken out a loan yet!

It would be if you accidentally took out more than you needed, say you ended up not spending all you took out for loans that semester even though you had originally thought you would need it all.

 

[Redtwogreen]

1. Yes, PLUS loans
2. Yes, with a private lender such as a bank or lender like Sofi, and like mentioned above, at a higher interest rate. I'd recommend avoiding that route if at all possible. Private loans won't have some of the protections of the fed govt for one thing, and interest really makes a difference on the total balance of your loans. I don't have any private loans, and my balance in interest alone is above $50k (but me and wife graduated with $600k of student loan debt from my dental school and her law school) I'd carefully consider what you can live on and try not to take out any private loans if possible. Its really not that fun to have to pay off a huge balance of student loans once you are finally making a decent income as a dentist. I'd do everything I could to spend as little as possible in dental school if I could do it over. (ps- we blog about paying off our student loan debt if you are interested at redtwogreen.com