Plus Loans or Private Loans

[DPTTELl]

---

Members don't see this ad.

Now that I’ve been accepted to PT school I have started filling my Financial AID.
That being said I only qualify for 85k in regular student loans since I already have 50k in undergrad debt. I need to come up with the extra 20k to cover tuition expenses and I was told Plus Loans would be the way to go. I saw the interest rate and I inmedialty freaked out. They also charge a 4% process fee which would just add more to the bucket of debt.
Is there any other route I should look into? Are private loans better than plus loans? Other than just having a slightly better interest rate?
How will those of you that will be attending private institutions be covering for tuition expenses?

 

[PT_Dream'n_17]

Great question! I am in the same boat and would love some insight on this as well. I have been procrastinating on the loan process because the thought of taking out so much in loans is extremely frightening/stressful.

 

[FlyingGnome]

I think this depends on how you plan on paying back the loans.
If you intend to use loan forgiveness, then it's best to get a PLUS loan so that you can consolidate all your federal loans.
If you don't and decide to pay off your loans as soon as possible, then a private loan may be better for a lower interest rate.

I would use a loan calculator. Sometimes it's cheaper to use loan forgiveness and pay the tax bomb that will come in 20 years (unless you decide to work in a public sector, your loans then get forgiven after 10 years and you don't pay tax).

 

[DPTTELl]

After reading and doing some research there’s no way I’ll be working for a public organization. It’s hard to commit 10 years of your career without knowing your loans will be forgiven for sure. Plus you’ll be getting paid way less than if you worked for a private hospital or practice.
At this point I am more interested in the IHS forgiveness, but after reading you pay taxes on those 40k they’ll forgive it makes me feel like there’s not an absolute win when trying to get some of that debt forgiven 🙁

 

[FlyingGnome]

After reading and doing some research there’s no way I’ll be working for a public organization. It’s hard to commit 10 years of your career without knowing your loans will be forgiven for sure. Plus you’ll be getting paid way less than if you worked for a private hospital or practice.
At this point I am more interested in the IHS forgiveness, but after reading you pay taxes on those 40k they’ll forgive it makes me feel like there’s not an absolute win when trying to get some of that debt forgiven 🙁

I believe if your loans disburse this year, then you'll be grandfathered into the public service loan forgiveness and the current 20 year income based repayment loan forgiveness plans.

From Trump's budget plan:
"All student loan proposals would apply to loans originating on or after July 1, 2019, except those provided to borrowers to finish their current course of study"
Someone please correct me if I'm wrong about that or if there is more recent information.

Yes, it does suck that you will pay taxes on your loan forgiveness, but I still think it's a win.
Worst comes to worst, you owe tax on 40k and with a tax rate of 30%, you'll end up paying 12,000.

 

[nd_dpt]

Strategies to Pay off Physical Therapy Student Loans, Part 2 - NewGradPhysicalTherapy.com

 

[Dj2PT]

Discover student loans isn't bad, no origination fee, also you get cash back for having good grades.

 

[DPTTELl]

Discover student loans isn't bad, no origination fee, also you get cash back for having good grades.

Thank you!!! They look like a very good option. I will definetly consider them.

 

[Dj2PT]

Thank you!!! They look like a very good option. I will definetly consider them.

I'm thinking about it too cause I plan on paying my loans down aggressively

 

[DPTTELl]

I'm thinking about it too cause I plan on paying my loans down aggressively

Same here! I am planning on paying them off in 5 years. My husband has a good job that will pay for cost so living while I’m on school. Our plan is to use all of my income to pay off the loans once I graduate. Hopefully we can stick to it.

 

[Dj2PT]

Same here! I am planning on paying them off in 5 years. My husband has a good job that will pay for cost so living while I’m on school. Our plan is to use all of my income to pay off the loans once I graduate. Hopefully we can stick to it.

keep me updated on what you decide to go with. i still have time before i take out my first loans. so im still weighing my options

 

[Agent007]

keep me updated on what you decide to go with. i still have time before i take out my first loans. so im still weighing my options

Ghm. It looks like private loans have better interest rate than federal. Thinking about it - why not do private loans? With physical therapy we would def have a job and wouldnt need all the deferments and other crap- the only thing tht really matters is the interest rate..hmmm.. i don't know..

 

[Dj2PT]

Ghm. It looks like private loans have better interest rate than federal. Thinking about it - why not do private loans? With physical therapy we would def have a job and wouldnt need all the deferments and other crap- the only thing tht really matters is the interest rate..hmmm.. i don't know..

well with federal loans they have all of these different payment options such as Income Based Repayment, that allows for loans to be manageable during times of low income. Such as residency, or if you i just want my monthly payments to be low as a safety net. Also this the last year students who are taking out federal loans will be grandfather in for public service loan forgiveness. Also with income based payments after 20 years of paying the rest will be forgiven but you'll pay a tax on them.
Another thing to consider is the fact that these loans can be refinanced with lower interest rates.
Theres pros and cons to both. It's defiantly one of those things you must sit down and contemplate!

 

[Dj2PT]

Also federal loans cancel out upon death or disability. While for private loans it really depends!

 

[dpt628570]

Ghm. It looks like private loans have better interest rate than federal. Thinking about it - why not do private loans? With physical therapy we would def have a job and wouldnt need all the deferments and other crap- the only thing tht really matters is the interest rate..hmmm.. i don't know..

Private loans have fluctuating interest rates, I think they initially give you a lower interest rate to draw you in and who knows how much they will increase it in a year or two, while federal have fixed interest rates.

I've heard most people take out the full federal unsubsidized loan (6% interest) of $20,500/year and take out the rest with federal Direct PLUS (7% interest).

So if you take full advantage of the unsubsidized loan for all 3 years, it covers $61,500. Your school will probably loan out $8k/year to you, totaling $24k (4% interest rate?). Leaving you with taking out the rest from Direct PLUS loans.

TLDR;
School loans > unsubsidized loans > Direct PLUS
Federal loans > Private loans

All from my opinion after doing research of course.