Plus vs. Private

[FLDoc]

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I am trying to decide which is the best way to cover the rest of my SMP cost after stafford loans next year.

Discover Plus: 8.25% fixed, 3% origination fee

Discover Private: 4.5% variable (subject to change every quarter), 0% Fees, 2% principle forgiveness at graduation, 9 mo grace period

I may not pay back the loan until after medical school if I get in this cycle. Is the fixed loan really better?

 

[TMP-SMX]

Keep in mind that Discover pays back your 3% origination fee if you stay with them until you start repayment.

Other than that, a lot can happen in the private market now until you start repayment so that 4.5% could go way up. You never know. Grad Plus is just simply a more stable option.

 

[FLDoc]

From Discover's website:

"There are zero guarantor fees and zero prepayment fees, but the government requires that we charge a 3% origination fee on Federal Grad PLUS loans. For applications submitted prior to October 10, 2007, we credit this amount back to you at repayment, provided that you have not repaid the loan in full by that time."

-I dont think they credit the origination fee on loans after 10/10/2007. Could someone who recently (after 10/10/2007) signed a Discover PLUS please confirm this.

 

[TMP-SMX]

I guess you are right then. Still, exactly how much grad plus will you be taking out? In general you should maximize your staffords and other financial aid before having to go to grad plus. Even then, I'd hope your CoA isn't out of control.

 

[FLDoc]

~27k Tuition and fees
+ ~8-9 room and board
-20 Stafford
-~3 Savings

= ~12k Grad Plus or Private

 

[tapir]

Stafford limit is 40,500 annually - sounds like that'll cover you.

 

[FLDoc]

its a 1 year SMP so I only qualify for the grad student limit

 

[mmcnam]

I've been wondering about this loan dilemma too - with rates being so low, using a co-signer can get you a better rate with the health professions student loans. I don't understand why more people aren't using those or discussing them. Banks always say to max out your government loan options before using private loans but I don't know...

I don't want to use a co-signer, but I would need one because I have no credit. I think I might go grad plus this year and build my credit by making car payments and credit card payments on time. Anyone have any thoughts on this?

Also, someone posted earlier "I hope your CoA isn't out of control". Mine is $70k, which baffles me because I can't understand how I would need that, even with a new car and a nice apartment. I'm still borrowing it anyway, because I'd like that peace of mind in unfamiliar territory.

 

[TMP-SMX]

I'd recommend against taking out the full 70k. Budget your expenses and only take out that much. Remember that your school will always give you more money when you need it.

FLDoc I don't know what the terms are on your Discover private loan but you should make sure it would allow deferment until you are out of school entirely. I have heard of loans that expect you to start paying after you finish your current school level. Either way, I would recommend Grad Plus before private. Thankfully, I won't ever need grad plus or private loans but it is still the general consensus.