Private med school loans: Why aren't they lower???

[bomgd3]

It seems to me that med/dental/pharm students must be extremely reliable when it comes to loans. We aren't deadbeat English students who will be lucky to make $30k. So why aren't loans cheaper for us? If I was some rich banker, I'd happily loan money to med students at 3-4% because I'd expect that very few if any would default.

Am I ridiculously naive? Why the heck do we need to suffer 6.8% Stafford rates, if we are basically guaranteed high, stable incomes?

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[bige11]

It seems to me that med/dental/pharm students must be extremely reliable when it comes to loans. We aren't deadbeat English students who will be lucky to make $30k. So why aren't loans cheaper for us? If I was some rich banker, I'd happily loan money to med students at 3-4% because I'd expect that very few if any would default.

Am I ridiculously naive? Why the heck do we need to suffer 6.8% Stafford rates, if we are basically guaranteed high, stable incomes?

Your logic is flawless. However, the government controls the parameters of student loans, and so logic has no place in this argument.

 

[Medicine4Bruhs]

This has been discussed recently in more detail but one of the basic principles is that graduate loans have little assets to provide as collateral (such as a home).

 

[bomgd3]

This has been discussed recently in more detail but one of the basic principles is that graduate loans have little assets to provide as collateral (such as a home).

Le sigh... I'd offer up my kneecaps or a testicle as collateral for a low-rate loan, just because the chances of defaulting on my loans is really low. *knock on wood*

 

[SoundofSilver]

And the scary thing is that the interest rates on stafford loans could climb considerably higher if our country's credit rating is downgraded (could still happen even with a debt ceiling increase).

 

[bige11]

And the scary thing is that the interest rates on stafford loans could climb considerably higher if our country's credit rating is downgraded (could still happen even with a debt ceiling increase).

It's certain to happen if we continue debt ceiling increases.....

 

[DoctwoB]

It's certain to happen if we continue debt ceiling increases.....

You serious? Going into more and more debt is bad. Defaulting on your debt is worse. Take care of the latter, then handle the former.

 

[bige11]

You serious? Going into more and more debt is bad. Defaulting on your debt is worse. Take care of the latter, then handle the former.

True to some extent, but simply adding more debt when you are struggling to pay the debt you have is ridiculous. Cut 50% of the budget, and if still necessary, give a small increase. We are goin to be bankrupt.

 

[circulus vitios]

If I was some rich banker, I'd happily loan money to med students at 3-4% because I'd expect that very few if any would default.

No, you who would jack up interest rates and screw medical students over because they're going to be making 'a lot' of money anyways.

 

[bige11]

No, you who would jack up interest rates and screw medical students over because they're going to be making 'a lot' of money anyways.

Yes, until another rich banker says I can make safe money off these loans, and offers them cheaper so he can make money. And then another can offer them even cheaper, etc..... The problem is when all the rich bankers get together and set a rate together. Here, capitalism/freedom converge with communism/totalitarianism. This is where we find ourselves now.... And this is the system where the ultra elite rich become even more ultra elite rich.

 

[pkwraith]

It seems to me that med/dental/pharm students must be extremely reliable when it comes to loans. We aren't deadbeat English students who will be lucky to make $30k. So why aren't loans cheaper for us? If I was some rich banker, I'd happily loan money to med students at 3-4% because I'd expect that very few if any would default.

Am I ridiculously naive? Why the heck do we need to suffer 6.8% Stafford rates, if we are basically guaranteed high, stable incomes?

Because they will make the most money out of it.

Just as you said, we are reliable. We can pay off a 1%. We can pay off a 6.8%. What's the point of charging us 1% if we can pay it off at 6.8%?

 

[bomgd3]

Yes, until another rich banker says I can make safe money off these loans, and offers them cheaper so he can make money. And then another can offer them even cheaper, etc..... The problem is when all the rich bankers get together and set a rate together. Here, capitalism/freedom converge with communism/totalitarianism. This is where we find ourselves now.... And this is the system where the ultra elite rich become even more ultra elite rich.

This is exactly what I mean. I wonder if doctors have ever tried to create some kind of co-op for funding medical school tuition, charging 4-5% for med/dental/pharm students with strong grades or some other kind of filter. Maybe you need an army of lawyers or some other ridiculously high startup cost. Or maybe the default rate is higher than expected? Or.. maybe med students just don't care? I see plenty of kids happily take out the maximum Stafford and Grad PLUS loans without ever considering the ridiculous costs, buying new cars, boasting they "have plenty of money", etc.

SO WHO WANTS TO GO INTO BUSINESS WITH ME?!

 

[calvnandhobbs68]

This is exactly what I mean. I wonder if doctors have ever tried to create some kind of co-op for funding medical school tuition, charging 4-5% for med/dental/pharm students with strong grades or some other kind of filter. Maybe you need an army of lawyers or some other ridiculously high startup cost. Or maybe the default rate is higher than expected? Or.. maybe med students just don't care? I see plenty of kids happily take out the maximum Stafford and Grad PLUS loans without ever considering the ridiculous costs, buying new cars, boasting they "have plenty of money", etc.

SO WHO WANTS TO GO INTO BUSINESS WITH ME?!

Some schools do this. I know some of the schools I applied to could offer low interest loans as part of their financial aid package. It certainly isn't widespread though.

 

[xanthomondo]

nj offered loans for med/professional students that were lower interest rates

and then after like 3 years they realized that hey! we can charge as much as gradplus!

and so now they do.

 

[bomgd3]

nj offered loans for med/professional students that were lower interest rates

and then after like 3 years they realized that hey! We can charge as much as gradplus!

And so now they do.

D:

that stinks!

 

[bige11]

This is exactly what I mean. I wonder if doctors have ever tried to create some kind of co-op for funding medical school tuition, charging 4-5% for med/dental/pharm students with strong grades or some other kind of filter. Maybe you need an army of lawyers or some other ridiculously high startup cost. Or maybe the default rate is higher than expected? Or.. maybe med students just don't care? I see plenty of kids happily take out the maximum Stafford and Grad PLUS loans without ever considering the ridiculous costs, buying new cars, boasting they "have plenty of money", etc.

SO WHO WANTS TO GO INTO BUSINESS WITH ME?!

You CAN'T into business because now our federal government controls student loans and has outlawed private loans that aren't within the federal guidelines. Once again, and back to original question, this is why MD loans are the same as all other educational loans.

 

[deleted393595]

It seems to me that med/dental/pharm students must be extremely reliable when it comes to loans. We aren't deadbeat English students who will be lucky to make $30k. So why aren't loans cheaper for us? If I was some rich banker, I'd happily loan money to med students at 3-4% because I'd expect that very few if any would default.

Am I ridiculously naive? Why the heck do we need to suffer 6.8% Stafford rates, if we are basically guaranteed high, stable incomes?

Look at it this way: The Fed government will be giving you heck of a lot of money for every patient you see, with no strings attached (Unless Medicare and Medicaid get axed). And if the Healthcare Reform act stays in place, your uninsured patients get government insurance, which will be paying you. Oh, did I remember to mention that some employers might also be switching over to government insurance?

 

[armybound]

lol. I imagine the rates aren't lower for the exact reason you'd expect them to be lower: we can afford our payments.

Why not charge 6.8% interest on $250,000 if you know a medical professional is going to make those payments. It's nearly guaranteed profit.

 

[calvnandhobbs68]

Look at it this way: The Fed government will be giving you heck of a lot of money for every patient you see, with no strings attached (Unless Medicare and Medicaid get axed). And if the Healthcare Reform act stays in place, your uninsured patients get government insurance, which will be paying you. Oh, did I remember to mention that some employers might also be switching over to government insurance?

Nice explanation bro. Except that Medicaid reimbursements don't even cover cost of time/procedure most of the time and Medicare reimbursements are heading that way if they don't stave off the scheduled cuts. Hooray uninsured patients get government insurance (Medicaid)...which doctors lose money on by seeing those patients. Doctors are dropping Medicaid patients like hot potatoes and lots won't accept any new Medicare or Medicaid patients. We should definitely use these reasons to be grateful to the gov for being so generous as to give us a 6.8% interest rate on a non-dischargeable loan though.

Say thanks to Uncle Sam for me!

Edit: Take some kind of class that gives you a little more exposure to healthcare in college...when you actually start it.