Stafford loans to pay off grad plus loans?

[david594]

So here is my situation. I will be attending The OSU in the fall and will be an OOS student my first year and Ohio lets you gain in-state residency for your remaining 3 years.

As such for my first year as an OOS student I expect to be maxing out my stafford loans and will also need to take out an additional ~10k in grad plus loans. The following 3 years I will be an in-state student and will only need to take out ~$36,000 a year in total loans. This will leave me ~$4000 under the stafford loans limits.

Now is there anything that would really prevent me from taking out additional stafford loans(up to the $40,500 limit) years 2-4 to pay off the grad plus loans I took out my first year? The logic being so I can graduate with all my loans at 6.8% as opposed to the grad plus 7.9%?

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[yadayadadude]

Your Stafford borrowing is limited by your school's COA in addition to the Stafford loan limits. In other words, if the total COA once you're paying in-state tuition is $36K, then that's all your can borrow in Stafford loans, regardless of the Stafford limits. If, on the other hand, the COA is $40500 and you can make do with $36000, then theoretically, you can max out the Staffords and throw a chunk on last year's GradPlus. In practice, this may not be kosher. I know there are legal restrictions as to what you can do with student loan money (you're not supposed to invest it, for instance). I'd ask your financial aid office what they think of the idea.

 

[TMP-SMX]

It's technically illegal, but they don't check what you do with your disbursement once you get it. Either way you may be limited to what your CoA ends up being once your tuition drops to in-state status.

 

[david594]

It's technically illegal, but they don't check what you do with your disbursement once you get it. Either way you may be limited to what your CoA ends up being once your tuition drops to in-state status.

Makes sense.

My plan while in school is to simply defer all loan payments until after graduation, but would that give me issues if I wanted to pay down portions of it during my summers off when I am working?

Essentially pay whatever I can during those summers when I am working full time and just let it accumulate the rest of the year?

 

[TMP-SMX]

Makes sense.

My plan while in school is to simply defer all loan payments until after graduation, but would that give me issues if I wanted to pay down portions of it during my summers off when I am working?

Essentially pay whatever I can during those summers when I am working full time and just let it accumulate the rest of the year?

Most students defer payments until after graduation. Besides summer after M1, you aren't going to have time to work so don't bet on that. You can of course pay to the principal/interest and take the interest payment deduction and the lifetime learning credit but how much do you think you can make for a summer? There are no other summers in medical school. After M2 is board studying.

 

[david594]

Most students defer payments until after graduation. Besides summer after M1, you aren't going to have time to work so don't bet on that. You can of course pay to the principal/interest and take the interest payment deduction and the lifetime learning credit but how much do you think you can make for a summer? There are no other summers in medical school. After M2 is board studying.

I'm veterinary medicine. So I have summers after VM1 and VM2 I can work through. We don't do boards until 4th year.

 

[TMP-SMX]

I'm veterinary medicine. So I have summers after VM1 and VM2 I can work through. We don't do boards until 4th year.

Lol ok then. Still won't make that much of a dent in your loans and you'll probably want to relax a bit because studying all the time sucks.