Stratergy for paying med school loans

[tiedyeddog]

I was wondering if anyone could comment on my plan for taking out student loans or if anyone has done something similar.

Through the inheritance from a grandparents I have ~60,000 dollars saved in a 529 plan for Medical school. I have no undergrad loans, thanks to scholarships. I plan to enter repayment in residency and to really make a dent in my loans before becoming a attending. The two schools I have been accepted to have tuition at ~30,000 and cost of attendance for the 9 month school years at ~45,000.

What is the smartest way to take out loans and accrue the lowest interest amount? Are the differences negligible no matter how I do it? For instance, Should I take out the 8,500 in subsidized Stafford loans my first year and then pay for the rest with my 529, then using the rest of the 529 my second year, and doing straight loans for 3 through 4 years on straight loans? To be honest, I don't have a great grasp of how the interest works, does it accrue monthly on Stafford loans?

---

Members don't see this ad.

 

[Gute]

the smartest move is to take the subsidized loan and try to ride as long as possible without taking unsubsidized loans. the subsidized loan is "free money" until you graduate, but the 6.8% per annum on the unsubsidized loan is expensive. also keep in mind that after your 529 is depleted, you may qualify for need-based scholarships/loans from your school which may lessen the burden...it really depends on what school you are at though.

also make sure the money in the 529 is allocated in a conservative manner. e.g. if the money is in a stock fund, move it to money market/govt bonds since you know you need the money with a maximum of a 4 year time horizon.

 

[dpmd]

It isn't free money if you have origination fees, which is something to consider. Also, I am not familiar with the 529 plan. Is that something in your name? If so it may affect how much subsidized loans you get. In that case using the money sooner is probably better (that will also help you in terms of other need based stuff-unless your parents have a lot of money).

 

[7 Iron]

I would use the 529 funds to pay the full tuition amount during your first and/or second years (minus subsidized loans if you are eligible); then, if required take out the 6.8% loans for your 3rd and 4th years. In other words, try to not take out any unsubsidized loans until after your 529 is depleted. That way, your 6.8% loans only accrue interest for 2 years instead of 4 years while in med school.

 

[Tabicakes]

For as long as possible, I would take the $8,500 subsidized each year and pay the rest of tuition/living with your money in the 529. I would put the remainder of the 529 money in a savings with the highest APY I could find. Once it's depleted, I would take out a private loan with the lowest interest rate (check Sallie Mae, they have some of the lowest rates right now depending on if you can get a cosigner or not) to finance the rest of my school-related expenses.
This is what I'm doing myself, except I'm starting out with a lot less than 60k lol.