Student loan/financial advice

[rxtech2012]

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Hey everyone,

So here's the situation: I have recently been accepted to pharm school for the fall. I graduated from undergrad last may so I started making student loan payments last month. So, my question is: should I continue to make these payments(which I can afford) or should I defer my loans(I'm enrolled half time this spring for a couple pre-reqs) and put that money for payments into my savings? The loans are federal, fixed interest, unsubsidized so interest will continually accrue. How I see it is that I can defer and use that money for some pharm school expenses in the fall instead of making payments when after four more years of added interest and loan amounts the money I pay now won't have much affect. What do you guys think?

 

[ShockingPurple]

Hey everyone,

So here's the situation: I have recently been accepted to pharm school for the fall. I graduated from undergrad last may so I started making student loan payments last month. So, my question is: should I continue to make these payments(which I can afford) or should I defer my loans(I'm enrolled half time this spring for a couple pre-reqs) and put that money for payments into my savings? The loans are federal, fixed interest, unsubsidized so interest will continually accrue. How I see it is that I can defer and use that money for some pharm school expenses in the fall instead of making payments when after four more years of added interest and loan amounts the money I pay now won't have much affect. What do you guys think?

I was in your situation last year. I graduated with my BS in May of 2011 and I didn't start pharmacy school till July 2012. My 6 month grace period ended the end of 2011 and I had to defer my payments. I couldn't afford it...but once you get into pharmacy school if you're taking out federal loans again, the loan service will see that you are enrolled in a graduate program and automatically defer your loans again. You can always pay on them if you want. It's not mandatory, but it's always an option if you want to.

 

[syl0sim]

Just FYI I don't think In-School deferment automatically kicks in until you actually start school.
I graduated in June 2012 so my grace period ended in early December. I had to go back to school starting this Jan to finish up few prereqs. The school I started attending said they will not send "In-School deferment form" to my lender separately for me because they will be electronically sending list of students attending school as of the first week of the quarter to the National Student Clearinghouse who reports out all lenders students enrollment status.
Winter quarter did not start until the first week of Jan, so I had to ask for In-School/Financial hardship deferment to Loan lender. It took them a while to get back to me, but my payment is delayed, and I think I'm good until I graduate from Pharmacy School.

But like ShockingPurple said, making payment is not mandatory. Just be aware of daily interest!

Oh, and maybe I was the only one who did not realize this ... But I found out that once your grace period is over, you will not get a second grace period even after you choose to attend school afterwards (ie Pharmacy School). So once I graduate from Pharmacy School I guess I need to find a job and start making payments ASAP ...

 

[rxtech2012]

The grace period not renewing is correct, I guess you could file for forbearance until you find employment.

 

[ShockingPurple]

Just FYI I don't think In-School deferment automatically kicks in until you actually start school.
I graduated in June 2012 so my grace period ended in early December. I had to go back to school starting this Jan to finish up few prereqs. The school I started attending said they will not send "In-School deferment form" to my lender separately for me because they will be electronically sending list of students attending school as of the first week of the quarter to the National Student Clearinghouse who reports out all lenders students enrollment status.
Winter quarter did not start until the first week of Jan, so I had to ask for In-School/Financial hardship deferment to Loan lender. It took them a while to get back to me, but my payment is delayed, and I think I'm good until I graduate from Pharmacy School.

But like ShockingPurple said, making payment is not mandatory. Just be aware of daily interest!

Oh, and maybe I was the only one who did not realize this ... But I found out that once your grace period is over, you will not get a second grace period even after you choose to attend school afterwards (ie Pharmacy School). So once I graduate from Pharmacy School I guess I need to find a job and start making payments ASAP ...

My in-school deferment didnt start till July when I started my program, but for 6 months I had to defer, or rather forebear on my loans.

 

[DrDrugs2012]

Look at it in terms of what your expected expenses will be and what your opportunity cost for asset growth is.

If the question is whether for the next six months you should continue payment:
If your current loans are charging greater interest rates than your future loans, then it is wiser to continue making payments for the next six months to whittle down what you owe before you defer during pharmacy school. If your pharmacy school loans will be greater interest, it is better to defer now, save now and reduce your pharmacy school debt by taking less in loans for pharmacy school.

If the question is whether you should continue paying undergrad loans during pharmacy school:
The same applies as above, except that there is an opportunity cost to employment in pharmacy school. Employment may trade off with time you spend on academics, professional development, and networking. If your current employment affording you the luxury of paying off your loans is not relevant to your future in pharmacy, you may be wise to consider what the long-term payoff on pursuing activities aligned with your academic and professional goals may be, and if that reward is justified by paying additional accrued interest on loans.

Lastly, if the question is overall financial management:
Think about the tax implications. If you are currently employed full time and will not be receiving all of your income back in tax returns, opening a modest with-penalty retirement account now (which is untouchable as far as need-based financial aid is concerned) will reduce or eliminate your 2012 taxes giving you additional income while beginning your long-term retirement planning. Additionally, consider that if you truly believe your savings can earn interest at a rate which beats the interest rate of your student loans, then it is wiser to take the loans. For example, if your loans are locked in at 5% and you believe you can earn a steady 10%, then the 5% differential adjusts for both inflation and the interest on loans.