Student Loan Reform

[lee9786]

Along with the Healthcare reform law, also signed into law was the student loan reform. Now all student loans will be funded directly through government. How does this affect the ability to get loans for school though? From a borrower's perspective, has anything really changed? For those of you attending PT school this upcoming cycle, will your ability to get student loans be impacted?

My guess is that the private sector just lost revenue, so they will attempt to regain revenue via higher interest rates through the private loans. It now looks as if it is even a scarier concept than before to borrow from the private sector. I don't think it is avoidable for many though. Any insight on how this will impact your ability to pay for all this?

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[MIDPT2012]

I don't see this changing my student loan borrowing, or my classmates. We have direct loans and Grad Plus loans through our school, which already are directly from the government. Unlike when I was in my undergrad years, I've noticed that in Grad school I haven't had the need to seek out private loans. The Grad plus loan is there to cover the gap from the 20,500 a year you are eligible to receive and the cost of attendance at your school, including room, board and spending expenses.

 

[lee9786]

How much does the grad plus loan cover usually?

 

[pwrtrainer]

...

 

[lee9786]

Isn't there a limit though? For example one institution I've looked at is 35k/year. Add living expenses and fees this could easily go up to 50k. So this can all be obtained through government loans?

 

[Kyra4dpt]

Isn't there a limit though? For example one institution I've looked at is 35k/year. Add living expenses and fees this could easily go up to 50k. So this can all be obtained through government loans?

I'll be attending a program that costs $35K/year and do not expect to have any issues. My issue is just taking out this much in loans. But I'll be pinching pennies every which way I can to try to reduce the amount I need to take out. Programs have a Cost of Attendance budget, which is used to determine how much you are eligible for. It covers housing, books, transportation, food, etc. It won't cover things like additional non-education expenses. Grad Plus loans is a fixed 8.5% APR and can be consolidated with your other federal loans. I was going to take out fed loans only and was going to avoid private loans, anyway.

Thus, the yearly cap is set by your program's COA budget and there's the overall one set by the federal government.

Here's a section regarding limits from http://www.finaid.org/loans/gradplus.phtml:

Additional Stafford Loan Limits for High Cost Programs: The trailing
matter in section 428H(d)(2) allows the Department to increase
Stafford Loan limits for "students engaged in specialized training
requiring exceptionally high costs of education". This is the section
that the Department used to increase annual Stafford Loan limits by
$20,000 to $38,500 (and aggregate loan limits to $189,125) for medical
school students. These limits are not affected by the Graduate and
Professional Student PLUS Loans. The annual limit, however, will
increase to $40,500 because of the increase from $10,000 to $12,000 in
the graduate unsubsidized Stafford Loan limit. The cumulative limit
does not change. Of course, the Department could potentially change
the additional annual limits and the cumulative loan limits for
medical school students or students in other high cost training
programs.

 

[lee9786]

I hear you regarding whether or not these loans should be taken out. What's scary is this guarantee to get these loans is most likely going to push the costs of tuition even higher. Add in the IBR which promises loan forgiveness and monthly caps and this perception only puts additional pressure on tuition increases. We are now walking a very scary line. It almost doesn't even make sense to go to school anymore. Oh well I guess I've come this far so what's another 100k. It doesn't matter how much I borrow because it will all be forgiven in twenty years with me only paying 10 percent of my monthly income right? Somehow I don't believe this at all. How is this system suppose to be sustainable when you have an extremly indebted, educated, and unemployed workforce in massive numbers which is exponentially growing?