Studnet Loans

[MechE]

Hey guys, I’m an incoming MS-1 interested in anesthesiology and I had a few questions about how you guys managed your student loans.

I’ve decided to live at home during med school (never having to cook or clean was tooooo tempting to pass up). My tuition is $19,000/year and I was thinking about $4000/year for gas/food/fun so approximately $23k a year in expenses.

The thing is my accountant (who happens to also be my dad) says I should take the full Stafford amount ($38k) and invest the rest in a CD. A CD has an interest rate of 5-6% and the Stafford interest rate is 6.8%. This means I would lose 0.8-1.8% on the investment. But I’ve also heard that hospitals and medical groups will pay off the loans of new graduates when they are hired. Is there any truth to this?

If a hospital pays my loans I will have all that money in the CD to spend, but if I’m not able to then I will have to pay and take the loss myself.

So my question to you guys is, what should I do? Should I plan on someone (a hospital or group) paying my loans and save the extra money, or should I go the cheap way and take as little money out as possible?

Thanks.

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[badgas]

Hey guys, I’m an incoming MS-1 interested in anesthesiology and I had a few questions about how you guys managed your student loans.

I’ve decided to live at home during med school (never having to cook or clean was tooooo tempting to pass up). My tuition is $19,000/year and I was thinking about $4000/year for gas/food/fun so approximately $23k a year in expenses.

The thing is my accountant (who happens to also be my dad) says I should take the full Stafford amount ($38k) and invest the rest in a CD. A CD has an interest rate of 5-6% and the Stafford interest rate is 6.8%. This means I would lose 0.8-1.8% on the investment. But I’ve also heard that hospitals and medical groups will pay off the loans of new graduates when they are hired. Is there any truth to this?

If a hospital pays my loans I will have all that money in the CD to spend, but if I’m not able to then I will have to pay and take the loss myself.

So my question to you guys is, what should I do? Should I plan on someone (a hospital or group) paying my loans and save the extra money, or should I go the cheap way and take as little money out as possible?

Thanks.

Ask this on the financial aid board. I know for a fact that it is illegal to invest the loan money in any way.

 

[GasMD]

The decision to join a group who will reimburse you for your educatin is a little pre-mature at your stage. You will have plenty of opportunities when you graduate. Dont limit yourself with these notions yet. You can defer/forebear your loans later until you make good income, especially subsidized which does not accure any interest in deferement. That's my 2 cents. I am sure your dad is more smarter than me in financial field.

 

[guitarguy]

Definitely take out as much subsidized loans as possible (usually around $8500 per year) since no interest accrues as long as you are in-school...esentially a four-year interest free loan. Depending on your financial situation, it may very well be a good idea to take out more unsubsidized loans as well, even at an interest rate higher than you can earn in savings. You rarely have access to such 'cheap' money, and you could possibly save this money for use towards a downpayment on a home as a resident. As Badgas said above, you are technically only supposed to use federal loans for educational expenses, but in the end I'd probably follow your father's advice.

 

[cfdavid]

Even though the 6.8% BLOWS, just look at it as an investment in your future. Everyone's scenario is different, but for most, it's pretty much the only way to do it. I'm a big believer in living comfortably within one's means. If you do this after residency, you'll be able to live a nice life and pay off the loans in a way that makes the most sense. Even in the lower reimbursing specialties, while opportunity cost is a much more compelling arguement, you'll be in a meaningful career and will have better than average compensation, while always having the challenge of keeping up with new science and technology. That's the way you have to look at it (well, not HAVE to..)if you're commited to med school.

Also, congrats on your acceptance.

 

[ketafol]

Ask this on the financial aid board. I know for a fact that it is illegal to invest the loan money in any way.

Oops. Guess those late night craps binges with refund checks are a no no as well.