Unanswered Questions - Finances

[peterish]

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I have a few loan related questions that I haven't found answers to after reading most of the threads around here. Please chime in on whichever issues you have knowledge of. Thanks!

1) In regards to Stafford & GradPLUS, Can you pay off your principal amount before graduation, thus avoiding all interest (which would have been capitalized after graduation) ?

2) What are some common sources of scholarships, if any?

3) What exactly are Perkins loans. I just know that it's max $8000/year for graduate school. How is it a separate entity from Stafford?

4) Are loan re-payments tax deductible?

5) Can loans be deferred until after residency? There have been many sources floating around...is there a definitive answer?

 

[sgtbrushes]

1) See below.
2) Scholarships is a very vague-word. Are you talking subsidized or private loans? Or merit- or need-based grants? If by scholarship, you mean merit-based grant, these are difficult to come by. I know some state schools in California are generous, and a lot of Honors colleges will give you a few hundred bucks a year. Past that, I don't really know a lot.
3) Perkins loans are a 5% loan offered by the government for students with "exceptional financial need." I'm not sure what the bottom line of this is, but you will want a FAFSA that screams, "I eat a lot of Ramen." You must do an interview when you graduate where they explain how to pay back the loans, and then you have 9 months to pay them back. Other than that, I think they work similarly to Staffords.
4) Interest paid on student loans is tax-deductible, but if you have 0 income, there's obviously no tax benefit from that.
5) See below.

 

[TMP-SMX]

1) The interest will be there but just not capitalized yet. So each year of those grad plus and unsub staffords will have interest but not interest on interest.

2) Scholarships and grants are need-based or merit-based. Either you do research or write an essay to be eligible for some. Others such as Perkins or institutional scholarships your parental and personal income and assets has to be low enough to qualify from the federal government.

3) Perkins are just need-based subsidized federal loans with 5% interest. The maximum amount given per student depends on the school as does the maximum estimated family contribution required. (Includes personal and parental numbers).

4) The only time you will benefit from a tax deduction on paying back interest is if you actually have any tax to pay. This would be the case if you personally make money or a spouse does. In your final year of school, if tuition is paid the second semester then you may be able to claim the deduction for your first year of residency.

5) There is no more deferment during a medical residency. Forbearance or income-based repayment is always an option if you can't make payments.