Unsubsidized, Grad Plus and Private "Alternative" Loans

[WannaB2]

Would it make sense to Reject the schools offering of Subsidized and Grad Plus Loans IF I can get a lower interest rate on my own - from a private bank or credit union etc?

THANKS

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[dr bojangles]

i would not reject the govt money, it usually has fixed interest rates and better perks. the private loans are attractive, and lure you in with low rates, but they can change on you in an instant. i would say maximize the stafford and grad plus, and if you need more, then go private.
good luck.

 

[whlee84]

agreed. if you're talking about private loans, you will have to start making monthly payments during school...with FAFSA/grad PLUS, you can wait until you graduate to start making monthly payments.

either way, max out on your gov't loans first, then go private for extra, if needed.

 

[WannaB2]

Thanks for the replies ... What if I can get a deferment of the payments (and a grace period after graduation) and fixed rate ?

I mean with decent credit and a cosignor it shouldn't be that hard to get lower than 6-8 ?

Anyone else can comment?

Thanks again.

 

[gryffindor]

You don't have to take any of the loans offered to you if you have other means to pay for dental school. If those other means are the bank of mom and dad or a loan from your credit union, it is entirely your decision.

However, the subsidized loans are unique because not only are the payments deferred until you graduate, but they also remain interest free while you are in school. Interest doesn't start accumulating on your tab until after you graduate. The government pays the interest on the subsidized loans while you are in school, will your credit union match this? Personally, I maxed out all subsidized loans offered to me in college and dental school, and used other means to pay the rest of my dental education. There were classmates who took no loans, and some who took all loans offered plus more private loans.

 

[Vicviper]

Yeah, you should definitely take all the subsidized money you can get. I think another question is to take Grad Plus or a Private Loan - this is the same situation I'm in. I'll need about 17-20k in loans above the Stafford each year, and I can't decide which to go with. The Grad Plus is like 8.25%, but the thing that galls me is the 3% origination fee. From Discover I can get Prime+1-2, so right now 5.25%, no origination fee, 9 month grace period, and a 2% balance reduction on graduation, so that'd be 5% less in loans I'd need to take compared to the GradPlus essentially. I worked out the numbers for each, and after the first year the GradPlus would be something like $2010 in interest and fees (I know the origination fee is only once), and the Discover Private would be like $1050.

The thing I'm worried about is that prime can change on the whim of the economy, and I can just see inflation skyrocketing in the next 4 years because all of the printing of extra money by the government, which I bet would cause prime to also go way up, possibly beyond 8%.

Any thoughts guys?

 

[cjb04]

Vicviper, I was in the same situation as you and ended up choosing the gradplus. I asked whether I could tolerate that level of risk concerning that amount of money, and the answer was no. Yes, the grad-plus interest and origination fee is high in comparison to some private loans available. However, the fact that the rate is fixed, that payments are not due till after graduation, and that there are plenty of lenders backing it make me comfortable with my choice. Good luck with your decision.