We are going to be drowning in debt!

[timwatley]

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This will be my one attempt to explain and help you. What everyone else is trying to say is that they will be using the 30 year payment plan.... Which means lower monthly payments... But they are not going to pay just the minimum.... They will be paying like they were on the 10 year plan... Just like you they can be done in 10 years...

So now, I believe that you think 30 year costs much more than 10 years because the 30 year plan will have 30 years of interest rates piled up. Yes, that is true. If you use the whole 30 years to pay off, you will have 30 years of interest. What everyone on here is trying to help you to understand is that.... We are going to pay it off in 10 years instead of 30 years. This means the interest rate will be piling up only for 10 years.

So wired asks: what's the point??? Isnt that doing the same thing as the 10 year plan?

I Answer: no wired, if you go with the 30 year plan, the interest rate is much lower than the 10 year. So instead of having the 10 year repayment pile up for 10 years, you'll only have the 30 year repayment interest rate (which is lower) pile up for 10 years. Which means overall you pay less if you go with the 30 year repayment and pay it off in 10.

If you don't get this, I don't know what else anyone on here can do to help you. Good luck with your future in dentistry.

Do you know if there are any early payoff fees if you go that route?

 

[Bereno]

Do you know if there are any early payoff fees if you go that route?

That depends on the refi agreement.

 

[goffdent]

I am pretty sure you are wrong on the last part. Student debt is unforgivable in lots of cases. It would be passed onto someone....

Look it up.. PLUS loans, direct loans... are cancelled upon death of the borrower. Your family and spouse don't take the burden on... See FAFSA website.

I shouldn't even comment on the rest of my post because others I see have been arguing at nausea... You simply CHOOSE the 30 year plan.

 

[TheClutch]

In my opinion, it takes a ton of discipline to pay off in 10-15 years when you are under a 30 yr plan. Once you make money finally after all 8 yr of school and start to enjoy your life, it's extremely tough to pay off more than you are required.

It's like you are trying to study for the board part 1 before you start a dental school. It's a terrible terrible analogy but I don't think anyone will buckle down and study it as if we were studying for DAT.

Plus a 10 yr monthly payment for~400K is well over 4k. Considering all the expenses of a dentist, I personally don't think that it is very realistic. Of course, if you go to a public school, then it may be a different story.

PS purely my opinions, no intention of arguing

 

[Cello]

Sure, it takes discipline, just like getting good grades and gaining admission to dental school takes discipline. The longer it takes to pay the loan back, the more the bank profits from your debt, and the more money you lose out on in the long run.

 

[2PacClone23]

Whatever, I'll just do HSPS

 

[Cello]

That attitude probably won't go far with HPSP* (thanks DJ). 😛 It's pretty demanding from what I understand, and a lot of healthcare professionals who come out of it tell anyone considering the same path to think long and hard about it, because it's not the cakewalk a lot of people think it is.

 

[mi2ni]

That depends on the refi agreement.

This came up earlier in the thread...what about amortization schedule? If you refi, the amortization schedule is reset to the date you refi.

Another question about amortization schedule: if you go with the 30 year and make higher payments to finish in 10, is that guaranteed that whatever you pay over the 30 year int.+pay. goes to principle? I was under the impression that early on, a bigger portion of any payment (including the extra payments) is applied to paying off interest.

Something is telling me that banks must have come up with an evil plan for the loss of money if loans are not held to maturity. Not sure if there are any exception for student loans. Any ideas Bereno?

 

[destinedsirius]

Yes if you pay more than the minimum the extra money will always go towards interest unless you specify with your every payment that you want the extra to go to principle. This is why it is recommended you don't pay electronically or do a monthly automatic charge online because you would not be able to tell the machine what you want to do. If you pay more and not tell them what it's for, your lender will also push back your next payment due dates thinking you are just paying for your next payment... Not beneficial because you won't make a dent in your principle.

 

[white fang]

Yes if you pay more than the minimum the extra money will always go towards interest unless you specify with your every payment that you want the extra to go to principle. This is why it is recommended you don't pay electronically or do a monthly automatic charge online because you would not be able to tell the machine what you want to do. If you pay more and not tell them what it's for, your lender will also push back your next payment due dates thinking you are just paying for your next payment... Not beneficial because you won't make a dent in your principle.

This is NOT true for my mortgages or for my current undergrad loans. When I pay extra in any given month it is applied directly to principle and my payment still has the same due day the next month. I am not saying you are not right for dental school loans as I have no experience paying them, but it would seem strange to me that they would be any different.

 

[immike1234]

Even though a 30 year loan has a lower interest rate (which would be advantageous if you were paying it off as a 10 year loan), how does it compare to the interest rates for stafford unsubsidized loans for graduate school? I'm just curious in an estimate from those who have any knowledge about private loans as I know the interest rate for private loans varies depending on your lender.

 

[DJPaulyDDS]

The banks aren't stupid. The lower interest rates for the 30 year loan repayment are true. But it is more than likely if you plan on paying off your loans before that time period (or pay more per month) the banks will charge a fee.

Sucks either way you slice it.

Oh and its HPSP...

 

[2PacClone23]

HPSP it is

 

[Bereno]

This came up earlier in the thread...what about amortization schedule? If you refi, the amortization schedule is reset to the date you refi.

Another question about amortization schedule: if you go with the 30 year and make higher payments to finish in 10, is that guaranteed that whatever you pay over the 30 year int.+pay. goes to principle? I was under the impression that early on, a bigger portion of any payment (including the extra payments) is applied to paying off interest.

Something is telling me that banks must have come up with an evil plan for the loss of money if loans are not held to maturity. Not sure if there are any exception for student loans. Any ideas Bereno?

True, the date would be reset, so if I was to refi it would likely be sooner than later

The portion paid to interest is a tricky thing, and would need to be worked out with the lender. As others have said, sometimes they automatically add it to principle, but other times they see it as an advance on the next pmt. You would need to talk to the lender to find out for yourself.

As I have said before, the big reason I would go this route is for the flexibility and safety of it. I would try and see if you can get the option to have no early pmt fee. However, if for some reason I am forced to pay the 10 year rate for this plan, so be it. I'm not out any money over the 10 year plan, but I do have a little more safety if I need it. Free insurance. As for how this would work with federal loans? I'm not too sure to be honest...

 

[2PacClone23]

Who wants to payback a loan in 30 years? jesus.

 

[goffdent]

Who wants to payback a loan in 30 years? jesus.

99% of the population who CAN'T afford to do it less than that......... jesus.

 

[little Buddy]

100% of anything over the contracted payment goes towards principle...

 

[mi2ni]

100% of anything over the contracted payment goes towards principle...

Are you speaking from experience? Do you have a reference I can look up? If this depends on terms set by lenders (i.e. there are no regulations set for student loans), I rather check it out before signing...

 

[little Buddy]

Yea go into your local bank and discuss it... This is finance 101, nothing secret or anything magical happening here. Let's say you buy an awesome Kawasaki KX250F for $5,500 and have a monthly payment of $100. The only interest portion is in the first $100, so if you decide to make a double payment because you have extra cash ($200), that additional $100 will go straight to principle. However, paying off debt faster than is on the payment schedule can actually be a negative on your credit score, doesn't really matter, but that is the only negative to this approach but isn't enough to offset the financial gains of paying off the debt asap.

 

[womboona]

Yea go into your local bank and discuss it... This is finance 101, nothing secret or anything magical happening here. Let's say you buy an awesome Kawasaki KX250F for $5,500 and have a monthly payment of $100. The only interest portion is in the first $100, so if you decide to make a double payment because you have extra cash ($200), that additional $100 will go straight to principle. However, paying off debt faster than is on the payment schedule can actually be a negative on your credit score, doesn't really matter, but that is the only negative to this approach but isn't enough to offset the financial gains of paying off the debt asap.

why exactly is one's credit score affected negatively if you pay extra?

 

[goffdent]

it's not alwyas the case.. It can help, and sometimes hurt. iIt helps because it reduces your loan/debt ratio. credit scores are based off of your payment history, and if a lender schedules your payment over 2 years for example, and you pay it off in 1 year, they miss out on interest that you contracted with them for 2 years which may penalize you by slightly lowering your score. Benefit= you have piece of mind that whatever you purchased is YOURS and no more lien. And you saved money in interest.

 

[TikiTorchUSA]

I read this entire thread and its both assuming and insightful. Doing my own research I concluded that the only factor that influences the 10 yr vs. 30 yr loan repayment is the amount of loans that one would take out. For example, I'm going to UMDNJ which is my state school, I'm also getting some help from my parents and I have some monies saved up. I ran the analysis using Bereno's calculator and compared it via other websites. Assuming a 100K starting salary (post GPR; since I intend on practicing in NY and NJ) I can pay off my loans with relative comfort/ease. Now if I went to NYU, Columbia, USC or Tufts then yes I would probably stretch out my loans for 30 yrs, because i'd be knee deep in debt. So with that mind one should really do his/her math and calculate their monthly repayment in order to gauge what option works for them. As stated before the average debt of most dental students is around 200K and if you come out of school making 100K you can pay that off in 10 years.

 

[2PacClone23]

I read this entire thread and its both assuming and insightful. Doing my own research I concluded that the only factor that influences the 10 yr vs. 30 yr loan repayment is the amount of loans that one would take out. For example, I'm going to UMDNJ which is my state school, I'm also getting some help from my parents and I have some monies saved up. I ran the analysis using Bereno's calculator and compared it via other websites. Assuming a 100K starting salary (post GPR; since I intend on practicing in NY and NJ) I can pay off my loans with relative comfort/ease. Now if I went to NYU, Columbia, USC or Tufts then yes I would probably stretch out my loans for 30 yrs, because i'd be knee deep in debt. So with that mind one should really do his/her math and calculate their monthly repayment in order to gauge what option works for them. As stated before the average debt of most dental students is around 200K and if you come out of school making 100K you can pay that off in 10 years.

Add another 400k if you want to buy a private practice haha.