Eugene

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Jul 2, 2006
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I am a newbie at the Stafford Loans, and I do apologize if my question seems silly or repetitive of other threads. My situation is that I am qualified for the Stafford Loan, sub and unsubsidized, and after paying for tuition and everything I will be left with about $5000 per term ($10K for the entire school year, but this money is unsubsidized). I don't really need this money, but I am wondering if I should return it or hold on to it, just in case the interest rate on student loan may go up next year.

What I am thinking is that, if the rate goes up to say 7.5% next year (hope not), I can use the 10K I am holding now at 6.8% to pay off some of the tuition, instead of having to borrow another $10K at 7.5%.

I understand that holding on to $10K at 6.8% unsubsidized will cost money in interest rate, and wonder if it is really worth it since I don't really know how much the interest rate will be next year.

I have asked my financial adviser, and she does not seem to be sure, and basically tell me to find out more information and think carefully. So I am asking if I can please have some advice from you. Maybe I am missing out on something? Any pointer would be greatly appreciated. Thank you very much.

PS: I am an entering freshman of pharmacy. My tuition is $20,000, what I qualified for in Stafford is $30,000, so it is 10K left. Please also recommend me any good lender for the Stafford loan for Pharm. I think T.H.E, Accessgroup and other lenders we see in this forum are not for pharmacy. Thank you.
 

RasputinDO

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Eugene said:
I am a newbie at the Stafford Loans, and I do apologize if my question seems silly or repetitive of other threads. My situation is that I am qualified for the Stafford Loan, sub and unsubsidized, and after paying for tuition and everything I will be left with about $5000 per term ($10K for the entire school year, but this money is unsubsidized). I don't really need this money, but I am wondering if I should return it or hold on to it, just in case the interest rate on student loan may go up next year.

What I am thinking is that, if the rate goes up to say 7.5% next year (hope not), I can use the 10K I am holding now at 6.8% to pay off some of the tuition, instead of having to borrow another $10K at 7.5%.

I understand that holding on to $10K at 6.8% unsubsidized will cost money in interest rate, and wonder if it is really worth it since I don't really know how much the interest rate will be next year.

I have asked my financial adviser, and she does not seem to be sure, and basically tell me to find out more information and think carefully. So I am asking if I can please have some advice from you. Maybe I am missing out on something? Any pointer would be greatly appreciated. Thank you very much.

PS: I am an entering freshman of pharmacy. My tuition is $20,000, what I qualified for in Stafford is $30,000, so it is 10K left. Please also recommend me any good lender for the Stafford loan for Pharm. I think T.H.E, Accessgroup and other lenders we see in this forum are not for pharmacy. Thank you.
It's my understanding that due to the changes made to the student loan program all interest rates on NEW loans are locked in, so the answer to your question would be forget about the money if you don't need it if the interest rate is the only thing you were keeping it for. All NEW stafford loans are now locked in at a fixed 6.8%. That is my understanding but someone please feel free to correct me if I'm wrong....
 

edubbs5

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Jul 20, 2006
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You are correct - the Reauthorization that was done this past winter by the Federal goverment changed the interest rate from being a variable rate (pre 7/1/06) to a fixed rate - that won't change. Next year's interest rate will be 6/8% as well.

If you have extra money, I wouldn't hold on to it for next year, because that loan will be accrueing intererst and you can be taking out funds next year at the same rate.

I hope that helps!
 
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abbaroodle

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Eugene said:
PS: I am an entering freshman of pharmacy. My tuition is $20,000, what I qualified for in Stafford is $30,000, so it is 10K left. Please also recommend me any good lender for the Stafford loan for Pharm. I think T.H.E, Accessgroup and other lenders we see in this forum are not for pharmacy. Thank you.
Don't forget living expenses - so if you have 10K left after tuition, unless you are not planning on paying rent or buying books and groceries (or you have other resources which is very possible too!), you probably want to hold onto it.

Ditto what everyone else said: rates are locked in, unless Congress passes a bill changing their mind. Borrow what you need because you will have to pay it back plus interest. Having more money in the bank may tempt you to live more lavishly which you may regret later. It really is a personal decion, though.
 

Jack Daniel

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Eugene said:
I don't really need this money, but I am wondering if I should return it or hold on to it, just in case the interest rate on student loan may go up next year.
Neither. Send it to me. I'll put it to good use. ;)
 

OSUdoc08

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Eugene said:
I am a newbie at the Stafford Loans, and I do apologize if my question seems silly or repetitive of other threads. My situation is that I am qualified for the Stafford Loan, sub and unsubsidized, and after paying for tuition and everything I will be left with about $5000 per term ($10K for the entire school year, but this money is unsubsidized). I don't really need this money, but I am wondering if I should return it or hold on to it, just in case the interest rate on student loan may go up next year.

What I am thinking is that, if the rate goes up to say 7.5% next year (hope not), I can use the 10K I am holding now at 6.8% to pay off some of the tuition, instead of having to borrow another $10K at 7.5%.

I understand that holding on to $10K at 6.8% unsubsidized will cost money in interest rate, and wonder if it is really worth it since I don't really know how much the interest rate will be next year.

I have asked my financial adviser, and she does not seem to be sure, and basically tell me to find out more information and think carefully. So I am asking if I can please have some advice from you. Maybe I am missing out on something? Any pointer would be greatly appreciated. Thank you very much.

PS: I am an entering freshman of pharmacy. My tuition is $20,000, what I qualified for in Stafford is $30,000, so it is 10K left. Please also recommend me any good lender for the Stafford loan for Pharm. I think T.H.E, Accessgroup and other lenders we see in this forum are not for pharmacy. Thank you.
Um, you don't have to take out the maximum loans. Just don't take it out.
 

Lesley

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Jun 18, 2006
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Attending Physician
Eugene said:
I am a newbie at the Stafford Loans, and I do apologize if my question seems silly or repetitive of other threads. My situation is that I am qualified for the Stafford Loan, sub and unsubsidized, and after paying for tuition and everything I will be left with about $5000 per term ($10K for the entire school year, but this money is unsubsidized). I don't really need this money, but I am wondering if I should return it or hold on to it, just in case the interest rate on student loan may go up next year.

What I am thinking is that, if the rate goes up to say 7.5% next year (hope not), I can use the 10K I am holding now at 6.8% to pay off some of the tuition, instead of having to borrow another $10K at 7.5%.

I understand that holding on to $10K at 6.8% unsubsidized will cost money in interest rate, and wonder if it is really worth it since I don't really know how much the interest rate will be next year.

**********************************************************


You say $20,000 is enough to borrow to cover your tuition expenses, but have you included all your other expenses, books, transporation, insurance or are you getting these covered through other resources such as a part time job, savings, parents, etc?

Even at 6.8%, accrued interest while in school can add up, so it's best not to borrow any more than you need to. I am not a fan of carrying debt. But, it's good to have a little safety net as well. Especially, if you are planning on working during school and find out that it may be a bit more stress than you originally realized.

I think your financial aid counselor is correct. Look at all your possible expenses outside of tuition, if you have them covered, there is no reason to borrow more. If not, you may want to consider at least some of the loan, granted money doesn't come cheap. But, the 6.8% unsubsidized loan remains a far cheaper option than credit cards or even the Plus loan, 8.5% also unsubsidized. So, just double check your financial needs and options carefully.


Maybe you could ask your counselor, if you turned down a portion of the loan now and realize that you need it later in the school year, would it still be available to you? If so, what would be the process? That would be the best possible option. Good luck on your financial decision and in pharmacy school. My son is starting in the fall. It's a six year PharmD program, so he'll be starting his first pre-professional year. He's very excited to start. Pharmacy is a great profession. Best wishes, Lesley
 

MNDOC31

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I agree with all that has been said. If you don't plan on needing the money this year I wouldn't take it out. That being said, if you do however need some of it for costs throughout the year a good option might be putting it in an internet savings account like emigrant direct (FDIC certified) where you can get 5.15% APY. This is a safe place for your money and you can take it out of the account as needed throughout the year and that way you will at least be getting some return on your money to help defray the 6.8% stafford rate.
 
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