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Which Lender for Grad PLUS loans?

Discussion in 'Financial Aid' started by ATruPhenom, May 8, 2008.

  1. ATruPhenom

    ATruPhenom House D.O. 5+ Year Member

    Dec 15, 2006
    Ft. Lauderdale, FL
    I know there are similar threads posted, but many are jumbled answers. I've done some research, but are there large differences between lenders for grad PLUS loans? I only see minor differences in terms of % rates/orig. fees/default fees.

    Can people who have already battled this problem let me know their opinions on which lender to choose. I have all my other previous loans through Sallie Mae and I am thinking that may be the best route to take since I can keep it somewhat organized.

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  3. fbf

    fbf 2+ Year Member

    Apr 2, 2007
    same boat. I would like to hear anyone's opinion.
  4. JamieMac

    JamieMac Elite Member 7+ Year Member

    Jul 7, 2005
    Royal Oak
    It seems like pulling teeth to get good information on this.

  5. nhy201

    nhy201 UTK class of 2012 2+ Year Member

    May 5, 2008
    San Diego, CA
    You can check out chase, they have a special program

    They have lower interest rates for both Stafford and GradPLUS loans
    The federal government set the interest rate at 6.8% for Stafford and 8.5% for GradPlus loans. The Chase loan is at 5.8% and 8.1%. I just talked to edamerica customer service, they said that the interest rate might do down to 6% for stafford loan in July 1st. Edamerica do have .25% interst rate reduction for auto-payment, but she said that is can change at anytime. The only thing for sure is the interest rate. I would pick the same lender as your stafford loan to make things simpler.
  6. SketchLazy

    SketchLazy 5+ Year Member

    May 16, 2007

    That's all they are, minor differences. Most lenders give a .25-.75% reduction for auto-debit and on-time payments. Origination fees for GradPLUS are mostly 1-3% with a few offering 0% origination with less of a reduction. It comes down to how quickly you pay your loan off. If you pay within 5 years (impossible if you want to live comfortably), then it's better to go with the ones that have no origination. If you pay in 10 yrs or more than it would be better to take the hit for the origination fee and take the loans that offer bigger rate reductions. Other things you should take into account are the size of the lender. If small lenders are in a crunch, they could sell off your loans to another lender which has every right to take away your borrower benefits. With all that, I've chosen citibank because: they are a big lender, they provide the highest rate reduction, they cancel your last 6 payments if you pay on time, and they forgive you for paying late. But in the end, the difference between loans will probably be 10k at most after it's all paid off.

    AMDFAO AMDFAO 2+ Year Member

    May 31, 2007
    When a lender states they will pay your last 6 payments you need to be clear on what that really means. If you prepay on the loan then you pretty much eliminate the benefit since you paid it yourself. Call back Citibank and ask for a very clear definition of what "last 6 means" and under what repayment option as well as "what if I prepay?" This issue came up a few years ago and if you did prepay you wound up elimintaing the benefit.
    To clarify: I borrow a loan and have a 10 year repayment of 120 payments w/ the last 6 months paid for by the lender which is defined as payments 114-120 (last 6 over the repayment terms as stated in your agreement). I start to prepay on it by sending in extra money every month so my last 6 payments may actually be payment 104, 105, 106, 107, 108 and 109 -- there would be no payment 114, 115, through 120. The lender pays nothing since you have left them nothing to pay on 114-120. I hope that made sense.
  8. PJlovin

    PJlovin Glasgow Vet c/o 2013 2+ Year Member

    Feb 20, 2008
    I went with my credit union for Stafford loans. They pay both the default fee and origination fee on my behalf, interest rate is fixed at 6.3%, and they offer an additional rate reduction of .5% with auto-debit payments. This one is disbursed by AES.

    For GradPLUS loans, I went with Regions, which offers the following benefits for the life of the loan (from their website):

    Money-saving benefits from Regions

    You may be eligible for benefits that lower the 8.5% interest rate to as low as 6.75%, and let you earn a 1.5% loan credit!
    • Earn a 0.25 percentage point interest rate reduction for the life of the loan when your loan is first disbursed*
    • Earn a 0.50 percentage point interest rate reduction for auto debit*
    • Earn a 1 percentage point interest rate reduction after your first on-time payment with a one-time benefit reinstatement opportunity*
    • Earn a 1.5% loan credit after you make your first 18 on-time payments*
    • Upromise Loan Link SM
    My GradPLUS loan is disbursed by SallieMae.

    Lastly, accoring to this site , Chase is offering no default and origination fee for Stafford loans, and Wachovia is offering no origination fee for GradPLUS loans.

    Hope that helps someone!
  9. doclm

    doclm Senior Member 7+ Year Member

    Mar 22, 2005
    Farmington Hills, MI
    Is there any downfalls from taking out Grad Plus loans versus the Stafford federal loans? Do you have to pay the Grad Plus loans back sooner? In residency??

    Thanks for your feedback.
  10. PJlovin

    PJlovin Glasgow Vet c/o 2013 2+ Year Member

    Feb 20, 2008
    As I understand it, you should always take out Stafford loans first! Depending on your program, you are allowed a certain amount with Stafford loans. (I'm doing Vet schools so I'm entitled to $20,500 - all of which I was approved for). That money is broken down into subsidized ($8,500, and is based on financial need) and unsubsidized ($12,000, not based on financial need). The interest on subsidized loans is payed for by the government while you are in school; for unsubsidized loans, YOU pay the interest while in school (but you may qualify for a deferment during this time). If you do get an in-school deferment, the interest will just capitalize and get added to your principal.

    Basically, if you can get away with only needing $8500 for your tuition (I wish! lol), you would want to take out ONLY sub loans so you don't have to pay interest during the length of your program. But if you need to get the unsub loans too, you may still want to pay the interest while in school because the larger your principal gets, the more interest you'll pay for the life of the loan. Does that make sense?? With both these loans, repayment begins 6 months after graduation.

    Now, for GradPLUS loans...

    You should only take out a GradPLUS loan if the amount you recieve through Staffords will not cover the cost of your tuition (or if you don't have the personal funds to cover it). In fact, I'm not entirely sure that you can even take out a GradPLUS loan without having taken out a Stafford loan first. Anywho, with GradPLUS, you can borrow the entire remainder of the tuition, plus the cost of accomodation, books, travel, etc anything associated with your education). This is good and don't want to take out anymore than what you absolutely need. (some schools, mine included, won't authorize funds that exceed their estimated cost of attendance). With these loans, repayment begins immediately after the first disbursement...but you can ask for an in-school deferment with these so you dont have to pay until after graduation.

    Generally, interest rates on Stafford loans is lower than that of GradPLUS loans and the rates are usually fixed for the life of the loan. I think we are fortunate, because PLUS loans used to be ONLY for undergraduates. So, many graduate students needed to take out Stafford and Private loans. Private loans have the worst interest rates and the rates are variable too.:thumbdown:

    To anwser your original question (after all that babble), the downfalls of GradPLUS loans vs. Stafford: higher interest rates and you have to pay ALL the interest on the loans. With Stafford, the government will at least pay the interest on your sub loans.

    Now, I don't know what program you're in or what country it's in, but I've read posts on here about something called the Health Professions loan. My school doesn't accept anything other than that what I discussed, so you may have other options out there (which may or may not be better.) Do your research!

    Like I said, this is how I understand it to be; but I could be wrong as this is my first time ever going through the feel free to correct me if that is the case. Did this help you?? Hope so!! :)
  11. doclm

    doclm Senior Member 7+ Year Member

    Mar 22, 2005
    Farmington Hills, MI
    Thanks for the great info:thumbup:

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