Who to borrow from?

[gary5]

Hi,

How do I decide who to borrow from for med school? I got a letter from MEDLOANS. Should I borrow from them? I really don't understand what my options are in terms of lenders.

Thanks!

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[Andrew_Doan]

Usually I suggest you borrow direct from the federal government if you qualify for a Stafford loan (sub and unsub). I have more faith in a federal agency than private company. This is only my preference. There are many private companies offering federal loans and non-federal loans.

http://www.ed.gov/offices/OSFAP/DirectLoan/index.html

 

[Kalel]

I think that medloans has a pretty good deal. If I were you, I would just look for a server that offers 0% origination fees. Those 3% origination fees add up pretty quickly after a while, I wish that someone from my FA office would have told me that.

 

[Vincristine]

I'm going to assume you've not yet gotten your financial aid award letter yet. Once you do, you will most likley be elidgable for loans (both subsidized and unsubsidized) through the Federal Direct Loans program. They are most likely you're best bet with the best inteterest rates. If you're unlucky enough to need to borrow more money, take at look at medloans or citibank student loans. However, most people I know do just fine with the money awarded to them through the Federal Direct Loan program. Of course, there are lots of people in different situations -- like non-traditional students, those with families and dependents, etc.

 

[mpp]

To borrow using a direct loan, your school must be a Direct Loan lender. Not all schools are. If your school is a direct loan school, you'll have no choice and must take the money direct from the federal government with their terrible terms and everything. If not, the financial aid office should provide you with a preferred lender list. They cannot favor one lender over the other but can tell you which lenders others at the school have used.

Things to look for in lenders include no up-front fees (MedLoans is a good program but they do charge a 3.5-4% up-front fee) and good pay back terms. Common ones used include T.H.E., NowLoans, Access Group, and MedCap. Some may offer very attractive pay-back terms (like MedLoans) but the interest earned on the upfront fees can leave you worse in the long-run. Direct Loans from the governmet offer no special pay-back terms (i.e., no cash back or lower rate). The rates for Stafford loans, no matter the lender, are set by the government. The lender can go lower, but not higher. So you can't get screwed by these companies or go with a 'bad' company (they're giving you money, not the other way around). Just be sure there are no up-front origination/guarantee fees.

 

[Outer Space]

After talking to fin aid officer who explained things pretty well it seems Access group offers a pretty good package. There are no origination fees and they lower interest rates after however many consecutive payments. One thing she said is after you consolidate loans, pay-back terms may change so it shouldn't be your main variable (ie lower interest rates once you start paying back). She also said you can consolidate loans even if you only borrow from one lender - but borrowing from two gives you more shopping around options.

 

[Chrisobean]

when i compared lenders for my stafford, MEDLOANS came out the best b/c even with their origination fee their repayment incentive was better than the others i checked. they had the most % cash back and another % incentive after the fewest # of payments (does that make sense?)

just keep that in mind - just b/c there is an origination fee it doesnt mean you are getting screwed. each one varies in their repayment plan.

 

[OSUdoc08]

You'd be crazy not to get federal loans first. They are easy to defer if ever needed.

 

[mpp]

For deferral, all loans under the Stafford loan program regardless of direct lender schools or private lenders have the same criteria and terms. If you are at a direct lending institution you have no choice anyway and must borrow directly from the federal government. Any private lender will offer the exact terms that the federal government does (in fact, they must do so as part of being part of the Stafford loan program) but they can also add additional fringe benefits such as cash back.

The downside to the Medloans origination fee is that unless you come up with money to pay that fee up front, you will borrow that money in unsubsidized loans. That origination/guarantee fee will accrue interest at a variable rate. Five years from now you could be paying up to 8.25% interest on the 3% borrowed with nothing to show for it. Work it out dollar for dollar, estimating future interest rates when comparing lenders. Although you might get back 3.5% it might not make up for the 3% you paid upfront plus interest accrued.

Remember that repayment terms are not as important as up-front fees since it is unlikely you will be keeping your loan with this lender. Most people will consolidate their loans (although consolidation rules may be changing and may no longer be fixed rate..stay tuned) and when you do so you are taking out a new loan with completely new terms. The old loan terms are no longer valid so you may never see those benefit anyways.

 

[Homunculus]

i use THE loans and have been very happy. in addition to the regular no origination/payback incentives they also offer a "residency relocation loan" that a few other companies don't offer that we're taking advantage of. It's basically a private loan they make up to 10k for graduating MS4's that are treated (deferral wise) like your regular loans. probably not that unique, but a nice program nonetheless.

 

[nascentdoc]

Is the origination fee calculated as a percentage of your original loan amount? For instace, if the first year I borrow 30,000 will the origination fee be 900$ (with 3% origination fee)? I really don't understand how that works.

 

[nascentdoc]

Anyone has T.H.E.? Is it any good? Thanks.
nascent

 

[gary5]

I'm going with T.H.E. I think theirs is the best deal overall.

 

[supereagles]

Has anyone tried or is considering the Bank of America Maximizer loans? What makes it different from the other more appealing lenders?

 

[exgatr]

Use Medfunds, they're the best deal I've seen.

No fees, plus a 3.33% discount on PRINCIPAL after the first 33 on-time payments. The site says it's adminstered by the Ohio College of Podiatric Medicine, but once you get thru the application you find out that Wells Fargo actually deals with the money, so it's not a shady as its website seems.

 

[mpp]

Beware of fancy payback schemes that off you a large payment after you make X number of on-time payments. Typically they have some up front origination/guarantee fees. You will likely never see those paybacks since most students consolidate their loans. Consolidated loans are new loans with new terms and you can kiss your payback goodbye. I would suggest a lender that has no upfront fees...no guarantee and no origination fees.

 

[medic8m]

I chose Medloans before I did enough research. I suppoe it isnt too late to change though. If I stick with Medoans, should I pay off the 3% origination fee right away? (if I can afford it). Or will they consider this just a payment towards the principal?

 

[mpp]

The 3% is part of the prinicpal. They just add to the loan to pay the fee. Yes you can pay it now if you would rather it not accrue interest.

 

[bjolly]

where do you get info on the terms offered by the various lenders?

 

[mpp]

Usually their websites.

 

[bjolly]

does anyone have links to the websites for any of the ones being discussed? my school's preferred lender list didn't include the website info. Some I've been able to find, some not.

 

[mpp]

Here are some:

www.northstar.org
www.accessgroup.org
www.nowloans.org

 

[critterbug]

Hey mpp.

Could you recommend the top ones, ie, which ones are the best I feel like an idiot sometimes because I really don't understand all this stuff. This will be the first time I have had to take out loans, so I am new to all this.

Heres a little info on myself that might help you help me I will be a first year dental student in the fall. I plan to take out about 100,000 total over 4 years. AFter 4 years, I will probably be finished and will not enter any form of specialty/residency training. However, for that small chance that I might, I guess I should take that into consideration when I'm choosing my lender.


Thanks

 

[mpp]

Any of the 3 above seem reasonable to me...

 

[critterbug]

I just went to access groups website and it says my loan limit is 18,500 per academic year for Stafford loans. However, my award letter says I'll need much more than that. What gives? do I have to choose an additional lender?

 

[southerndoc]

Yes, the remainder is taken out in private loans.

However, I got $8500/year in subsidized and $28,500 in unsubsidized if I'm not mistaken.

Are you sure it's only 18.5? That's low for a medical student, or are you still in undergrad?

 

[critterbug]

Here are the terms. I picked my school from a list, and this is what came up:
Loan Terms
The Federal Stafford Loan for graduate & professional students
Subsidized & Unsubsidized Federal Stafford Loans

Fees

Origination Fee: 0%
Guarantee Fee: As low as 0%
Loan Limits:

Annual Maximum:
$18,500 per academic year
(up to $8,500 of this amount may be in subsidized Federal Stafford Loans)

Program Aggregate Maximum (including undergraduate debt):
$65,500 (subsidized)
$138,500 (combined subsidized and unsubsidized)
Please note: Higher limits on the unsubsidized Federal Stafford Loan may apply to certain health profession students. Ask your financial aid administrator for more information.


Interest Rate:

Subsidized Stafford Loans

In school/interim: The federal government pays interest during periods of authorized deferment.
In repayment: 91-day U.S. T-bill + 2.3%
Unsubsidized Stafford Loans

In school/interim: 91-day U.S. T-bill + 1.7%
In repayment: 91-day U.S. T-bill + 2.3%
The 91-day U.S. T-bill index for the period July 1, 2003 to June 30, 2004 is 1.12%.

Repayment:

Up to 10 years to repay
Begins 6 months after graduation or when your enrollment status drops to less than half-time, unless you request an earlier date
$50 minimum monthly payment
No penalty for prepayment
Deferment and forbearance options available
Flexible repayment options and federal loan consolidation also available
Rates and fees are subject to change with the approval of appropriate regulatory authorities.

Money-Saving Payment Incentives:

Access Group offers two payment incentives. You can take advantage of either one or both:

Access OnTime
Make your first 48 consecutive loan payments on time, and, beginning with your 49th payment, you will receive a 2.0% reduction on your Federal Stafford Loan interest rate, which will remain in effect as long as you continue to make scheduled payments on time.
Access Automatic
Authorize your bank to have your loan payments automatically transferred from your checking or savings account. As soon as you sign up for the program and are in repayment, you will receive a .25% reduction on your interest rate, which will remain in effect as long as you continue to have loan payments automatically transferred.
Additional Notes

The above rates, terms, and fees are in effect as of January 1, 2004.
Depending on the guarantor of your loan, you could be charged a guarantee fee of up to 1 %.

 

[mpp]

Allopathic and Osteopathic students get another $20,000 on top of the $18,500 that graduate students are eligible for.

 

[critterbug]

what about us dental students?

 

[Burris]

This is a website from Emory that summarizes the benefits of the lenders they deal with.


http://www.emory.edu/FINANCIAL_AID/MedStaffordLoans.htm

 

[ELDON30]

when looking at the private alt. loan lender, what should one look at beside no upfront/origination fees. i'm not that informed when it comes to loans and all the intricacies... should i worry about their 3 year grace period during residency and the opportunity to continue deferring it... or will i be consolidating and that is not of any importance? i just wanted to know some of the important things to look for and ask about when applying for the loan...

 

[mpp]

Private loans are a whole different ballgame. For some you might not even be able to consolidate. Read the fine print carefully, and ask other students what has worked out well for them.