This thread is for people going to graduate school in 2006 and beyond.
As we know, everything changed this year -- Federal interest rates skyrocketed, UHEAA is no longer an option, the new Graduate PLUS loan program was created, and the rules have drastically changed for in-school consolidation.
I am creating this thread because there must be others like me -- starting grad school this year (or already in it) and trying to make the best financial aid decisions. Let's work together and figure out what the best deals out there are for us. With all the changes, we are basically starting from scratch with this research.
So, I'll start things off with some useful links and info that I've already found. Please post any conclusions made from reading these, from your own research, or other useful links/info you find.
Grad PLUS Loans (for Ohio students/residents only)
Student Lending Works Option # 1 3% rebate of origination fee + 1.5% off loan balance after 12 months + 1.5% off loan balacne after 24 months + 0.25% interest rate reduction + All benefits are permanent once you earn them (you don't have to keep making on-time payments)
Student Lending Works Option # 2 3% rebate of origination fee + 2.0 off interest rate after 24 months + 0.25% interest rate reduction + All benefits are permanent once you earn them (you don't have to keep making on-time payments)
Message edited by: philharmonic2000 on 2006-08-24 16:01:29 CDT
Depending on the chosen major students may qualify for assistantships which cover full tuition and also include a monthly stipend. I'm in Engineering and the stipend I receive isn't the highest but I'm able to pay all my bills, save a little, and live pretty comfortably on this stipend alone.
MOST ATTRACTIVE LENDER BENEFITS FOR GRADPLUS (please comment, share more, etc. and I will update this) EFSI - 3% principal balance reduction upon graduation AND Diamond Benefits: - an interest rate reduction of 0.25% immediately upon entering repayment - an additional interest rate reduction of 1.75% by having your payments electronically deducted from your checking or savings account (ACH payments) NOTE: Diamond Benefitsâ„¢ will be forfeited if you are more than 15 days delinquent of any payment and will not be reapplied if lost. All borrower benefits are subject to certain terms and conditions.
EFSI looks great to me if you think you can make all your repayments on time in the future (very few people actually do)
Wachovia - Fixed rate of 8.5% is reduced by 0.60% immediately after the first disbursement, lowering the interest rate to 7.9%. This incentive interest rate is not affected by in-school deferment and is made permanent after all of the first 12 scheduled payments are made on time. - 180 days after full disbursement, a 3% interest credit in an amount equal to your origination fee will be subtracted from your accrued interest.
Wachovia looks great to me if you want to lower the interest rate while in school, and then consolidate your loans afterwards.
Northstar/T.H.E. - Required 3% origination fee, credited back to account 6 months after final disbursement - A T.H.E. Repayment Bonus* at the annualized rate of 1.3% beginning when your loan enters repayment and continuing as long as payments are less than 60 days past due. If the account becomes 60 or more days past due, the bonus will resume when the account is brought current. NOTE: Consolidation of this loan with T.H.E. drops the repayment bonus to only .75%. Consolidating this loan with another lender would get rid of the T.H.E. repayment bonus. In essence, the Federal Graduate PLUS interest rate (8.5%) combined with the 1.3% T.H.E. Repayment Bonus may be more cost effective than the consolidation interest rate (8.25%) combined with the .75% T.H.E. Repayment Bonus. You are able to extend your repayment term without consolidating if you have $30,000 in federal student loan debt. *** UNKNOWN IF EXTENDING THE REPAYMENT PERIOD WITH THEM RATHER THAN CONSOLIDATING WOULD AFFECT THE BENEFITS OR INTEREST RATE ***
T.H.E. looks great to me if you don't want to consolidate your loans after school (and are OK with a 10 year repayment period).
National City - advertises 6.80% fixed interest rate - no refund on the 3% Federal Origination Fee
Not sure if their web site is correct, as I believe Grad Plus loans are required to start at 8.5%. If their web site IS correct, and there's no further catch, this may be the way to go, especially if you can use the 6.8% fixed rate as the base rate for consolidating later on.
Looks like you've done some research. See my post in this thread for a few more. Seems like Sallie Mae (ugh) and AMS (associated with Sallie Mae?) offer some good deals, although that EFSI thing looks really good. Do you know anything about them? (Are they sketchy?)
Select your state from the drop down list for your incentives. New York, and several others, have the following:
-All borrowers will receive an immediate 1% interest rate reduction when the loan is disbursed. The 1% interest rate reduction will be eliminated if your account is more than 15 days past due. -An additional 0.25% interest rate reduction for authorizing automatic electronic payments from their checking or savings account.
At face value, it does not look as good as Wachovia, but the language of the Wachovia rebate worries me:
"180 days after full disbursement, a 3% interest credit in an amount equal to your origination fee will be subtracted from your accrued interest."
Well, what if my accrued interest is LESS than my origination fee? Thoughts? I am deciding between PNC and Wachovia, as I am unconcerned with incentives that do NOT decrease my interest rate or give me credits while in-school since I will consolidate within 6 months of graduation.
Its always scary to read the fine print... Here's Wachovia's: "This benefit program may be modified or discontinued at any time without notice." Anyone else find a benefit program thats guaranteed out there?
Select your state from the drop down list for your incentives. New York, and several others, have the following:
-All borrowers will receive an immediate 1% interest rate reduction when the loan is disbursed. The 1% interest rate reduction will be eliminated if your account is more than 15 days past due. -An additional 0.25% interest rate reduction for authorizing automatic electronic payments from their checking or savings account.
At face value, it does not look as good as Wachovia, but the language of the Wachovia rebate worries me:
"180 days after full disbursement, a 3% interest credit in an amount equal to your origination fee will be subtracted from your accrued interest."
Well, what if my accrued interest is LESS than my origination fee? Thoughts? I am deciding between PNC and Wachovia, as I am unconcerned with incentives that do NOT decrease my interest rate or give me credits while in-school since I will consolidate within 6 months of graduation.
cameron2003 said:WHat would people do if they had enough money for grad school and didnt need a loan? Is it still advantageous to use a loan rather than pay cash?Without going into the moral issues, it pretty much comes down to whether you can "beat" the 6.8% rate on your loans. In other words, do you have some idea that can guarantee you a rate of return greater than 6.8%? If so, go for it (and please share your idea with this board ).
Otherwise, if you're going to take the loan money and stick it in your local B&M savings bank at 0.004% APY, then don't bother.
fishflake said:Its always scary to read the fine print... Here's Wachovia's: "This benefit program may be modified or discontinued at any time without notice." Anyone else find a benefit program thats guaranteed out there?
Select your state from the drop down list for your incentives. New York, and several others, have the following:
-All borrowers will receive an immediate 1% interest rate reduction when the loan is disbursed. The 1% interest rate reduction will be eliminated if your account is more than 15 days past due. -An additional 0.25% interest rate reduction for authorizing automatic electronic payments from their checking or savings account.
At face value, it does not look as good as Wachovia, but the language of the Wachovia rebate worries me:
"180 days after full disbursement, a 3% interest credit in an amount equal to your origination fee will be subtracted from your accrued interest."
Well, what if my accrued interest is LESS than my origination fee? Thoughts? I am deciding between PNC and Wachovia, as I am unconcerned with incentives that do NOT decrease my interest rate or give me credits while in-school since I will consolidate within 6 months of graduation.
Yet another reason why PNC's 1% rate reduction upon dispursement looks better than the Origination Fee refund offer. I think over the life of the loan, the additional .04% rate reduction will pay off, especially for consolidation where the weighted average of the interest rates on your loans are used to determine the consolidation rate.
Again, I plan to colsolidate any GRADPlus loans right after graduation, so incentives based on timely payments are of no value to me.
You need to be careful when it comes to PLUS loan consolidation. In many cases, the benefits offered go away if you consolidate the loan and all "savings" are capitalized.
isles1 said:fishflake said:Its always scary to read the fine print... Here's Wachovia's: "This benefit program may be modified or discontinued at any time without notice." Anyone else find a benefit program thats guaranteed out there?
Select your state from the drop down list for your incentives. New York, and several others, have the following:
-All borrowers will receive an immediate 1% interest rate reduction when the loan is disbursed. The 1% interest rate reduction will be eliminated if your account is more than 15 days past due. -An additional 0.25% interest rate reduction for authorizing automatic electronic payments from their checking or savings account.
At face value, it does not look as good as Wachovia, but the language of the Wachovia rebate worries me:
"180 days after full disbursement, a 3% interest credit in an amount equal to your origination fee will be subtracted from your accrued interest."
Well, what if my accrued interest is LESS than my origination fee? Thoughts? I am deciding between PNC and Wachovia, as I am unconcerned with incentives that do NOT decrease my interest rate or give me credits while in-school since I will consolidate within 6 months of graduation.
Yet another reason why PNC's 1% rate reduction upon dispursement looks better than the Origination Fee refund offer. I think over the life of the loan, the additional .04% rate reduction will pay off, especially for consolidation where the weighted average of the interest rates on your loans are used to determine the consolidation rate.
Again, I plan to colsolidate any GRADPlus loans right after graduation, so incentives based on timely payments are of no value to me.
I'm going back to school in the Fall and just starting to look at the mess, good thing I noticed this thread thanks bunches OP!
What I had compiled.
Stafford Subsidized $8,500 Year (Currently 6.8% I believe tops at 8.25%) Stafford UnSubsidized $10,000 Year (not sure of APR?) Graduate PLUS Loan Cost of Attendence - Financial Aid (Fixed 8.5%)
I'm pretty sure I can beat 8.5% so I'm planning on maxing whatever I can get out. HOWEVER, I have a full tuition waiver & a stipend although my FAFSA says I'm ok for Subsidized they only cover tuition & fees correct? If the PLUS is really just Attendence - Financial Aid i guess I'm out of luck there. I really hope I don't end up eating dirt because I'm going to school for free
What I want to do is Stipend - covers house for my first year, house & car my second year Subsidized - covers living expenses Plus or Unsubsidized
You financial aid office should publish an official student budget. The budget includes tuition and living expenses. You can borrow up to the published student budget minus aid you receive (including scholarships and tuition waivers).
filliy said:I'm going back to school in the Fall and just starting to look at the mess, good thing I noticed this thread thanks bunches OP!
What I had compiled.
Stafford Subsidized $8,500 Year (Currently 6.8% I believe tops at 8.25%) Stafford UnSubsidized $10,000 Year (not sure of APR?) Graduate PLUS Loan Cost of Attendence - Financial Aid (Fixed 8.5%)
As for the interest rates, from now on new Stafford loans (both subsidized and unsubsidized) have an interest rate of 6.8%. Period. This rate is fixed. Ditto for GradPLUS at 8.5%. However, lenders are offering plenty of incentives on top of that. (For instance, Citibank is offering 1% off after 3 years, 1% off after 4 years, and .25% off with auto-debit.)
I'd say you're crazy if you're thinking of taking out student loans for investment capital. If you want money to play with, go play the BT game.
fishflake said:You need to be careful when it comes to PLUS loan consolidation. In many cases, the benefits offered go away if you consolidate the loan and all "savings" are capitalized.
Good call fishflake.
Wachovia: would NOT lose the .6% rate reduction OR the 3% Origination Fee credit;
PNC: would lose the 1% rate reduction when consolidating, but all savings are not capitalized upon consolidation; rather the rate would be changed to 8.5% upon consolidation.
Good to know for anyone who is considering consolidating at a later date. Call your potential lender and ask what their policy is.
Leaning back towards Wachovia now...but will get it in writing before going forward. Need to make a decision soon.
I'd say you're crazy if you're thinking of taking out student loans for investment capital. If you want money to play with, go play the BT game.
Subsidized loans Assuming 5% in a CD, 3% Org fee recovered/waved, repay after grace period
$8,500 for 2.5 years at 5% net (5% CD - 0% loan) = $9,872.51 $8,500 for 1.5 years at 5% net (5% CD - 0% loan) = $9,392.00
$2264 in interest with no watching credit cards, no minimum payments, no hassle, NO RISK ? or am i missing something
Now unsubsidized is a little risky assuming 9% from a high yield bond fund (PIMCO or some nature), 3% Org fee recovered/waved, repay 1 year after school
$10,000 for 3 years at 2.2% net (9% PHK - 6.8% loan) = $13,086.45 - $12,255.92 = $830.53 $10,000 for 2 years at 2.2% net (9% PHK - 6.8% loan) = $11,964.14 - $11,452.42 = $511.72
$1342.25 in interest
True the interest is taxable (but the bonds at long term dividend rates = low) and the unsubsidized interest is a tax write off and if I pay the interest on the unsub monthly it will be a tad lower. Am I missing something?.. because I see $3606.25 in without a hassle.
You can play with the subsidized loans risk free, sure. Unsubsidized is risky. And you have to keep in mind you're breaking the law. So depends whether that bothers you or not. The only risk is that if your financial aid office or the government catches on, they can recall your loans, fine you, etc.
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