The New Graduate Student Loans Thread (2006 and beyond)

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 Benefits™ 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.

Thoughts on PNC GRADPlus?

Text

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.

I'm going with LELA:

For both staffords and grad plus:
.25% interest reduction on repayment for auto debit
3% interest reduction after 36 payments

you need a louisiana connection, though.

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?

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?


isles1 said: Thoughts on PNC GRADPlus?

Text

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

What are your plans??

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.

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.

Edit: can't spell like usual

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.

filliy said: Using the loan to pay for school [house payment, food, books, etc] and using the stipend (and whatever little part-time money i make) i would otherwise use to pay for school to invest is breaking the law??The law is not very clear on this. The idea is that if you don't need the loan, you shouldn't take it. But it's almost impossible for the law to catch up to someone on something like this.

There is a difference between having enough cash on hand to buy something vs. actually being able to afford it. Sure you have enough cash to pay for school, but whether or not you can afford to do that without borrowing money is a very subjective matter.

I think the only thing that could raise suspicion (and the only thing that is 100% against the law) is lying on your application. When you apply for federal loans, you give them a snapshot of your finances, and they calculate your need (and thus your award) based on those numbers. If they don't think you need the money, they won't give it to you. So if they award you a certain amount of money, and you haven't lied, then they'll have no case against you.

Then there's the matter of what you do with the money. Certainly gambling away stafford money would be illegal. But sticking it in your non-interest bearing checking account wouldn't be very prudent either. Investment options obviously run the gamut of low risk, low return to high risk, high return. I don't know that there's any precedent for Uncle Sam being able to tell you where you can invest your money (ie FDIC savings account vs. MMA vs. bonds vs. stocks, etc.), but to be honest I haven't researched it thoroughly. Bottom line: don't lose the money.

JeebusSaves said: Educational loan money is supposed to be used only for tuition and fees, as I understand it. Parking it in a bank account doesn't qualify; I think you're technically supposed to return money that isn't used for educational expenses, but who really does that?This much I know is not true. The Feds know exactly how much my tutition & fees are, and yet they gave me stafford loans in excess of that.

therealOP said: Is the 6.80% locked in regardless of rate changes by the fed?Yes, all new Stafford loans from here on out will be at 6.8% fixed. I am thinking by 2008 I will be able to get between 7.5-8% for a CD so it would make sense to take out the 138K loan and get a 200K CD at 8%.No offense, but if you could predict which way rates are going, you'd be better off dropping out of school and heading to Wall St. But yes, if CD/MMA rates are higher than 6.8% at the time, then as you said it would make sense to take the loans.

I was truthful on my FAFSA. I've worked myself down to almost no cash (engagement ring, wedding expenses, pumping 401k, max IRA cont, debt payoff) I'm could live without loans, but it'd be below fatwallet level and well below poverty level. The cost $ is set by the school not by you (unless you show additional qualified ie not luxury condo rent) expenses above the school limit. So everyone in that class has the same loaning ability less scholarships etc. I'd seem to me the Feds are counting on the schools to make sensible decisions for loan amounts.

Educational loan money is supposed to be used only for tuition and fees, as I understand it. Parking it in a bank account doesn't qualify; I think you're technically supposed to return money that isn't used for educational expenses, but who really does that?

Isn't there a major logic problem with not being allowed to park it in a bank account? You get a $4200 loan at the beginning of the semester. Your rent is $500 a month, food is $50 a week, books are $500 on credit cards. You have to take that loan and prepay all your food, housing, and credit cards? Totally impractical..

"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'm also starting school in the fall. I consolidated my loans with UHEAA last year(thank you fatwallet) and was wondering why they are no longer an option for school loans?

Thanks

I was afraid to post a new thread about this question because it just seems like a dumb question. However, I can't find the answer.

If I have a loan, and I pay extra toward the principal, does the minimum payment per month change at all?

isles1 said:
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?

Your accrued interest after 180 days will be equal to approximately 1/2 the interest rate on the loan. For Wachovia, that's 3.95% of the loan principal. Your origination fee is 3%.

isles1 said:
It looks like the term of the Origination Fee credit may preclude my ability to make such payments if I want the 3% credit.

I would definitely hold off until after receiving the credit, just to be safe.

orick said: isles1 said: 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.

This makes the National City 6.8% fixed rate look pretty darn good.

I do not believe this rate has been confirmed. Likely an error since GRADPlus req. % is 8.5 to start. Might be a mixup between Stafford and PLUS on their site.

Good if it is correct, however.

Anyone have any experience with National City or EFSI? EFSI has the best deal if you auto-debit and pay on time, but National City appears to be really safe because you can't lose the benefits (?).