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Grad Plus Student Loan

Don Said:

Explain pros/cons between Grad Federal PLUS Loan and MEFA Loan?

We Answered:

The GRAD PLUS is the loan offered through the federal government's FFELP program. It usually offers better interest rates, fees, and repayment terms then private loans. You also don't have to apply with a cosigner. Double check on the MEFA interest rate...I just checked their website and it says it's a variable interest adjusted quarterly...

Arnold Said:

STUDENT LOAN QUESTION?

We Answered:

The answer to this question really depends on the school you are going to attend. I have seen some schools have overage checks ready to go out to non-freshman a week before school starts, but many wont risk this sort of kindness and you will have to wait until a few weeks until after the semester has started (as long as you got your paperwork in by their deadline). Some folks who miss deadlines may have to wait WAY longer than a few weeks to get money.
Sorry I couldn't be more help.

Stacy Said:

Which student loan to pay off first?

We Answered:

Always pay down the loan with the highest interest rate first. Always.

John Said:

Will this student loan strategy work?

We Answered:

It depends really on three things. (1) what will you make per year as a lawyer. (2) How much will you come out of law school owing (3) what interest rate will you be charged.

But, on the surface, it doesn't look like a good plan for a high income job such as a lawyer. It could be a very good plan for a lower income worker, such as a social worker. Here is the math for you to think about:

If you come out of school owing consolidated loans of $200,000 in total, at 4%, the payments over a 30 year repayment schedule are $954 a month. Over 20 years, the payments are $1,211 a month.

If you are making $125,000 (typical for a lawyer right out of school), then your payments at 10% of income are $1,041 a month. And, as you get wage increases, those go up. When you are making $180,000 a year (possible at a big firm by year 3), your payment will be $1,500 a month (at 10%). So it is likely that if your income is greater than $100,000, there will be nothing left to forgive when you reach 25 years.

So, if you really want to be a lawyer, and the concept of 10% of your income as student loan repayment is comforting to you, then sure, go for it. But, if you think this will be a windfall like the banks are getting - eh... not so much. It is a good deal for people with modest incomes and high college bills like teachers, social workers, etc.

There are good loan amortization tables and payment calculators on bankrate.com. Excel also has amortization tables. Run through a few scenarios and you can have more information for your decision.

Good luck.

Kirk Said:

i was recently credit-approved last friday oct 31 for a citibank grad plus student loan. how long til i get $?

We Answered:

Student loan money will show up directly in your university account. In most cases, it arrives within the first two weeks of the school term. And since student loans have to be processed through the Financial Aid office anyway, don't worry about it too much.

BTW - please do yourself a favor and Report all of the SPAM/SCAM answers you get from online lenders.

Andrew Said:

I already have about $50,000 in fed grad student loans. Can I borrow more for a second grad degree?

We Answered:

Brandon:

The lifetime borrowing limit for the Stafford loan program is $138,500, that includes both graduate and undergraduate borrowing.

I'm not sure what you are referring to by a Stafford "Plus" loan. The PLUS loan program is entirely separate from the Stafford program.

Graduate students are eligible for Graduate PLUS borrowing. There is no pre-determined lifetime limit on PLUS borrowing, but PLUS is a credit-based loan, so PLUS lenders will evaluate your current debt any time you apply for a new PLUS loan. You will be rejected when the PLUS lender determines that any additional borrowing will create too much risk.

PLUS loans should be used to supplement Stafford borrowing, so you would theoretically borrow from the PLUS program once you'd used up your annual Stafford max of $21,500.

The better question is not "How much can I possibly borrow?", the better question is "How much can I possibly AFFORD to borrow?"

The monthly payments on $138,500 worth of Stafford borrowing is just a shade under $1600. This does not include any additional borrowing that you wind up doing through the PLUS program, which also has a higher interest rate than the Stafford does.

The accepted rule of thumb on student loan borrowing is that a borrower's monthly payment obligation should never exceed 15% of income - so let's do the math.

A payment obligation of $1600 a month would require an annual salary of $128,000 to stay within the 15% guideline. While it's quite possible for an experienced medical doctor to earn $128,000, and quite a bit more, your loan payments will require a salary well into 6 figures from the first year that you leave school. Your payments will be $1600 from the beginning of your employment. The lender doesn't wait for you to get a really high paying job.

The very real prospect of significant debt is something that all medical school wannabes must carefully evaluate. Only you know how risk tolerant you would like to be.

Good luck!

Francis Said:

How do you get approved for a GRAD PLUS loan?

We Answered:

Do your fafsa, apply with whaetver lender you want. if they say yes, then they'll send the money to your school. Ask your school to see if they received, or contact that lender.

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