GradPLUS or private? That is the question.

First of all, let me say that I did a search in the forums for old talks on this and found lots of discussion about student loans but not a thread that really matched what I was looking for. If it exists, I'm sorry. Please do not get angry for me asking a question that has probably been asked before.

As we are about to get on the train to this crazy journey called medical training, we are left contemplating student loans. We both have significant debt from a private undergraduate degree and so student loans freak us out. It sounds like all the rules for medical school student loans have been changing so I'm hoping that someone on here knows something. I googled and can't get any good information.

GradPLUS comes with a hefty interest rate but its a federal loan and so it is easier to deal with when you lose your job or something and need to go into deferrment.

Private loans seem to offer a smaller interest rate but its adjustable and not fixed like the federal loans.

Which one did you choose and why? Does anyone know what the current rules are about residency?

Lacy

[MarissaNicole]

Okay I cannot speak from experience but based on the fact that grad plus loans are GOVT loans I would say to go with that. I am guessing at this point you do not know what your husband will go into and so you won't know how long your residency is. With govt loans you can forbear (or not pay during residency even though interest may accrue). With a private loan you WILL have to enter repayment during residency. And if you are not aware residency salaries are currently in the $40,000s - which is not much money to pay loans back if you aren't working as well. And you never know what life might bring. Personally I like knowing that if we HAVE to we can forbear and not pay a single cent during residency (although I hope to at least pay some money toward interest).

Also I believe Grad Plus loans qualify for income based repayment which your private loans do not. If you don't know what income based repayment is check it out at ibrinfo.org. It may be something you want to consider doing for your own undergrad loans while your husband is in medical school.

Again I am not speaking from experience and other people may have better advice, thats just my two cents.

[scrub-jay]

I agree with MarissaNicole. Although we haven't faced that choice yet, we would always go with the GradPLUS first and private loans only as a last resort. For the most part, gov't loans are much more flexible while your DH is in residency, etc. The private loan interest rates could be low now, but who knows what that adjsutable interest rate will be in a few years! With the undergrad debt you already have, you don't want to put yourself in a tough situation with private loans. That is just my 2 cents, we are only in our first year here (MS1) and so far sticking with the govt loans. Good luck with your decision, hopefully some of the post-training spouses will chime in soon!

[Chrisada]

Definitely agree with Marissa Nicole on taking federal loans instead of private loans. DH refused to take out private loans, and I am so glad he made that decision as we go into residency. Private loans are a lot to pay for in residency. Once debt to income ratio comes into play, the payments are not that high in residency for federal loans.

Thanks for the reply! I have both private and federal undergraduate loans and I know that the govt ones are easier to work with. But the fixed IR of 8.5% is a little scary! That's a ton! My private ones are variable rate. At one point, they were 8%, right now, they're 3.25%. The interest rate changes your monthly payment so much that is scares me to accept that fixed rate for the GRADplus.

I will still be working full time while my husband is in medical school, so I won't be changing my payments. My husband's payments for undergrad on in deferrment and that scares the hell out of me too... COMPOUNDING INTEREST! AH!!!!!! I'm hoping that I'll get a promotion soon and I can at least pay a little of his interest while he's in med training.

[Chrisada]

DH is scared to death of all of his loans, but it pretty much comes with the territory of being a doctor unless you are very very lucky. Most of us are in the same boat. I've just let it go.

[scrub-jay]

DH is scared to death of all of his loans, but it pretty much comes with the territory of being a doctor unless you are very very lucky. Most of us are in the same boat. I've just let it go.

Same here. We are trying to only take out only what we NEED, but as for losing sleep over the interest and the amount - training is simply too long to go without sleep. We are paying out-of-state tuition and although DH loves his school, the price tag is high. We are learning to accept this as part of the journey - my opinion, just don't think of student loans as "Monopoly Money" and you'll be fine. I know too many med students that took out a little extra in loans just to afford that ski pass...

[ladymoreta]

We stuck with government loans, too, and I'm so glad they were enough. DH handled all of that, and I only have a rough estimate of our final "number" - I don't even know the interest rate. I know, that's bad. But I'm the financial worrier of the two of us, and if I knew, I would definitely be losing sleep, and would be feeling a lot of guilt over staying at home with our baby. So we're not planning to enter repayment until he's done with residency, and I'm really happy that we can do that, so I have the flexibility to stop working. We have a pretty aggressive repayment plan once he's done, and we will be working closely with a financial planner then.