Loan Virgins

[SoonerTexan]

DF's Financial Aid info came in today and we are trying to wade through this and figure it out...obviously we probably need to call up the Financial Aid office, but I know you ladies/gents have loads of insight...care to share?

DF qualified for:

TX Public Education Grant--5k (This is just straight up cash, right?) I honestly don't understand how he got it, but I'll take it.

2 "school award loans"--3k total
--5% interest
--Not capitalized, no fees
--1 month and 12 month grace periods (depending on loan)
--Interest accrues "when loan enters repayment"
--Deferments: Principal-only intern/residency & All intern/residency/fellowship (depending on loan)
--10 year repayment period

Federal Subsidized Stafford Loan--8.5k
--Capped at 8.25%

Federal Unsubsidized Stafford Loan--23k
--Capped at 8.25%

He has to accept, reject, or reduce the amounts in 2 weeks. Once we accept it, do we have to use it?

Also, with this grant, we could pretty much pay for this first year of tuition out of my salary + bonuses easily (Thank You Texas Medical School Cheap Tuition!), but it seems like it might be stupid to pass up on the 3k "school award loans." Couldn't we save the money and just pay the loan back upon graduation with no interest? Or would it be the end of residency? I don't understand when the loan "enters repayment." I think we'll stay away from the unsubsidized Stafford Loan, but I'm not sure what to do about the subsidized one.

Finally, we have to take into account that he probably wont get as much next year since we'll be married and I'm working. Also, children are a real possibility all four years of med school, and a definite "goal" before graduation (ideally 4th year but I know enough to accept that trying to plan around it is pointless ) and of course a baby would change things too

[MarissaNicole]

Second attempt at responding here...

- loans enter repayment six months after graduation
- for sure take the 8.5 subsidized (put it in savings and if you don't use it by the time he graduates just pay it back!) --> unless you are the type of person who will spend money just because you have it
- its not easy to predict how much you will get next year, but personally I would rather accept more and pay it back than not take enough and rack up credit card debt at a much higher interest rate (but I also won't spend money just because we have it, I'm sure there are others would disagree)
- for us DH took the full amount of federal loans the first two years (I was in school as well), then third year we only took enough to cover tuition (my salary covered fees, books, living etc.) then fourth year we took the full amount so that we would have enough money to cover interviews and applying to residency (there are also special loans you can take out too). We also managed to save some money during the process which we are now using (along with our wedding money) as a down payment
- I'm pretty sure you can start repaying loans as soon as you take them out, so if you don't use all of the money and have a ton left you can pay it back within his first year before it aquires any (if the subsidized loan) or little interest

I hope that answered some of your questions....

[TulipsAndSunscreen]

Take the money even if you don't need it. That's what we did and we've invested in a variety of investments but mostly pretty safe stuff so that the $$ doesn't disappear. This way we have something saved in case I lose my job or we decide to start a family. You can pay it off the day he finishes school if you haven't used it and you accrue no interest. That's our plan (although DH went to a private school so we might not be able to pay off in full). We will pay off as much as we can immediately upon graduation (or after the 6 month grace period or whatever) so that we don't have to deal with interest.

In my opinion, unless you're the type of people who will spend it because you have it, there's no reason not to take the money. Especially if you might have kiddos. And I know the job seems secure but lots of people lose their jobs and it's much harder to get loans in mid-stream than take it up front and sock it away.

[OrionGrad]

I agree with what TulipsAndSunscreen and MarissaNicole said about taking out the money just in case, but one other thing to take into consideration is that unsubsidized loans start charging interest from the time the money is first disbursed (rather than upon graduation), so it might not be worthwhile to take out money with that loan unless you know of a way to earn more interest than you'd be paying on it while DH is still in school.

With that being said, DH goes to a private school and we've taken out unsubsidized Stafford loans that we ended up putting into a savings account because we didn't use them all, and it has been nice knowing that the money is there and available if we ever needed it.