Friday, May 30, 2008

Student Loan

There are a few ways to pay for that expensive medical school education. Unless you have a great inheritance, win the lottery, or find a sac of hidden cash, it is likely that student loans are the only way to pay. I never found the pot of gold at the end of a rainbow and now must look for other financial options.

Scholarships and Grants
If you have the grades, the time, and the will power, it is wise to search for a little free money. Grants and academic scholarships helped fund a large portion of my undergraduate studies leaving me debt free upon graduation.

The hardest part is sitting down and looking for matches that meet your personal qualifications. FastWeb is a great place to start as it does the sorting for you. With the right grant or scholarships, the medical school expenses can be significantly buffered.

Student Loans
Once scholarship opportunities are exhausted, the most common method for payment comes from borrowed money in the form of a loan. With rising costs for medical school, loans are becoming more substantial all the time. Loans to consider: Stafford, Grad PLUS, Perkins, and private.

Stafford Loans
Stafford loans come in two forms, unsubsidized and subsidized. $32,000 and $8,500 can be borrowed from these loans respectively, totaling $40,500. This will satisfy tuition, but not easily the other expenses of room, board and supplies. Interest is paid by the US department of Education for subsidized loans while in school where unsubsidized loans require the interest to be paid by the student from the time of disbursement. Obviously subsidized loans are preferred in this regard. Interest rates may be high, but some lenders offer benefits to curb the overall expense.

Grad PLUS Loan
These loans are backed by the government and come with a fixed interest rate of 8.5%. As these are usually supplementing the Stafford loans, they are not need based and vary according to the amount of aid already received. You cannot borrow more than the cost of attendance. A good credit history will make this loan easy to obtain.

Perkins Loan
The Perkins loan is a federally funded loan that provides aid to those who are exceptionally needy. It offers a low interest rate to those who qualify.

Private Loans
Should the loans above not provide adequate funding, private loans are available to supplement your resources. Do not over-borrow as it will one day have to be repaid. Interest rates are not fixed and other requirements may apply.

Lenders
Finding the right lender can be difficult. Compare the terms of service and special offerings before selecting your lender. Some will offer all or a couple of the loans listed above. Use one lender for all your loans. Once the time comes to repay your loans, the process of loan consolidation will be made easier offering a lower interest rate.

I chose to use MedInvest as they offered greater discounts than the other lenders I researched. With on-time payments and direct withdrawal, similar sized loans save almost $2,000-3,000 over the lifetime of the loan.

Application
I have chosen to apply for the Stafford loans and some Grad PLUS loan money. TUNCOM has a loan application form that is filed once a lender is chosen. The financial aid office applies for Stafford loans on my behalf. In order to obtain Grad PLUS money, I must apply with my lender of choice for the amount of desired money on my own. Since my wife will be able to work during my time in school, it is not requisite that I borrow the full amount available. Since I would like to buffer some of the expenses, I will obtain a small Grad PLUS loan to help cover living expenses.

In every case, it is necessary to fill out a FAFSA application as this is how lenders approve your loan request. Never incurring debt until this point in my life has been a great accomplishment. Now that I must borrow money to thrive, the natural fear that is associated with owing something to someone else is very daunting.

One physician I spoke with said that students are poor and doctors are rich. Borrow a little extra during school in order to live moderately so that the transition is not too drastic. Good advice, I hope that is still the case when I graduate.

3 comments:

  1. Just stopped by to take a look. Good info and great Blog.. Thanks!

    ReplyDelete
  2. Hey..if you have any advice for Seth about student loans, he'd love to hear it. He just completed the FAFSA. Say hi to Willow.

    ReplyDelete

Share a suggestion, question or just leave your mark.

Subscribe to Life as a Medical Student