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Graduate School Stafford Loan FAQs – US News

#stafford loan

Find out if an unsubsidized Stafford loan is right for you.

Who can get Stafford loans?

Graduate school students who are U.S. citizens, legal permanent residents, or eligible noncitizens who have been accepted at a U.S. school can get unsubsidized Stafford loans. Students cannot have defaulted on other federal student loans in the past and must attend school at least half time to qualify.

How much can I borrow from the Stafford program?

Graduate students can borrow up to $20,500 a year in Stafford loans, and up to $138,500 total for their studies, including any Stafford loans taken out during college.

Students in certain health fields have higher maximums, and can borrow up to $224,000 in total through the Stafford program.

How much do Stafford loans cost?

Stafford loan interest rates are determined annually using the interest rate on the 10-year Treasury note as of June 1. The rate for graduate students is the interest rate of the note plus 3.6 percent, with a cap of 9.5 percent. Since rates on Stafford loans are now market-based, they will fluctuate from year to year. Once the loan is issued, however, the rate is locked in.

All Stafford loans for graduate students are unsubsidized, meaning interest will accumulate on the loans while students are in school.

How do I get a Stafford loan?

You must fill out a FAFSA. For unsubsidized Stafford loans, which are what is available to graduate students, students do not need to demonstrate financial need.

Does every grad student get approved for a Stafford loan?

No. Students who are not eligible for the program, who have defaulted on other college loans,or who are attending school only part time do not qualify.

What if I have bad credit?

You can get a Stafford loan if you’ve defaulted on a mortgage, car, credit card or medical bills. The federal government does not do a regular credit check for Stafford loans. It only rejects applicants who have defaulted on other federal education loans.

What if I need more money than the Stafford maximums?

You can borrow up to your full cost of attendance from the federal Graduate PLUS program. But those loans have higher fees and interest and are not awarded to students with bad credit.

Are Stafford loan payments tax deductible?

It depends on your income when you start repaying. Generally, for a single person, education loan interest is not deductible if your adjusted gross income is more than $80,000.

When do I have to start repaying my Stafford loan?

The first bill comes due six months after you’ve left school, whether that’s after graduation or after you’ve dropped out.

What are the advantages of a Stafford loan?

Stafford loans have a fixed interest rate, so the size of your monthly payment won’t increase if interest rates rise. Through income-based repayment. Stafford borrowers can ask to have their payments capped at a ​percent of their disposable income. The remaining debt is forgiven after 20 or 25 years, depending on the age of their loans.

As of December 2012, borrowers who demonstrate financial hardship can also opt for the Pay as You Earn plan. which caps payments at 10 percent of discretionary income.

And public servants who make 10 years’ worth of income-based repayments can have their remaining Stafford debts forgiven.

What happens if I lose my job or get into other financial trouble?

Call the Department of Education and ask about income-based payment options, such as the Pay as You Earn plan. If that doesn’t bring your payments down to an affordable level, you can also ask for either deferral or forbearance of your payments, which could postpone or temporarily lower your payment requirement.

What are the downsides of federal loans?

Unlike credit card debt and mortgages, which can be canceled if you file for bankruptcy, education loans of all types – whether federal or private – must be repaid. Most bankruptcy courts will not cancel them unless your situation is extremely dire .

Trying to fund your education? Get tips and more in the U.S. News Paying for Graduate School center.

Updated on March 11, 2015: Statistics and information have been updated to reflect the current year.

Loan Payment Calculator School

#loan calculater

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Execute Your Own Free Credit Assessment-UpWhether you could have positive or negative credit history, you should always do your own credit check-up prior to any main buying or looking for new credit history.

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Medical School Loans

#medical loans

Medical School Loans

Medical students face a specific set of challenges that can make their educational experience far from affordable. Their classes are intense and challenging, for example, and they re required to spend hours in internships and residencies for little to no pay. These demands make it hard for students to hold down part-time jobs to supplement their income and pay their tuition fees.

Additionally, medical schools can be expensive, with the Association of American Medical Colleges (AAMC ) reporting that tuition and fees for first-year medical students in public schools topped $40,000 for residents and $70,000 for non-residents in 2011 and 2012. Private schools are even more expensive. Even applying for medical school can be expensive, the AAMC reports, as applications for school come with a $160 fee, with $35 tacked on for each additional school the student selects. Taking the entrance exam can cost $270, and there are additional fees associated with late registration.

Since medical students need money in order to meet their educational goals, and they re unlikely to have the time to work, they ll often need the help of medical student loans. These products can help students to stay focused on their goals, so they can obtain their degrees and begin practicing without much financial concern over unmanageable debt.

When it comes to medical student loans, most experts encourage students to explore their federal options first. Federal student loans are almost always the best first option, as they have generally more favorable borrower terms, including the following:

Favorable Terms
  • Multiple repayment options
  • Opportunities for student loan forgiveness, for some eligible students
  • Fixed interest rates
  • Plans that allow for deferred payments while a student is in school
  • Consolidation options

Also, federal student loans don’t require a student to have a stellar credit history.  While some private lenders offer choice loans that have a bounty of excellent benefits, the best plans are often reserved for those students who have perfect credit, and that might not be the case for everyone in medical school.

There are a variety of federal options open for students in medical school, including direct unsubsidized loans and direct PLUS loans. Each of these loans works a little bit differently, and they re designed to help in a slightly different way. They also have different interest rates. Some students choose direct unsubsidized loans for graduate school, but students who used these loans in order to fund their undergraduate studies may bump up against the time limits imposed by the government for this type of loan. These students might need to move directly to a PLUS loan, but they might be limited in the amount they can apply for, because they ve borrowed from the government in the past.

It can be confusing, and sometimes, it s best for medical students to visit the Financial Aid Office of the school in which they re enrolled, and discuss their options in detail with a trained professional. This person can parse the details of the loans the student has used in the past, along with the needs of the student at that moment. Then, armed with this information, the student can begin to fill out the appropriate paperwork and enroll in the right kind of plan to meet that student s needs.

Since federal loans come with limitations, some students in the late stages of their careers are ineligible for additional loans. They may have been in school for too long, or the amount of money they ve borrowed in the past puts them above the limit for borrowing set by the federal government. These students might still need money, but they might not be able to get it from the government.

Additionally, there are some medical students who have excellent credit scores and the promise of a lucrative job just waiting for them on the other side of their educational experience. These students might be capable of landing a very favorable private loan with generous terms that the federal programs might never approach. For them, signing up for a federal program could mean obtaining a loan that s much more expensive than it should be.

Students like this might benefit from medical student loans that come from private lenders. These loans come directly from a bank to a student, so there s no financial aid office to deal with and no tricky federal paperwork to fill out. Instead, the student simply applies for a loan, just as someone might apply for a loan in order to buy a house or a car, and that person begins to receive checks from the bank that can be applied for the fees associated with attending medical school.

AAMC reports that 86 percent of medical school graduates have some form of education debt, and it s likely that at least some of that debt comes from private sources. There s no shame in heading to the bank to ask for help with a loan, when it could help a student to complete an education and begin helping others. It does pay to shop around for loans, however, so students can ensure that they re getting the best deal. Private loans aren t controlled by any kind of oversight committee, so they can vary by:

Loans May Vary
  • Loan length
  • Payment start date
  • Interest rate
  • Penalty fees

Since the financial aid office isn t involved, there is also no person available to explain how the loans tend to work and whom they re for. The person who is offering the loan might have a vested interest in selling that product, and the information given might be slightly skewed as a result.

Using Reason

Getting a loan for medical school is relatively easy, but it makes sense for medical students to use caution. For example, Health Affairs suggests that primary care physicians in the United States make about $186,582 per year on average. New doctors may make much less, as they don t have the experience and tenure of their elder counterparts. Taking in loans that have payments that just don t mesh with the amount of money a doctor stands to make isn t wise. It s best for students to be realistic about what they can pay back, and look for loans that have payment plans they can afford. Heading off problems now could mean less stress down the line.

It also pays, as mentioned, to look over the details of the loan carefully, particularly the sections that deal with default. While no student expects to walk away from a loan, knowing what might happen if financial difficulties enter a student s life could help that student to plan ahead and make smart financial choices. If the loan documents seem confusing, even if they come from federal sources, it s best to ask questions until you totally understand the loan terms. It s a product and a purchase, and the buyer must really understand the terms and conditions.

Similarly, those students who do take out medical student loans might have a significant amount of responsibilities in place at the same time, with hard classes to take, anatomical terms to memorize and maybe even a family to attend to. Dealing with a loan can seem unimportant in the face of all of this work, and payments can sometimes slip and slide. It s understandable, but unfortunately, student loans can sometimes come with acceleration clauses when payments are missed, and those clauses can be hard to reverse.

It s best for medical students to give their loan payments top priority, ensuring that they make payments on time each time, no matter what else might happen. If those payments can t be met, talking to the lender before the default is absolutely vital. Some loans can be deferred for a time, while others can be consolidated. There are always options, but those options tend to disappear as soon as the loan is considered delinquent. Students must keep in touch with their lenders so they can head off potential problems before they turn into gigantic messes that are impossible to handle.

We Can Help

If you re looking for help with your medical school expenses, click on our Compare Student Loans tool. By answering a few simple questions about where you re going to school and when you ll graduate, we can provide you with a list of student loans and financial aid options that could help you meet your goals. And, our website contains a variety of articles about each type of loan we profile, so you can read more about how these loans work before you choose to take action. We d like to help you meet your educational goals, so click on our tools to get started.

Medical School Student Loans – MedCAP Loan – Wells Fargo

#medical loans

Student Loans for Medical School and Health Professionals

A Wells Fargo MedCAP ® alternative loan for health professionals is designed for graduate students in medical, nursing, dental, and other health-related programs.

The Wells Fargo loans for medical school cover the cost of education, including tuition, books, lab supplies, computers or living expenses.

  • Students make no payments until six months after leaving school (up to 60 months for M.D. and D.O. students).
  • Pay no application, origination, or early repayment fees.
  • Select a competitive fixed or variable interest rate option.
  • Reduce your loan cost by qualifying for our interest rate discounts .

Most students can qualify on his or her own without a cosigner. However, a cosigner may help you get a lower interest rate.

Need help covering relocation, residency, medical boards, and clinical exams? See our MedCAP-XTRA loan .

If you are an undergraduate student enrolled in a medical or health related program please see our Wells Fargo Collegiate loan .

Ready to get started?

See a checklist of what you’ll need to apply.

Refinance Your Medical School Loans At A Lower Rate

#student loan consolidation rates

Refinance Your Medical School Loans At A Lower Rate

October 21, 2013

[Update:Although I didn t have a financial relationship with either of these companies when this article was written, I do now. DRB has paid me for advertising and I have an affiliate agreement with SoFi (meaning if you actually refinance with them through one of the links on this page I get paid.)]

One of the things I feel the worst about for current students, residents, and new attendings is that not only do they have a much higher amount of student loan debt, but they are paying a ridiculously high amount on it.  Federal loans were, until recently, offered at a minimum of 6.8%, with many students now having a majority of their debt at 7.9%!  I find it completely unfair that I can get a mortgage for less than the rate of inflation, and dump it in the case of bankruptcy, but you can t get student loans from the government for twice that AND they can t be discharged in bankruptcy.  Thankfully, Congress and the President have provided a little bit of relief with a bill this summer that tied interest rates to treasury rates.  So now, instead of 6.8%, you re paying 3.6% plus the 10 year treasury rate at the time the loan is made (with a cap at 9.5%), which is currently a total of 5.41%.  Direct PLUS loans are down from 7.9% to 6.41% (4.6% plus the 10 year treasury rate.)

Refinancing Issues

Perhaps the biggest difference between coming out of school a decade ago like me and coming out now, however, is the issue with refinancing.  My classmates refinanced their student loans at rates as low as 0.9% after graduation in 2003.  That s about as close to free money as you ll ever get.  Now, if you want to refinance your government loans, they simply take an average of all your loan rates.  It s nice to consolidate I suppose, but it doesn t save you any interest .until now.

Social Finance

There are currently two options available (and hopefully many more to come) where students can actually refinance their student loans at a lower interest rate.  The first of these is a company called Social Finance (SoFi).

This is actually a peer to peer lending company, not that dissimilar from Lending Club or Prosper .  They are currently loaning money to students who graduated from or are currently attending 100 schools. including my  undergraduate institution and my medical school.  The reason there are only 100 schools is that they require either alumni or institutional support for a school before they will loan there.  Currently they have only lent money to 1900 students, but I m sure that number will grow. Rates range from 4.99%-6.99% fixed (with a 0.25% discount for autopayment), or 2.94-5.19% (capped at 8.25%) variable, again with a discount for autopayment.

I think this is a great option for a borrower.  You get lower rates than you get from the government.  It s beyond me why an investor would be interested.  When I go shopping for peer to peer lending investments, I expect a double digit return. and there s no way to get that when your yields are under 7%, especially if there are some defaults.

Darien Rowayton Bank

I was approached recently by another option, the Darien Rowayton Bank (DRB), who sponsored last month s newsletter (although I received no compensation for mentioning them in this post-feel free to call them and tell them to buy a banner ad on the site).  [Update: DRB has now purchased a banner ad that ll run during November.] They ll refinance your loans from any institution.  These two companies have also been in a bit of a rate war as of late, and DRB has fixed rates of 4.75-5.75% and variable rates currently set at 2.76-3.01%.  That looks awfully attractive compared to the 7.9% the government is giving you.  As of this posting, DRB s rates are at least 0.25% less than what you can get from SOFI (assuming you went to an institution where your loans quality with SOFI).  DRB also likes to point out that they have a single rate for each term (5-15 years) whereas you have to go through the SOFI application process before you can actually find out your exact rate.  The biggest benefit of using DRB over SOFI (aside from the lower rate) is that you didn t have to attend a SOFI-approved institution.

Reasons Not To Refinance

Remember that when you refinance your loans, they are no longer eligible for the IBR or the PSLF program, and that like other student loans, SoFi and DRB loans don t go away in bankruptcy.  You also probably don t want to refinance subsidized loans from undergraduate, if you have any, since that subsidization will go away.  Since undergraduate loans are generally at a much lower rate anyway, that s not really an issue.

The Mortgage Option

My favorite student loan refinancing option involves a mortgage.  If you can somehow turn a high-interest, non-dischargeable in bankruptcy, non-deductible (for most docs) student loan into a low-interest, dischargeable, deductible mortgage or home equity loan, that s a great deal.  Unfortunately, those who have big fat student loans don t generally have any home equity, and by the time you get some, the student loan situation isn t so bad.

I hope to see more competition in this financial marketplace, but it s possible that both of these companies will just go away.  Neither of them is exactly a household name.  You might want to jump on one of these options before it s too late.  It isn t like you can t refinance again later.

What do you think?  Have you refinanced your student loans?  How?  Did you use SoFi or DRB ?  Are you happy with it?  Comment below!