student loans...help

[brownboi512]

so im starting college in the fall and i am lost with student loans. heres my plan right now

i need about 10k
stafford subsidized: 3500=will take this for sure
stafford unsubsidized: 3500=not sure about this
private loan: whatever is left=need to find a bank...any recommendations?

the things that is gonna decide for me is the interest rate. i can defer payments on the principal and interest rates on all of them. the stafford loans are at 6.8%. private loan is about 6% at my bank. so should i take the unsubsidized stafford loan and take the rest in private loans or skip out on the unsubsidized stafford and take about 7k in private loans?

 

[amdskip]

Me thinks you should contact your school's FA office. They are there to figure this stuff out for you.

 

[brownboi512]

i gotta call next week since this week they are closed :\ so i turned to ATOT for help!

 

[Deeko]

Well, there are consolidation benefits to federal loans.

 

[coldmeat]

Thank god for OSAP. My loans from OSAP don't even accumulate interest until 6 months after I graduate.

 

[Special K]

The private loans most likely have a variable rate. Every private student loan I am aware of has a variable rate. Do you know the exact terms of the loan? Most are tied to Prime or LIBOR. With interest rates being low right now, that 6% will likely be higher in the future. Also, your exact rate will depend on your credit score. People with less credit history and/or lower credit scores will receive less favorable rates. Was the 6% rate quoted by a bank for a candidate who fit their top credit profile, or did they already check your credit and tell you that you were eligible for that rate? Some people get their parents to cosign on the private loans if it will get them a more favorable rate.

Also, even though you can defer principal and interest payments on the unsubsidized and private loans, keep in mind that interest still accrues during that time, and any unpaid interest at the end of the month is added to your outstanding principal amount. The government will pay the interest on the subsidized stafford loans while you are in school.

If you can afford to pay off the interest each month, I would encourage you to do so. Having your debt compound at 6.8%+ is not good.

 

[randomlinh]

and even if you have to defer payments, I would think the unsubsidized loan would be a definite yes. No doubt when you're done you'll be able to consolidate all your federal loans and hopefully lock in a low rate. I got lucky w/ half of my stuff at 3%. My private loans.. ugh.. adjusted quarterly tied to prime. I got an offer to consolidate for ~1% more than my variable rate. I may look into it again now if they still will do for 1% more than my current rate.. to head off an increase in rates.

 

[AndrewR]

AVOID PRIVATE LOANS AT ALL COST! Seriously, they are much more restrictive, and the interest rates when they are in repayment can be astronomical. Minimize those as much as possible. Stafford, sub and unsub, are fine.

 

[hanoverphist]

Originally posted by: coldmeat
Thank god for OSAP. My loans from OSAP don't even accumulate interest until 6 months after I graduate.

my dept of ed loans didnt either, and i didnt have to pay until after that 6 months either. i deferred for a year, but not interest free.

 

[polarmystery]

Originally posted by: AndrewR
AVOID PRIVATE LOANS AT ALL COST! Seriously, they are much more restrictive, and the interest rates when they are in repayment can be astronomical. Minimize those as much as possible. Stafford, sub and unsub, are fine.

To add, avoid as MUCH AS POSSIBLE taking out loans. They are killing me even after graduation and I have an electrical engineering degree. Take things slow, get your basics out of the way from an institution that will allow for transfer if you want (community college), and try your hardest to get scholarships and/or grants. You will thank us later. The party/fun you will have will NOT outweigh the horrible financial burden you will have later.

 

[Corporate Thug]

my private loan was for 7.5%, the same as the Grad Plus loan so it isnt always bad.

 

[Deeko]

Originally posted by: AndrewR
AVOID PRIVATE LOANS AT ALL COST! Seriously, they are much more restrictive, and the interest rates when they are in repayment can be astronomical. Minimize those as much as possible. Stafford, sub and unsub, are fine.

That's a bit extreme. I have private loans and federal loans. Some of my private loans have a lower interest rate than the federal, some higher, but none "astronomical". You gotta remember that this isn't 2003 or whenever it was that you could lock in 1% interest on federal loans - Stafford loans check in at about 6.8% these days.

I will say that you have more consolidation options with Federal and should max out your stafford before going private, but don't freak out if you have to take out some private loans.

ps to answer your original question, mine are through citibank.

 

[ggnl]

I did Stafford subsidized and along with a few Parent PLUS Loans when I was really broke. When I finished up I consolidated everything into a 2.875% fixed loan.

 

[Special K]

Originally posted by: randomlinh
and even if you have to defer payments, I would think the unsubsidized loan would be a definite yes. No doubt when you're done you'll be able to consolidate all your federal loans and hopefully lock in a low rate. I got lucky w/ half of my stuff at 3%. My private loans.. ugh.. adjusted quarterly tied to prime. I got an offer to consolidate for ~1% more than my variable rate. I may look into it again now if they still will do for 1% more than my current rate.. to head off an increase in rates.

Unfortunately, the days of locking in a low rate for stafford loans are pretty much over, at least for the time being. Stafford loans issued prior to July 2006 were variable rate loans whose rate was calculated from the 91-day tbill investment yield. The investment yield of the 91-day Tbill auction held the last week of May would determine the new rate of the loan starting that July.

As the 91-day tbill was yielding < 1% in 2004-2005, that was an excellent time to consolidate if you had variable rate stafford loans. Now that they are all fixed at 6.8%, I think all a consolidation will do is make it so you only have to pay on one loan instead of several.

 

[randomlinh]

Originally posted by: Deeko

Originally posted by: AndrewR
AVOID PRIVATE LOANS AT ALL COST! Seriously, they are much more restrictive, and the interest rates when they are in repayment can be astronomical. Minimize those as much as possible. Stafford, sub and unsub, are fine.

That's a bit extreme. I have private loans and federal loans. Some of my private loans have a lower interest rate than the federal, some higher, but none "astronomical". You gotta remember that this isn't 2003 or whenever it was that you could lock in 1% interest on federal loans - Stafford loans check in at about 6.8% these days.

I will say that you have more consolidation options with Federal and should max out your stafford before going private, but don't freak out if you have to take out some private loans.

ps to answer your original question, mine are through citibank.

are your private loans through city? and are they locked in?

 

[Special K]

Originally posted by: Corporate Thug
my private loan was for 7.5%, the same as the Grad Plus loan so it isnt always bad.

7.5% isn't bad in the same way that a 25% APR credit card is bad, but it still seems pretty high. It's definitely high enough that I would be trying to pay it down ASAP. A risk-free 7.5% is a pretty good return for your money. Heck, even the stock market may not return 7.5% over the long run, and it is obviously far more risky than paying down a loan.

 

[imported_Imp]

Makes me appreciate the people who payed for my college... now I'm undeservadely debt free.

 

[AndrewR]

Originally posted by: Deeko

Originally posted by: AndrewR
AVOID PRIVATE LOANS AT ALL COST! Seriously, they are much more restrictive, and the interest rates when they are in repayment can be astronomical. Minimize those as much as possible. Stafford, sub and unsub, are fine.

That's a bit extreme. I have private loans and federal loans. Some of my private loans have a lower interest rate than the federal, some higher, but none "astronomical". You gotta remember that this isn't 2003 or whenever it was that you could lock in 1% interest on federal loans - Stafford loans check in at about 6.8% these days.

I will say that you have more consolidation options with Federal and should max out your stafford before going private, but don't freak out if you have to take out some private loans.

ps to answer your original question, mine are through citibank.

No, it's not extreme. You have a much greater amount of protection with government loans than you do with private loans, over and above the consolidation options. With a private loan, you are much more likely to default in case of payment problems -- there is simply more leeway built-in with government loans. You shouldn't "freak out" over private loans, but don't go blithely into contractual agreements assuming a "student loan" is a "student loan" regardless of the provider. Some of the commercials on TV these days are insane -- "they gave me cash just for a signature!"

But, as one poster put it above, avoid loans if at all possible. Preference order: NO loans, Perkins loans only (if you qualify), Subsidized Stafford and Perkins, Sub and Unsub Stafford plus Perkins, then add private loans if absolutely necessary. Don't take all the money given if you don't need it -- live frugally, get a job, and keep your loan expenses as low as possible. If not, it will limit you on the other side, possibly for a long time. I'll be paying $300+ each month for the next 28 years unless I prepay my consolidated federal loans, and I just repaid my private loans last year (early -- that was a good feeling). I probably won't prepay my federal loans though, since I consolidated at 4%. Investing extra money is a better option for me.

 

[Deeko]

*shrug* I'm paying $600/month on my loans with no problems.