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Member
Posts: 15
Registered: ‎06-01-2008
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I'm about to take out a student loan. Is this a good deal?

Hey All,

I'm going back to school for an MBA and I'm working through the financial aid application process now. Here's what the university has awarded me for the remainder of tuition that I owe (I got a very nice scholarship), fees, and living expenses for the 2008-2009 year:

Federal Unsubsidized Stafford Loan (6.8%) - $12,000
Federal Graduate PLUS Loan (8.5%) - $7,994
Federal Subsidized Stafford Loan (6.8%) - $8,500
University Tuition Grant (free money!) - $1,420

I'm beginning to wonder if I'd be better off with a private loan rather than going through the government but frankly I'm unaware of the pitfalls (if any) that there might be when going that route. For what it's worth, according to Score Watch I have a FICO score of 727.

I've also heard that some things are going to change in the word of student loans starting on July 1st but that will only affect old loans rather than new ones. Is that correct?

Many thanks in advance!

-DL
my FICO - 06/02/2008: EQ 727, EX 725, TU 665
TC FAKO - 06/14/2008: EQ 680, EX 727, TU 720
Moderator Emeritus
Posts: 9,252
Registered: ‎03-19-2007
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Re: I'm about to take out a student loan. Is this a good deal?

Even with a great score- I am doubtful you will get better than 6.8 on a private loan-
 
On the July 1st thing-
I consolidated last june at 7.25%  
If I would have waited- I could have gotten a lower fixed rate-
New Contributor
Posts: 123
Registered: ‎05-01-2007
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Re: I'm about to take out a student loan. Is this a good deal?

Your scores are very good but it is unlikely a private lender can offer you less than the 6.8%.
 
You may want to look at a private lender to see if they can offer you a better rate than the PLUS loan.
 
You could accept everything except the PLUS loan then use private lender to fund the amount of the PLUS loan.  Based on your credit you should be able to get in the 7%-7.5% range.
Regular Contributor
Posts: 124
Registered: ‎05-01-2008
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Re: I'm about to take out a student loan. Is this a good deal?

You know, what is most concerning to me is not the loans...it's the aparent cost of tuition.  Did you say all those loans are for ONE year!?!?  Very few jobs out there require a high-priced college education... are you sure you can't limit your costs?  That's entirely too much money to pay in my opinion- my entire Masters Degree costs $9000, not including grad costs.  I could pay my tuition plus mortgage payment for two years for the amount you're considering getting.  College is like everything else- shop around!
Nov 09: TU 644 EQ 665
Dec 09: TU 644 EQ 673
New Year: TU 658 EQ 673
Contributor
Posts: 83
Registered: ‎03-03-2008
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Re: I'm about to take out a student loan. Is this a good deal?

[ Edited ]

heather76 wrote:
You know, what is most concerning to me is not the loans...it's the aparent cost of tuition. Did you say all those loans are for ONE year!?!?





Welcome to grad school! Smiley Very Happy I'm not looking forward to the cost, that's for sure! It might be less for me, but those costs probably represent a good school. Smiley Happy

As for the rate, that's the best that you'll find (and it's meant to be). The smallest rate I've seen for private loans was 10% variable.

Message Edited by Nectarine on 06-06-2008 02:42 PM
Regular Contributor
Posts: 121
Registered: ‎03-11-2008
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Re: I'm about to take out a student loan. Is this a good deal?

Also realize that the effective interest rate for the subsidized portion of your Stafford loan is 0% as the US Gov't pays the interest on it while you are in school.  Also, it is possible that the Gov't lowers interest rates on Stafford loans on July 1st  which will affect all Stafford loans (they are variable, but can only vary on one day out of the year).  Also, I agree, it is very unlikely that you will find a better rate on an unsecured private loan.  You may get close to the PLUS rate, but even that is going to be hard to find.  I think (other than the cost of tuition) you are in the best situation you can be in.
05/25/07: TU-567, EQ- 570, EX-546
03/19/08: High:668 Mid:662 Low:649 (don't know which is which, got it from mortgage broker)
04/21/2008: EQ-696
Member
Posts: 15
Registered: ‎06-01-2008
0

Re: I'm about to take out a student loan. Is this a good deal?

Many, many thanks to all. That's the news I was hoping to hear.
my FICO - 06/02/2008: EQ 727, EX 725, TU 665
TC FAKO - 06/14/2008: EQ 680, EX 727, TU 720
Valued Member
Posts: 84
Registered: ‎05-02-2008
0

Re: I'm about to take out a student loan. Is this a good deal?

I'm amused at the comment that your tuition is way too high. I wish that were true, really. My med school tuition and cost of living is &65K/yr. The biggest pitfal about private loans is that you have to be prepared for the variable interest rate. It could be 2% now, and jump big time, adding in the finance charges, etc, you will be unpleasantly surprised.
4/28/08-EQ 668
5/2/08- EQ 687 TU 670
6/15- EQ 722!!! TU 687
Regular Contributor
Posts: 121
Registered: ‎03-11-2008
0

Re: I'm about to take out a student loan. Is this a good deal?

The point is that unless he is going to one of the 1st tier schools (of which there are maybe 5), then his school likely belongs in the second tier group, and since you are going to a second tier school anyway, there isn't any reason to pay 30k a year for a graduate degree.  Of course this is all assuming that he isnt going to one of the first tier schools.
05/25/07: TU-567, EQ- 570, EX-546
03/19/08: High:668 Mid:662 Low:649 (don't know which is which, got it from mortgage broker)
04/21/2008: EQ-696
Member
Posts: 15
Registered: ‎06-01-2008
0

Re: I'm about to take out a student loan. Is this a good deal?

I say this with all due respect:

Not all graduate degrees are created equal, nor are the universities which grant them. Professional degrees in Law, Business, and Medicine cost lots of money at the schools which produce the highest paid graduates. While the return on investment may be debatable between in-state tuition at Michigan's B-School (ranked 7th) vs. regular tuition at Harvard GSB (ranked 1st), the ROI between a professional degree that costs $9000 vs. one that costs $120,000 probably isn't (depending on your goals, of course). If you want to work in the upper-echelon of law firms, consultancies, or medicine, you're only choice is to pay the big bucks.

Honestly, I'm getting off cheap. Between scholarship and grants, I'm paying roughly 1/3 of what most of my classmates will pay. Remember too that the loans I posted include after-scholarship tuition , living expenses, books, fees, etc.

Thanks again to all for the advice.
my FICO - 06/02/2008: EQ 727, EX 725, TU 665
TC FAKO - 06/14/2008: EQ 680, EX 727, TU 720

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