Financing Your MBA

Hey, I didn't write that. It was "laymeoff". I don't know how you quoted and changed the author name. I am not looking to get laid off nor to commit any unemployment crime. I was just curious if the law is really bullet proof when it comes to that.

Ha - sorry about that. I was just deleting all the quote headers at the top of the message. My mistake.

Quick grapevine intel for those considering private loans:

Discover appears to be offering variable rate private student loans at Prime minus 50bps (so currently ~2.75%) for domestic borrowers with solid credit AND a co-signer. I hear if you want to go without a cosigner and have excellent credit, you can score Prime plus 200bps (~4.25%).

Discover also offers a 2% reduction in principal as a "graduation reward" when you finish and has zero fees for qualified borrowers.

Not a bad deal.

If anyone sees a better deal elsewhere, please post here for kudos!

What are the predictions for this variable rate i.e. how high could Prime usually go?

The Prime rate was around 8.25% as recently as August 2007. Where it will be say in three years, no one knows for sure really. If you will need more than a year or two to pay off your private loans, the GradPLUS loans are probably a safer bet.

Obviously this is all very credit-dependent, and to some extent also on the school you will be attending.

However! If one could structure their loans to minimize the risk, it might be doable. One option would be to keep the amount you borrow through a variable rate loan low and try and take those loans out near the end of your 2 years. Basically, use them for short-term borrowing, knowing that you'll be able to pay them off quickly if rates start to rise.

Then again, if you minimize your exposure to variable rate loans, how much do you stand a save? A couple thousand? Is it really worth the headache?
RF

It is just a signal of instability in your life. Since there is a lag time in credit reporting, they have to use proxies for information instead of actual information. Looking for a lot of credit can be an indicator that you are about to take more than you can chew, since you could potentially get 5 or 10 huge loans in a matter of a few days without it showing up on your report for other creditors to see. They have to mitigate that risk by assuming that if you are looking for loans at five places, you could potentially take those loans as well. Thus your score goes down, albeit a small amount.

Someone who has more insight into this industry feel free to correct me if I'm wrong.

Thanks refurb! I didn't realize they looked at inquiries for some loans different than others.

https://www.finaid.org/loans/creditscores.phtml

This site seems to contradict the "multiple inquiries about private student loans won't hurt your FICO score" line of thinking.

I think it's worth throwing a shout out for Discover student loans. They have rates starting at Prime minus .5, they have zero fees and they give a 2% graduation gift (in addition to the .25% credit for automatic debits). Add to that it took less than 5 mins to apply and the decision is instant, I'm really happy with the whole deal. They loan up to $60k per year.

To get the prime minus .5 you'll need to have good credit and you'll need a cosigner who has 800+ credit. That might be tough for some people but if you have a spouse or relative who doesn't mind jumping on there with you, it makes a big difference. Discover only pulls from Experian so that's the only bureau that matters. I had a 770 with Experian and was initially given Prime +3. I tried 3 different relatives until I got an 800+ cosigner at which point I got the Prime minus .5. They don't mind you "shopping" for cosigners. Each time I tried a new cosigner it took 3 minutes on the phone and the new decision was available two hours later. You can check it out at https://www.discoverstudentloans.com Hope that helps.

The part you quote seems to be talking about private student loans specifically. Or am I misreading it?

RF