brandon432 wrote:
This is a great resource. Sounds like I have some comparing to do! Thank you!
brandon432 wrote:
I have undergrad loans (almost done) with Sallie Mae, Citibank, and Discover. I have MBA loans with Charter One and Discover. Discover's web portal smokes everyone else, but I pretty buy on price. My MBA loans are all private variable rate; at 3.5-4.25%, it was hard to pass up. Rates will undoubtedly rise in the next few years, but my timeframe for payback should only be 2-3 years. About 75% of my loans are fully deferred, the others are interest-only while in school.
Here's the list of factors I considered when weighing loan options.
Fed vs. private
Fixed or variable
Deferral options
Rate discounts or graduation reward $
Cosigner vs. none
Any fees (Rare. CommonBond has origination though)
Repayment length and flexibility
Also great information. To move a little into realm of best practices, from the little I've come to the following conclusions (correct me if I'm wrong):
Fed vs. private : In general, it seems like Fed are slightly more forgiving in terms of economic hardship, deferral options, etc. Unfortunately, given that PLUS loans have a 4.288% origination fee, it sounds like you pay a premium for this. Something I'm not really planning to take advantage of (If I am unemployed post-MBA, I have bigger problems).
Fixed or variable - Seems like interest rates are low now but will likely rise over the next few years (they really can't get lower). Seems like a gamble, and for the sake of having consistent payments, fixed seems to make sense for those of us who are more risk averse / like to plan (variable rates are evaluated quarterly). The downside being that variable rates seem to be a few points lower initially than fixed.
Deferral options - Seems like this depends largely on your means. If possible, it seems like paying off interest while in school is a good bet (otherwise you'll end up paying interest on your interest), though dollar-wise I'm not sure how much of a difference this makes.
Rate discounts or graduation reward $ - Haven't read anything about this... not sure how important it is?
Cosigner vs. none - Seems like having a cosigner (if you can find one) might lower the interest rate you pay... finding one if possible seems like the way to go if you have a family member with good credit.
Any fees (Rare. CommonBond has origination though) - If Federal didn't have such a high fee (highest I've seen from the few possibilities that I've looked at), I probably would just go with the default option. Working to avoid these (with the rate as high as it is, you're effectively paying another year of interest right out of the gate).
Repayment length and flexibility - Seems like lengths go from 5-30 years. I plan to live like a pauper for a few years after I graduate and although I'm planning to pay for tuition almost entirely with loans, I'm hoping to pay off my loans within 5-7 years. Federal seem to be the most flexible in terms of repayment, though again, it seems like you pay a premium for it.
There also seems to be the option to refinance or consolidate after you graduate (it seems like SoFi mostly exists to allow you to refinance interest rates at a lower rate). Again, not sure how often this is done in practice.
Am I on the right track?