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# Student Loan Question

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VP
Joined: 09 Dec 2008
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Schools: Kellogg Class of 2011

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25 Mar 2009, 17:08
cs11 wrote:
weezy25 wrote:
2) In addition, will taking out private loans from friends negatively affect my eligibility for Stafford loans in any way for either year?

Thanks!

Just to add to the confusion here, my understanding is that anyone (regardless of income) can get up to \$20,500 per year in Stafford loans. Income comes into play to determine whether the loan is subsidized (ie. interest doesn't accrue while you're in school). I want to say the interest rate is around 6.5% on those. Grad-PLUS, which can be taken out on top of Stafford and up to the school's determined budget, is 8.5% or something horrible like that.

http://studentaid.ed.gov/PORTALSWebApp/ ... tloans.jsp

You are right: there is no credit requirement to qualify for Stafford loans, and I think unless you have defaults or were delinquent on prior student loans you'll pass the credit check for GradPLUS as well. I'm not sure how much income comes into play when determining subsidized vs. unsubsidized - my current salary is in excess of the post-MBA average and I qualified for subsidized Stafford loans.
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Current Student
Joined: 23 Jan 2009
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Schools: Fuqua

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30 Mar 2009, 11:27
Bumped.

Now that I imagine many of us have gotten back our award letters from schools, has anyone done further research on how on earth they're going to pay for school? Even with my scholarship, I'm still looking at well north of \$100k of student loan debt.

Having read through this thread carefully, combined with outside research, my understanding is that gov't loans (Stafford, PLUS) doesn't come close to covering your COA (cost of attendance, which is basically tuition plus the school's budget for living expenses). To cover the difference between the COA and my gov't un/subsidized loans, I'll be borrowing money from a private lender. If, perchance, I wanted to exceed that living expenses budget, I'd have to rely on savings. Sound about right?

Anyone else terrified about owing that much money? Ugh.

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VP
Joined: 28 Feb 2008
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30 Mar 2009, 11:47
Toubab wrote:
Bumped.

Now that I imagine many of us have gotten back our award letters from schools, has anyone done further research on how on earth they're going to pay for school? Even with my scholarship, I'm still looking at well north of \$100k of student loan debt.

Anyone else terrified about owing that much money? Ugh.

Yeah! The mortgage on my first house was \$120K, but I had 30 years to pay it off!!

RF
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VP
Joined: 05 Aug 2007
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Schools: NYU Stern '11

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30 Mar 2009, 13:22
Not true.

You can borrow up to 20,500\$ under the Stafford program, and everything else that is part of your school's cost of attendance calculation can be borrowed under the GradPLUS program.

You can meet 100% of your cost of attendance via federal student loans.

Toubab wrote:
my understanding is that gov't loans (Stafford, PLUS) doesn't come close to covering your COA (cost of attendance, which is basically tuition plus the school's budget for living expenses).

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VP
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30 Mar 2009, 13:34
You're also correct toubab that if you care to spend more than the school's estimate for living expenses, it must come out of your savings.
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30 Mar 2009, 14:17
Jerz wrote:
You're also correct toubab that if you care to spend more than the school's estimate for living expenses, it must come out of your savings.

or credit cards

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VP
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30 Mar 2009, 14:42
I think what Toubab was getting at was that sometimes the school estimated cost of attendance is quite low. I think Duke assumes only \$500/month in rent or something like that.

Not impossible, but definitively on the low end.

RF

solaris1 wrote:
Not true.

You can borrow up to 20,500\$ under the Stafford program, and everything else that is part of your school's cost of attendance calculation can be borrowed under the GradPLUS program.

You can meet 100% of your cost of attendance via federal student loans.

Toubab wrote:
my understanding is that gov't loans (Stafford, PLUS) doesn't come close to covering your COA (cost of attendance, which is basically tuition plus the school's budget for living expenses).

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Current Student
Joined: 21 Aug 2008
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Schools: Fuqua '11

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30 Mar 2009, 15:08
refurb wrote:
I think what Toubab was getting at was that sometimes the school estimated cost of attendance is quite low. I think Duke assumes only \$500/month in rent or something like that.

Not impossible, but definitively on the low end.

RF

So much for station 9.

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VP
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31 Mar 2009, 04:05
Ah, I see. I misunderstood Toubab's post then.

Bear in mind schools produce a COA based on a 9-month period. So, Duke probably calculates the housing allowance to be around \$620 a month as opposed to \$500 - a slight improvement. However, for instance my school will allow students to petition Financial Aid if their monthly rent exceeds the maximum amount assumed in the cost of attendance calculation? So if there's a good case to be made for living at the Station 9, maybe that's worth a shot? All that will do is allow you to borrow more in GradPLUS loans though.

refurb wrote:
I think what Toubab was getting at was that sometimes the school estimated cost of attendance is quite low. I think Duke assumes only \$500/month in rent or something like that.

Not impossible, but definitively on the low end.

RF

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Current Student
Joined: 23 Jan 2009
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31 Mar 2009, 06:24
Ah, so after the Stafford loans (of which I'm getting the max), I can cover the rest of my tuition + cost of living with PLUS loans? Cool. I was thinking I'd have to use private lenders to cover the rest.

Incidentally, Duke budgets \$6166 for housing, which comes out to \$514/month on a 12-month lease (since 9-month leases in Durham are very rare). Definitely out of the Station 9 price range there - though I'm not too hot on that place anyway. No room for a garden.

Can't say any of this still makes me feel good about being a hundred Gs in the hole, though.

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Intern
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07 May 2009, 06:22
Jerz wrote:
cs11 wrote:
weezy25 wrote:
2) In addition, will taking out private loans from friends negatively affect my eligibility for Stafford loans in any way for either year?

Thanks!

Just to add to the confusion here, my understanding is that anyone (regardless of income) can get up to \$20,500 per year in Stafford loans. Income comes into play to determine whether the loan is subsidized (ie. interest doesn't accrue while you're in school). I want to say the interest rate is around 6.5% on those. Grad-PLUS, which can be taken out on top of Stafford and up to the school's determined budget, is 8.5% or something horrible like that.

http://studentaid.ed.gov/PORTALSWebApp/ ... tloans.jsp

You are right: there is no credit requirement to qualify for Stafford loans, and I think unless you have defaults or were delinquent on prior student loans you'll pass the credit check for GradPLUS as well. I'm not sure how much income comes into play when determining subsidized vs. unsubsidized - my current salary is in excess of the post-MBA average and I qualified for subsidized Stafford loans.

Just some questions, guys!

I am going to B-school too, and I also have no credit history (no work experience, no debt and never had a student loan)

From what I understand, I will be qualified for the full amount of the Stafford loan (in my FAFSA, my Estimated Family Contribution is 0.) So that means I will get the \$20,000 right?

Is this 100% certain? If I apply for a loan at Salli Mae am I going to get the money for sure?

Now I might be needing another ~\$20,000. Can I avail the PLUS loan without credit history? I'm going to need a cosigner for that, right?

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VP
Joined: 09 Dec 2008
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Schools: Kellogg Class of 2011

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07 May 2009, 07:07
GabrielRodriguez wrote:
Just some questions, guys!

I am going to B-school too, and I also have no credit history (no work experience, no debt and never had a student loan)

From what I understand, I will be qualified for the full amount of the Stafford loan (in my FAFSA, my Estimated Family Contribution is 0.) So that means I will get the \$20,000 right?

Is this 100% certain? If I apply for a loan at Salli Mae am I going to get the money for sure?

Now I might be needing another ~\$20,000. Can I avail the PLUS loan without credit history? I'm going to need a cosigner for that, right?

The Stafford loan is not at all credit based and is independent of your financial need. You can see the eligibility requirements on Sallie Mae's website here: http://www.salliemae.com/get_student_lo ... /stafford/

Quote:
- You must have submitted a FAFSA to be eligible for a Stafford loan.
- For subsidized Stafford loans, you must have financial need as determined by your school.
- You must be a U.S. citizen or national, a U.S. permanent resident, or eligible non-citizen.
- You must be enrolled or plan to enroll at least half time.
- You must be accepted for enrollment or attend a school that participates in the Federal Family Education Loan Program.
- You must not be in default on any education loan or owe a refund on an education grant.

If you meet those requirements, you qualify for \$20,500 per year in Stafford loans. The only question is whether the school will decide that your financial need qualifies you for subsidized Stafford loans. If your EFC is 0, my opinion is that it's probably likely you will demonstrate sufficient need to get some subsidized Stafford loans.

As for GradPLUS, there are credit requirements for those loans although they aren't as stringent as the non-federal loans. Whether your lack of a credit history will require a cosigner is really up to the lender. Like the Stafford loan, GradPLUS is not dependent on financial need. The only cap on how much you can borrow is that Stafford + GradPLUS + Scholarships/Grants cannot exceed the school's official cost of attendance. Also, Sallie Mae is not the only lender who provides Stafford and GradPLUS loans. You should do some comparison shopping since other lenders may offer better deals or discounts.

One last point about credit in general. It probably a good idea if you've never had any credit at all to get yourself a credit card. DON'T OVERSPEND WITH IT, but occassionally use it and pay off the balance each month so you don't incur any finance charges. Demonstrate that you can handle credit responsibly and that you pay back debts promptly. You'll want to have built up that credit history for when you apply for larger loans such as car loans or mortgages.
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07 May 2009, 07:16
Jerz wrote:
GabrielRodriguez wrote:
Just some questions, guys!

I am going to B-school too, and I also have no credit history (no work experience, no debt and never had a student loan)

From what I understand, I will be qualified for the full amount of the Stafford loan (in my FAFSA, my Estimated Family Contribution is 0.) So that means I will get the \$20,000 right?

Is this 100% certain? If I apply for a loan at Salli Mae am I going to get the money for sure?

Now I might be needing another ~\$20,000. Can I avail the PLUS loan without credit history? I'm going to need a cosigner for that, right?

The Stafford loan is not at all credit based and is independent of your financial need. You can see the eligibility requirements on Sallie Mae's website here: http://www.salliemae.com/get_student_lo ... /stafford/

Quote:
- You must have submitted a FAFSA to be eligible for a Stafford loan.
- For subsidized Stafford loans, you must have financial need as determined by your school.
- You must be a U.S. citizen or national, a U.S. permanent resident, or eligible non-citizen.
- You must be enrolled or plan to enroll at least half time.
- You must be accepted for enrollment or attend a school that participates in the Federal Family Education Loan Program.
- You must not be in default on any education loan or owe a refund on an education grant.

If you meet those requirements, you qualify for \$20,500 per year in Stafford loans. The only question is whether the school will decide that your financial need qualifies you for subsidized Stafford loans. If your EFC is 0, my opinion is that it's probably likely you will demonstrate sufficient need to get some subsidized Stafford loans.

As for GradPLUS, there are credit requirements for those loans although they aren't as stringent as the non-federal loans. Whether your lack of a credit history will require a cosigner is really up to the lender. Like the Stafford loan, GradPLUS is not dependent on financial need. The only cap on how much you can borrow is that Stafford + GradPLUS + Scholarships/Grants cannot exceed the school's official cost of attendance. Also, Sallie Mae is not the only lender who provides Stafford and GradPLUS loans. You should do some comparison shopping since other lenders may offer better deals or discounts.

One last point about credit in general. It probably a good idea if you've never had any credit at all to get yourself a credit card. DON'T OVERSPEND WITH IT, but occassionally use it and pay off the balance each month so you don't incur any finance charges. Demonstrate that you can handle credit responsibly and that you pay back debts promptly. You'll want to have built up that credit history for when you apply for larger loans such as car loans or mortgages.

Thank you. Very useful info!

As for GradPLUS, I'd shop around but I plan to study in London. Most lenders do not accommodate international schools. Thanks for the advice though. I'll make sure to research some more.

Regarding the Credit Card, I actually have a credit card in my own name. I've had it for around 3 years and my mother pays for it.. But it is still under my name. It's a Visa but the bank is based in Manila. I've never really had a job and I honestly am not sure how my mother got this for me. I think it is because I had some money in my bank account.

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07 May 2009, 07:52
A few points I'll throw out (I apologize if they've already been stated).

--GradPLUS is a fixed rate loan (I think it's currently 8.5%) and is based on credit history (not credit score).
--Private loans are variable rates (PRIME + ___) and based on your credit score. The finanancial aid department at Booth said they've seen anywhere from +4 to +8. I don't have a crystal ball but I can tell you that PRIME is not going to dip below 3% and, if it does, it won't be for long. PRIME is typically around 5-6%. I can tell you that a major US bank just sent its requirements to Booth and it requires co-signors for ALL loans--regardless of credit rating.

Great quote: "if you live like a CEO when you're a student, you'll live like a student when you're a CEO"

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07 May 2009, 08:25
Most schools use rent amounts based on 9 months since the expectation is that you will have an internship for the first summer and that salary will pay rent (though lots of folks end up paying double rent). Then second year you graduate so you either move or have a job...at least that is the assumption. It is possible to petition for more loans but they will typically only allow that if you have kids or a spouse who can't possibly work. Saying you want to live like a baller but dont have any savings isnt going to cut it. Private loan rates are good these days but you run the risk of them going way up. Basically student loan rates suck these days, my wife has like 1.5% for the little left of her undergrad loans...if that was the rate these days we would all be maxing out loans.
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Kellogg Class of 2010...still active and willing to help. However, I do not do profile reviews, don't offer predictions on chances and am far to busy to review essays, so save the energy of writing me a PM seeking help for these. If I don't respond to a PM that is not one of the previously mentioned trash can destined messages, please don't take it personally I get so many messages I have a hard to responding to most. The more interesting, compelling, or humorous you message the more likely I am to respond.
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07 May 2009, 17:39
As an international who is not eligible for any of the Stafford or PLUS loans, does anyone have any recommendations regarding private loans?

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26 May 2009, 01:05
Can anybody help me how to establish a credit history?

I do have a credit card under my name. I have never held a job so I just pay it using my allowance. I don't have credit history though?

I need this for my student GradPLUS student loan.

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26 May 2009, 03:35
If you have a credit card in your name, that is building your credit history. As long as you pay at least the amount due each month, it'll help build a good credit history. It doesn't matter that you're paying the payments with money from your parents, the credit card company only reports whether you pay on time or not.

You can get copies of your credit reports from the websites of the 3 credit reporting agencies (Equifax, Experian and TransUnion), or get your FICO score from Fair Issac at myFICO.com, and see exactly what your credit looks like. Beware of websites like freecreditreport.com, which promise a free credit report but then require you to sign up for a recurring subscription service.
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26 May 2009, 06:14
Jerz wrote:
Beware of websites like freecreditreport.com, which promise a free credit report but then require you to sign up for a recurring subscription service.

It's actually [url]annualcreditreport.com[/url] that is the once a year free credit report site. You are entitled by law to receive one free report from that site per year and are not required to sign up for anything. However, in oreder to see your credit score, you will have to pay for that seperately.

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27 May 2009, 04:55
Jerz wrote:
If you have a credit card in your name, that is building your credit history. As long as you pay at least the amount due each month, it'll help build a good credit history. It doesn't matter that you're paying the payments with money from your parents, the credit card company only reports whether you pay on time or not.

You can get copies of your credit reports from the websites of the 3 credit reporting agencies (Equifax, Experian and TransUnion), or get your FICO score from Fair Issac at myFICO.com, and see exactly what your credit looks like. Beware of websites like freecreditreport.com, which promise a free credit report but then require you to sign up for a recurring subscription service.

Wow.. Okay okay! So hey, if my credit card is a foreign credit card (outside the US), would it still show in my credit report?

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Re: Student Loan Question   [#permalink] 27 May 2009, 04:55

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# Student Loan Question

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