How to get a loan?

Question

I looked through the "Financing Your MBA" thread already, but honestly, I still don't get it. It may seem tragically clueless for an admitted student, but I've never done this before. Hopefully I'm not the only person in this situation and this can benefit all of us.

The background: 
- I don't own anything, I don't make much money, and I have one small piece of plastic that barely counts as a credit card. 
- I'm planning on financing my entire MBA (hopefully plus a dual degree) through loans.
- After receiving my aid package, I'm at the max Perkins loans and Stafford loans. I still need about $42k/year in PLUS or private loans.

So, where do I look? What do I look for? What numbers should I pay attention to, what is good, what is bad? WHAT DOES IT ALL MEAN!?

Any and all input will help me sleep. Thank you!

solaris1 · Answer

Talk to your school's Financial Aid office - they can tell you what lenders their students have worked with in the past. It's not a very complicated process at all.

You will be able to borrow PLUS (or private loans, if you choose to go that route) loans in addition to the Perkins and Stafford loan funds you have already been offered by your school. You can borrow a combination of all three as long as your total borrowing is no higher than your school's "Cost of Attendance" calculation. The amount of money you make or the length of your credit history generally does not really matter at all if you decide to go with federal loans.

I don't know much about what is going on in the private student loan market these days, but I borrowed my Stafford and PLUS loans from Discover and have been pretty satisfied. At least last year they had a marginally better deal on PLUS loans as compared to the other lenders. Not sure if that is still the case.

If you've never borrowed before and want to learn more about federal student aid (for us that unfortunately only means loans) check out https://studentaid.ed.gov

EGall · Answer

Has anyone's B-school begun offering the federal direct loan processing for GRAD Plus loans for 2010-2011 financial aid year? I was notified of my Stafford awards last week, and am eager to complete the process with my GRAD Plus loans. However, the transition to direct lending (change made as part of the healthcare bill) seems to have caused some delay for most schools. Has anyone else gotten this far?

For students who have already gone through the financial aid process, do you recall at what point you had a full picture of your financial aid picture for the ensuing year?

For students who have already gone through the financial aid process, do you recall at what point you had a full picture of your financial aid picture for the ensuing year?

conmisdosmanos · Answer

Thanks for the response, this calms my nerves. So, once you receive the quotes from your school, you choose a lender? It would be great to amass a list of lenders & rates somewhere on this site (at least for this year). Once I really start looking, I'll get on that. Apparently I need to wait until the school releases their final estimate for next year's tuition & costs.

Does anybody know how (or if) the new Reconciliation Bill will affect us?

nink · Answer

I am not taking out any loan for bschool (so Solaris1 or anyone else, correct me if I am wrong), but from what I’ve seen, once the school’s fin aid office has Stafford, GradPlus and other loan apps made available, you have to fill them out. They might ask you to file additional papers for guarantors (if needed) and also if you’ve never taken out a loan before, you have to get a loan counseling or some kinda workshop….

Once that’s all done, your school fin aid office processes the apps and the lender will send the money directly to the school. School will deduct money for tuition and whatever it left over, they send you a check

Once that’s all done, your school fin aid office processes the apps and the lender will send the money directly to the school. School will deduct money for tuition and whatever it left over, they send you a check

solaris1 · Answer

Most schools recently switched to the Direct Loan Program through which GradPLUS and Stafford loans etc will be offered well...directly by the USG. At my school the will start processing new loans under the Direct program after July 1st, 2010. If you're done with filing a FAFSA already, you should be in good shape.

Last year my loans didn't get approved until like a week or so before I actually matriculated!

conmisdosmanos · Answer

Thanks, nink. These are the kind of super-basics I'm looking for. So basically, I can wait until my school has the applications available before I start worrying? I'm so used to worrying, now that my deposit is paid I'm looking for new things to worry about. Speaking of which....

That's frightening! Have you guys ever heard of anyone actually being turned down? Last year, a friend of mine had to postpone grad school entirely because she couldn't get enough loans. Granted, that was for social work, but still...

solaris1 · Answer

Don't worry, Financial Aid coordinates with the Bursar's Office and if you're paying your tuition with student loans, you're generally not subject to the same deadlines as students who're paying the Bursar directly. I'm just saying that even a week before classes start is enough time for everything to get processed smoothly. However, don't take that to mean you can just chill and not concern yourself with such things until the very last minute.

Definitely reach out to Financial Aid with any questions - however silly they might seem. They're paid to handle these things for you.

Jerz · Answer

While you certainly can get turned down or offered very high rates for private student loans if your credit history isn't good (at least as long as the People's Republic of America continues to let banks make private student loans), it's highly unlikely you'll be turned down for the Stafford or GradPLUS loans. I don't think there's any credit check for Stafford loans, and I think you essentially need to have defaulted on other student loans or declared bankruptcy in the past to not pass the credit checks for GradPLUS.

conmisdosmanos · Answer

Can one of you please explain what this means: "rates of Prime+100bps and 1mLIBOR+450bps "? (Solaris1, I stole that directly from one of your 'Financing your MBA' posts.)

Also, is there some sort of consensus on whether it's best/cheapest/easiest to just go with the GradPLUS loans, or to shop around for private loans? Obviously, everyone's situation is different, but there seems to be a lot of debate on that topic. I'm inclined to do whatever is simplest since I'm so clueless, but I'm definitely interested in learning.

Thanks again, all of you, for your answers. It's reassuring to hear from people who've been through this already.

Jerz · Answer

You'll have to forgive solaris1, after a year at Stern he just assumes everyone talks like a banker. It means the interest rates are variable, based on benchmark rates (either the prime rate or the 1 month LIBOR) plus a certain margin: 100 basis points over prime or 450 basis points over LIBOR (a basis point = 0.01%). So assuming the current prime rate is 3.5% and 1 mo. LIBOR is 1% (I just made those up), these loans would currently charge 4.5% or 5.5%, respectively. You can easily find the current prime and LIBOR on the internet or in the WSJ. As the prime rate or LIBOR increase/decrease, the interest rates on these loans will increase/decrease.

There is a lot of debate on this topic precisely because there is no real consensus. Currently, the rates on GradPLUS are above the rates on many private loans, but are fixed compared to the variable rates of private loans. So people who think that interest rates will remain low for the near to mid-term are generally more in favor of private loans, while people who think that interest rates will go up (like I do) are more in favor of the fixed-rate GradPLUS.

2012dreams · Answer

THANK YOU!!! I've been trying to figure this out. I think I may have to just go with Federal aid, right now I have a car loan (plan on selling before school) that will probably make borrowing privately a pain in the a@@, but I too guess I'm confused about timelines - am I supposed to be working on this now? Do I need to wait for my financial aid package from school? Is most of this done in June/July?

gmatbschool · Answer

Does anyone know of any private loan options for international students WITHOUT a US co-signer, and NOT the school option?

I haven't been able to find any through the school resources or searching online. But I might be missing something...

mansishah475 · Answer

loans can easily available these day..for business loan you have to show your strength..like how many workers in company, have your own company or have on lease, & what is the total profit you gain from the company...if you have these all things you get business loan easily....

SinghAnjali · Answer

Due to the advancement of technology, you can carry your whole world in the pocket. You can book a cab, watch a movie, read a book, order food, make online payments, and perform almost every activity. Another useful feature is acquiring quick credit through instant loan app. The app also lets you track all your expenses and income through the app and manage your loan. Gone are the days when you had to visit a bank, apply for the loan, and then wait for the approval. The online loan apps in India are designed to make managing loans easier for people like you.

How to get a loan?

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