[Asherah]

Originally Posted by columbiaetp04

Their regret started when the bills from Sallie Mae came.

I suppose from your statement, my one sincere question is, I'm unsure as to how surprising it can be for anyone to sign promissory notes and not be aware of how much they will be paying per month. Or is it purely a disconnect between an outrageous salary expectation and the loan balances that one will have to pay?

I've certainly run the numbers, its very easy these days to determine what a monthly payment will be based on 'n' number of interest rate scenarios (figuring in increases), as well as different repayment timeframes. However my financial plan is to have my loan(s) paid off in 5 years, through a combination of frugal living and extra work.

I find it impossible to believe that so many people are surprised by what they will be committing to pay.

[columbiaetp04]

Asherah,

Congratulations on financial planning.

There are some general facts about signature and unsubsidized loans that people don't understand:

Capitalized interest - Your unsubsidized federal and sallie mae loans start accruing interest the first day the funds are released. So in my case, an additional $9000 or so was tacked on before I finished my first year. By the time I had earned a master's an additional $15000 or so was added on to my balance, a process called capitalization.

Variable rates - Sallie Mae Signature Loans have variable rates. WHile I was in nursing school the Signature APR approached 11%. After nursing school it dropped to 7 1/2%, so that first year after nursing school an additional $10000 or so was added to my balance.

Payment are applied to your interest first - For example my first student loan payment was about $1200. Only $111 was applied to the principal loan balance, the rest was applied to interest. So your principal loan balance is whittled down very slowly. Meanwhile interest continues to accrue.

As a general rule, debt service on uncollaterialized loans (ie loans not backed up by collateral like credit cards, student loans and car loans, this means mortgages are excluded) cannot exceed approximately 20% of your take home pay, before you are put in with the poor credit risk crowd. Assuming about $50,000 a year in take home pay is average for NPs that leaves you with $10,000 you can spend on uncollaterialized loans. You need more than $10,000 to make your columbia student loan payments. The end result is you are likely to be denied car loans and mortgages, and if you are given such loans they will be at a much higher interest rate than you would have if you had good credit.

I have been making large payments for several years now and my balance has only gone down by $3000.

Another way to look at it is this: you may have borrowed $115,000, but your payments to retire the loan will add up to about $150,000 - $160,000.

Sincerely,

Columbia ETP '04

[Asherah]

Thanks for posting that, I'm sure a few folks did indeed learn exactly how the process works. I'm hoping that for those of us who can (and do plan on working) while in school can at least work on paying that interest while in their respective programs to avoid or minimize interest capitalization.

[columbiaetp04]

Asherah:

The real shock people get is that after sending large payments in for several months, their balance does not go down by very much.

People are usually astounded by how fast compounding interest will boost the balance of a loan. If you are unable to take bites out of your principal balance every month, you are spinning your wheels.

You know I did an interesting thing. I went to Bankrate.com and used their online amortization calculator. I put in the following data:

Beginning loan balance: $115,000
Interest Rate: $5.0% (Your federal loans will be less, and your signature loan will be more than 5.0%, and sometimes much more)
Years to pay off balance: 15


Results: Total interest paid: $ 48,694.28
Total amount of monthly payments: $163,694.28

Now remember you have to earn $180,000 - $200,000 to get $163,694.28 after taxes, at the very least.

Now keep in mind that the ETP '08 class is going to have to pay a lot more tuition than 115 large I had to pay.

[Alexandria8]

you seriously don't seem to get it. the reason i am not "keeping to the facts" is because your input is not welcome, the last thing i want to do is further engage this bs. take your pearls of financial wisdom to the designated thread where people want to discuss the glaringly obvious financial issues surrounding ivy league educations. enough, honestly.

[Alexandria8]

if we are going to discuss finances, i don't know about anyone else, but i'd much rather talk salaries There was a lot of good info. in this article and a promising number for NYC salaries in particular.... http://www.advancefornp.com/Sharedre...larySurvey.pdf

[jbazoola]

Originally Posted by columbiaetp04

Asherah,

Congratulations on financial planning.

There are some general facts about signature and unsubsidized loans that people don't understand:

Capitalized interest - Your unsubsidized federal and sallie mae loans start accruing interest the first day the funds are released. So in my case, an additional $9000 or so was tacked on before I finished my first year. By the time I had earned a master's an additional $15000 or so was added on to my balance, a process called capitalization.

Variable rates - Sallie Mae Signature Loans have variable rates. WHile I was in nursing school the Signature APR approached 11%. After nursing school it dropped to 7 1/2%, so that first year after nursing school an additional $10000 or so was added to my balance.

Payment are applied to your interest first - For example my first student loan payment was about $1200. Only $111 was applied to the principal loan balance, the rest was applied to interest. So your principal loan balance is whittled down very slowly. Meanwhile interest continues to accrue.

As a general rule, debt service on uncollaterialized loans (ie loans not backed up by collateral like credit cards, student loans and car loans, this means mortgages are excluded) cannot exceed approximately 20% of your take home pay, before you are put in with the poor credit risk crowd. Assuming about $50,000 a year in take home pay is average for NPs that leaves you with $10,000 you can spend on uncollaterialized loans. You need more than $10,000 to make your columbia student loan payments. The end result is you are likely to be denied car loans and mortgages, and if you are given such loans they will be at a much higher interest rate than you would have if you had good credit.

I have been making large payments for several years now and my balance has only gone down by $3000.

Another way to look at it is this: you may have borrowed $115,000, but your payments to retire the loan will add up to about $150,000 - $160,000.

Sincerely,

Columbia ETP '04

I really do not want to participate in this discussion. Long ago I realized the best way to stop a bully is to ignore them. But I have to respond to this, briefly.

of course I know their is a variable rate on my loan AND how that works. Of course I understand that interest accrues and is added to the principal of my loan. Of course I have done the math and realized what the future holds for me regarding paying off the loan. I'm not an idiot. I'm also not 22 (not that this would make a difference). I also did not get my loan from Sallie Mae (notoriuos for less than stellar loan rates and practices).

If your goal is to help us because you want us to avoid the problems that you have had, then I appreciate your concern. It is kind and brave of you to attempt to get to us information that you feel we may not have. Thank you. But we get it now. And all the continued obstinance on your part is only detracting from your original well meaning intentions. enough. please.

[Stef82]

Whoa. I didn't check this forum for a couple of weeks and wow. Anyway, I'm looking forward to getting to meet ETP alumni at the event in a couple of weeks. I'm sure that it will be much better to hear their experiences in person instead of hearing negative things from someone behind an anonymous screen name.

Just one more week and a day until the program starts! Looking forward to meeting you all!

[columbiaetp04]

Guys:

Why are you attacking me? this a free forum where anyone can say anything they want. I haven't attacked anyone else. I am entitled to my opinion.

And to be clear, I never said becoming an NP is a bad idea. Hell I still am one. And it is true salaries have boomed a bit in the last 2 years. It's also true that getting a job as an NP is pretty easy, especially if you are willing to move for an opportunity.

Instead of getting mad, why don't we have a discussion?

[jbazoola]

YAY!! Me too Stef. Sorry we got a little off topic here. But on the positive tip, I am SOOO excited to get started. and I can't wait to meet everyone face to face. My last day at work is this Friday and I am so thrilled!! to leave this job behind. See you in 8 days!!