Grad Plus Loan vs Private Loans

JenTheSchoolRN, BSN, RN · May 20, 2013

My concern about private loans is that the interest rate is lower now, but that could change. The interest rate is variable, not fixed like it is on graduate plus loans.

I spoke with my dad, a financial advisor, before I took out loans. I needed a large loan, so he recommended the graduate plus loan due to the fact that my rate was fixed and that a large private loan's rate could continue to bump up as I repaid it.

As I understand it, public service loan forgiveness applies to the federal subsidized and unsubsidized loans (i.e. the $20,500 max you can get). It does not apply to additional graduate plus or private loans. But please, someone correct me if I'm wrong.

detroitdano · May 20, 2013

Private loans are not always variable. I have a fixed rate with Wells Fargo. Sure a variable rate might not ever change, or actually go down, but it can get as high as 18%. Forget that.

From what I've read on forgiveness, I believe that only applies to government-issued loans, not private loans.

From http://www.finaid.org/loans/publicservice.phtml:

"Eligible loans include Federal Direct Stafford Loans (Subsidized and Unsubsidized), Federal Direct PLUS Loans, and Federal Direct Consolidation Loans."

murberry · May 21, 2013

Any advice on which is better option? I know the obvious lower interest rate for private loan and no origination fee. But wondering if there is something else I might have missed. Also does anybody know if the public service loan forgiveness applies only to plus loans and not private sector loans?[/quote']
Private loans have better rates however less repayment options, therefore in the long run it may be difficult to pay back if you dont have the money. Private loans do not qualify for the program since its a fed program.
Grad plus loans have several repayment options, programs to postpone payments and will qualify for PSL. It has to be a direct loan to qualify and not title 4 (loan program). PSL only works if you have a large amount of debt you have to repay. You can consolidate all of your loans and go under an income based repayment plan and try to pay as little as possible for 10 years, after 10 years of making on time payments the remaining balance gets forgiven.
Lmk if you have any questions :)

flyingfish2u · May 22, 2013

Private loans have better rates however less repayment options, therefore in the long run it may be difficult to pay back if you dont have the money. Private loans do not qualify for the program since its a fed program.
Grad plus loans have several repayment options, programs to postpone payments and will qualify for PSL. It has to be a direct loan to qualify and not title 4 (loan program). PSL only works if you have a large amount of debt you have to repay. You can consolidate all of your loans and go under an income based repayment plan and try to pay as little as possible for 10 years, after 10 years of making on time payments the remaining balance gets forgiven.
Lmk if you have any questions :)

Is the forgiven amount considered as taxable income?

murberry · May 24, 2013

Is the forgiven amount considered as taxable income?

No, it isn't taxable. :) Contact your student loan server and they can provide more information. :) you will need to meet all the requirements before applying. Good luck.

Bruce_Wayne, ASN, RN · May 24, 2013

Private loans are the devil! There are so many programs for federal loans related to consolidation, forgiveness, and reversing defaults that they're the much better option.

OscarRN · May 24, 2013

Can people, for the most part, get by with federal loans only (for tuition and living expenses?

denver nurse · May 25, 2013

i talked to a hrsa rep not to long ago and private loans do qualify as long as it is spent for tuition and anything for cost of living related to a nursing related field aka rn or crna in our cases. this includes rent, food, bills..ect.

i am in the process of applying for a sallie mae smart option loan: they offer fixed and variable rates based on credit. I just am not sold on the fed grad plus loan at 7.9% with a 4% origination fee each time you apply. yes its backed in certain aspects and would be much more attractive if i was concerned about not finding work after graduating. However, I am pretty confident i can find work for at least 150k after graduating as a crna as long as i am willing to relocate and be on my game.

I am currently in the process of applying for the sallie mae smart option loan....I am not sold on this loan either but i want to fiddle with the numbers and interest rates to see whats more attractive. i will let you all know how it goes. the variable rate is attached to the LIBOR which is london's version of our prime rate. current LIBOR is .21% add that a variable rate of 2.5% and you're in good shape...unless everything goes to hell and then you could be in some trouble!

I trust private loans as far as i can drop kick them but it might be a better option when considering a fed grad plus loan at 7.9%. Also, since we can only get $20,500 a year with the unsubsidized fed loan at 6.8% i want to explore all my options. 1% interest adds up fast when you're talking about a 100k over 5-10yrs. I hate loans but its worth doing your research for sure.

also, here is the info directly for the hrsa nurse corps loan repayment program we are all wanting to cling to:

What types of educational loans qualify for NURSE Corps LRP?

A NURSE Corps LRP participant will receive funds to repay a portion of the outstanding principal of and

interest on qualifying educational loans (see Definitions) obtained by the participantfor nurse training

costs at the time of the participant's undergraduate and/or graduate qualifying nursing education.

(1) Qualifying Educational Loansinclude loans obtained for actual costs paid for:

a. Tuition, fees, and other reasonable educational expenses (see Definitions) for qualifying

nursing education; and

b. Reasonable living expenses (see Definitions) incurred while enrolled in qualifying nursing

education.

marco346 · May 25, 2013

For a front loaded program, isn't the only option private loans after the first year? I was told I couldn't qualify for federal loans since I wasn't "technically" a full time student.

missnurse01, MSN, RN · Jun 6, 2013

Marco I hear that is a problem with some schools! Many schools divide the courses so you still have full time hours between lecture and clinical. I believe your program is entirely front loaded and you don't pay tuition after the first year? So you are mainly needing living expenses and clinical fees? I can't quite remember. I would guess your fellow students are taking out max the first year so they have a cushion the rest...

detroitdano · Jun 7, 2013

For a front loaded program, isn't the only option private loans after the first year? I was told I couldn't qualify for federal loans since I wasn't "technically" a full time student.

When do your front loaded courses start? If it's before August/September, you can still file for financial aid for summer 2013, which is a separate school year. It might not be the $20,500 Stafford you get for a full year, but should be something to help bank for later on.