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Author Topic: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!  (Read 4440 times)

BearlyLegal

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #20 on: April 16, 2008, 02:03:17 PM »
I'd take a Stafford before I took a GradPLUS. The terms are better. Why would you want a GradPLUS before a Stafford?

You have to max out the Stafford before you can take out gradplus, so if I do take the gradplus, I'd be getting both. Problem is that Stafford maxes out at 20,500, so I'm like with another 45k or so.

Got it. I thought someone was saying they wanted to take GradPLUS and not Stafford.
Why would anyone want to do this? This doesn't make any sense.

I know it doesn't make sense. That's why I was confused. Am I just confusing everybody?
Nope just bearses!  :D

antaresvi

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #21 on: April 16, 2008, 02:06:26 PM »
Also, is it too early to be doing this? Is there any problem with getting loans out of the way before June?

If you're doing GRADPLUS, no.  If you're doing private loans, then yes.  The rates might change.

They might, but I was under the impression that pretty much every private loan rate is tied to prime or LIBOR, and the only question is what you qualify for relative to those rates. Is there a fixed private loan available?

I haven't seen one - and been looking. What's your take?


Well what I meant there was that it shouldn't matter if the rates change between now and June - the number Citi approved me at isn't going to change. I'm actually more torn between private and GradPLUS today than I was before I applied for the private loan - I got prime -0.5, which is really appealing. Here's a summary of the options I'm thinking about:

PNC GradPLUS loan @ 8.5%
-they refund the 3% opening fee
-rate reduction of 0.75% as long as you make payments on time
-reduction of 0.25% if you use autopay
= effective 7.5% fixed

Citi private loan @ prime -0.5%
-.25% reduction with autopay
-.75% reduction after 48 on time payments
= effective prime - 1.5% two years after graduation

So I'm kind of torn here, although I'm really nervous about taking out a variable rate loan - who knows what the prime rate will be in 5 years? If I could find a variable loan capped at like 9% or something, I'd be much more comfortable, but I don't think such a thing exists.

Anyone know anything about consolidation after graduation? The private loans would seem to make a lot more sense if you could lock in a sub- 8.5% fixed rate in three years.

BearlyLegal

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #22 on: April 16, 2008, 02:08:46 PM »
Also, is it too early to be doing this? Is there any problem with getting loans out of the way before June?

If you're doing GRADPLUS, no.  If you're doing private loans, then yes.  The rates might change.

They might, but I was under the impression that pretty much every private loan rate is tied to prime or LIBOR, and the only question is what you qualify for relative to those rates. Is there a fixed private loan available?

I haven't seen one - and been looking. What's your take?


Well what I meant there was that it shouldn't matter if the rates change between now and June - the number Citi approved me at isn't going to change. I'm actually more torn between private and GradPLUS today than I was before I applied for the private loan - I got prime -0.5, which is really appealing. Here's a summary of the options I'm thinking about:

PNC GradPLUS loan @ 8.5%
-they refund the 3% opening fee
-rate reduction of 0.75% as long as you make payments on time
-reduction of 0.25% if you use autopay
= effective 7.5% fixed

Citi private loan @ prime -0.5%
-.25% reduction with autopay
-.75% reduction after 48 on time payments
= effective prime - 1.5% two years after graduation

So I'm kind of torn here, although I'm really nervous about taking out a variable rate loan - who knows what the prime rate will be in 5 years? If I could find a variable loan capped at like 9% or something, I'd be much more comfortable, but I don't think such a thing exists.

Anyone know anything about consolidation after graduation? The private loans would seem to make a lot more sense if you could lock in a sub- 8.5% fixed rate in three years.
The bolded comments are extremely credited and what I want to find out. If anyone has any answers, I'd be glad to hear them. I'll keep posting as I learn more as well.

jnb983

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #23 on: April 16, 2008, 02:23:29 PM »
tag.  awesome info.
yo: Gtown($$), RU-C($), GW($), UIUC($$), Northwestern($)
no-go: Berkeley, H, Y, UChi
so-so: Fordham, Mich, UCLA, Columbia, Vandy, UVA, Penn, NYU 

el ess en

zardoz

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #24 on: April 16, 2008, 02:55:41 PM »
Anyone know anything about consolidation after graduation? The private loans would seem to make a lot more sense if you could lock in a sub- 8.5% fixed rate in three years.
The bolded comments are extremely credited and what I want to find out. If anyone has any answers, I'd be glad to hear them. I'll keep posting as I learn more as well.
[/quote]

You can consolidate GradPlus and Stafford Loans together.  Both types of loans qualify under the College Cost Reduction and Access Act of 2007.  If you are married, you cannot consolidate your loans with your spouse's loans, but if you are both on the income contingent repayment plan with direct loans, then your payment per month will consider the amount both you and your spouse owe and the amount you both make in figuring what you can afford as a monthly payment. 

I know very little about private loans, but I hope this info. on GradPlus and Stafford helps.
Michigan 2012

zardoz

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #25 on: April 16, 2008, 08:23:26 PM »
You can consolidate GradPlus and Stafford Loans together.  Both types of loans qualify under the College Cost Reduction and Access Act of 2007.  If you are married, you cannot consolidate your loans with your spouse's loans, but if you are both on the income contingent repayment plan with direct loans, then your payment per month will consider the amount both you and your spouse owe and the amount you both make in figuring what you can afford as a monthly payment. 

I know very little about private loans, but I hope this info. on GradPlus and Stafford helps.

Thanks - helps me!

I was hoping it would help someone else.  I finally just called the Federal Direct Loan people to ask the questions I couldn't find in their FAQs, but that were important to my own situation.  They were very helpful (for all of you with specific questions).  And they said that more information about the College Cost Reduction and Access Act would be on their website in the next couple of months, so for people trying to sort things out this summer that should be useful.
Michigan 2012

hbb

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #26 on: April 16, 2008, 09:55:26 PM »
Quote
but if you are both on the income contingent repayment plan with direct loans, then your payment per month will consider the amount both you and your spouse owe and the amount you both make in figuring what you can afford as a monthly payment.

Married borrowers filling federal income taxes as "married filing seperately" can avoid having spousal income affect their eligibility for the IBR/LRAP programs available under the CCRAA:

Quote
SEC. 2. INCOME-BASED REPAYMENT FOR MARRIED BORROWERS FILING SEPARATELY.

      Section 493C of the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended by adding at the end the following:

      `(d) Special Rule for Married Borrowers Filing Separately- In the case of a married borrower who files a separate Federal income tax return, the Secretary shall calculate the amount of the borrower's income-based repayment under this section solely on the basis of the borrower's student loan debt and adjusted gross income.'.


S.2371


Edit: I don't recall seeing this mentioned elsewhere in this thread, but perhaps I missed something - anyone considering taking on private loans rather than federal loans should be aware that these loans will not qualify for the new IBR/LRAP programs under the CCRAA.

Additionally, if I personally was considering alternative funding, I would most likely utilize a HELOC or Home Equity Loan. These types of funding have a tax advantage (for some borrowers) over educational loans as the interest deduction is not capped at $2500 annually. Of course, if you aren't a homeowner, this isn't an option.

vjm

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #27 on: April 16, 2008, 10:09:44 PM »
I can't see many schools continuing to offer separate programs. They will probably just steer everybody into this one.

OldFart

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #28 on: April 17, 2008, 06:38:49 PM »
I thought I'd chime in with this news article (somewhat edited;  see link for full article) :
http://news.yahoo.com/s/nm/20080417/bs_nm/studentloans_salliemae_outlook_dc&printer=1
Quote
Sallie Mae affirms outlook, warns of "train wreck"

By Kevin Drawbaugh
Thu Apr 17, 11:21 AM ET

Sallie Mae (SLM.N), the largest U.S. student loan company, on Thursday affirmed its 2008 profit forecast, but warned of a "train wreck" in the $85 billion education financing market without urgent government intervention.

But Chief Executive Al Lord told analysts on a conference call: "We've been predicting something of a train wreck" in mid-2008 without prompt changes in a market hit by fallout from the subprime mortgage crisis and cuts last year in federal subsidies to student lenders.

His remarks came hours ahead of an expected vote on the floor of the U.S. House of Representatives on a bill meant to help stabilize the student loan market, with legislation also pending in the Senate amid general White House support.

Millions of young people will begin this month to lock in their financing before heading to college in the autumn, raising concerns among officials about loan availability.

On the conference call, Lord said Sallie was being flooded with loan applications from students, reflecting the exit of dozens of other lenders from the business.

"Far more have left than have announced they've left," he said. "We're operating, as everyone is, in some fairly strange capital markets."

He said loan demand at Sallie was running at $3 billion a month, while the company has only been able to access funding of about $1 billion a month -- at record-setting costs.

Sallie Mae Chief Financial Officer Jack Remondi said on the call: "Although we are awaiting a potential resolution of this issue from Washington, I want to be perfectly clear. We will not do business that jeopardizes the company's liquidity position or franchise value."
My comments:

When I was in college, I was completely clueless about the wider economy.  My main concern was having the five bucks it took to get lunch.

For those of you who, similarly, are out to lunch today, the financial sector is in the middle of a serious crisis.  It started with a flood of cheap credit, much of which went into overpriced housing.  With house prices falling back to more rational values (i.e., what a topnotch brain surgeon might reasonably expect to pay off in a lifetime of eating stale bread and generic ramen), the banking sector is unable to work its fractional-reserve lending magic to pump out new dollar bills.

At the moment, the Federal Reserve is gaming the system to try to stabilize it.  Allowing the bond insurers to pretend that they can back up a "AAA" rating, forcing fire sales of Bear Stearns (no relation to BearlyLegal) and Countrywide Mortgage rather than letting them declare bankruptcy, cutting the federal-funds rate to below inflation even as inflation is soaring, and so on and so forth.  They can't keep it up forever, though.  At some point, banks will have to admit their losses, simply because the internal stresses on the banking system keep getting worse as the game goes on.  It's like wrapping duct tape around a hamster before, umm, let me rephrase that.  Well, never mind, you probably get the drift.

During the bond insurance crisis about 2-3 months ago, several student loan bond auctions failed.  Someone has to put up the initial capital to finance your loans, and nobody was willing to do it.

My best guess is that rates will shoot up dramatically at some point in the not-too-distant future.  This will trigger further housing price declines, which will cause more banking-sector pain, which will reduce credit further, which will cause rates to increase, which will cause. . . .

You begin to get the idea.

There are two main schools of thought on what we're going to go through.  One is stagflation (with the subschool of staghyperinflation).  The other is deflation.

I'm currently on the stagflation side, mostly because it's visibly happening.  Last I heard, 4.1% inflation, and a stalled economy.  Q.E.D.

A lot of smart people (and some real jerks and idiots) are on the deflation side, saying that the current crunch is simply too large.  Maybe we'll end up with a 1990s-Japan "lost decade", or a Great Depression, or just a huge 1970s-style stagflationary schlog.

Then there are those who say "buy some farmland and guns, and learn to grow your own vegetables."  Oooookayfine.

Just some random musings from someone who is a bear marketer.

All that said, I really have no idea what will happen to interest rates any time soon.  I can't see the mess continuing, but the feds are intervening every time it looks like there will be a reckoning.  Anyway, I don't see the next several years as being very pleasant, at least not if you want to borrow money.

Good night, chilluns.  Pleasant dreams! ;)

BearlyLegal

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Re: ITT Bears Ask Smart LSD Posters to Help Choose a Loan!
« Reply #29 on: April 17, 2008, 06:48:16 PM »
I thought I'd chime in with this news article (somewhat edited;  see link for full article) :
http://news.yahoo.com/s/nm/20080417/bs_nm/studentloans_salliemae_outlook_dc&printer=1
Quote
Sallie Mae affirms outlook, warns of "train wreck"

By Kevin Drawbaugh
Thu Apr 17, 11:21 AM ET

Sallie Mae (SLM.N), the largest U.S. student loan company, on Thursday affirmed its 2008 profit forecast, but warned of a "train wreck" in the $85 billion education financing market without urgent government intervention.

But Chief Executive Al Lord told analysts on a conference call: "We've been predicting something of a train wreck" in mid-2008 without prompt changes in a market hit by fallout from the subprime mortgage crisis and cuts last year in federal subsidies to student lenders.

His remarks came hours ahead of an expected vote on the floor of the U.S. House of Representatives on a bill meant to help stabilize the student loan market, with legislation also pending in the Senate amid general White House support.

Millions of young people will begin this month to lock in their financing before heading to college in the autumn, raising concerns among officials about loan availability.

On the conference call, Lord said Sallie was being flooded with loan applications from students, reflecting the exit of dozens of other lenders from the business.

"Far more have left than have announced they've left," he said. "We're operating, as everyone is, in some fairly strange capital markets."

He said loan demand at Sallie was running at $3 billion a month, while the company has only been able to access funding of about $1 billion a month -- at record-setting costs.

Sallie Mae Chief Financial Officer Jack Remondi said on the call: "Although we are awaiting a potential resolution of this issue from Washington, I want to be perfectly clear. We will not do business that jeopardizes the company's liquidity position or franchise value."
My comments:

When I was in college, I was completely clueless about the wider economy.  My main concern was having the five bucks it took to get lunch.

For those of you who, similarly, are out to lunch today, the financial sector is in the middle of a serious crisis.  It started with a flood of cheap credit, much of which went into overpriced housing.  With house prices falling back to more rational values (i.e., what a topnotch brain surgeon might reasonably expect to pay off in a lifetime of eating stale bread and generic ramen), the banking sector is unable to work its fractional-reserve lending magic to pump out new dollar bills.

At the moment, the Federal Reserve is gaming the system to try to stabilize it.  Allowing the bond insurers to pretend that they can back up a "AAA" rating, forcing fire sales of Bear Stearns (no relation to BearlyLegal) and Countrywide Mortgage rather than letting them declare bankruptcy, cutting the federal-funds rate to below inflation even as inflation is soaring, and so on and so forth.  They can't keep it up forever, though.  At some point, banks will have to admit their losses, simply because the internal stresses on the banking system keep getting worse as the game goes on.  It's like wrapping duct tape around a hamster before, umm, let me rephrase that.  Well, never mind, you probably get the drift.

During the bond insurance crisis about 2-3 months ago, several student loan bond auctions failed.  Someone has to put up the initial capital to finance your loans, and nobody was willing to do it.

My best guess is that rates will shoot up dramatically at some point in the not-too-distant future.  This will trigger further housing price declines, which will cause more banking-sector pain, which will reduce credit further, which will cause rates to increase, which will cause. . . .

You begin to get the idea.

There are two main schools of thought on what we're going to go through.  One is stagflation (with the subschool of staghyperinflation).  The other is deflation.

I'm currently on the stagflation side, mostly because it's visibly happening.  Last I heard, 4.1% inflation, and a stalled economy.  Q.E.D.

A lot of smart people (and some real jerks and idiots) are on the deflation side, saying that the current crunch is simply too large.  Maybe we'll end up with a 1990s-Japan "lost decade", or a Great Depression, or just a huge 1970s-style stagflationary schlog.

Then there are those who say "buy some farmland and guns, and learn to grow your own vegetables."  Oooookayfine.

Just some random musings from someone who is a bear marketer.

All that said, I really have no idea what will happen to interest rates any time soon.  I can't see the mess continuing, but the feds are intervening every time it looks like there will be a reckoning.  Anyway, I don't see the next several years as being very pleasant, at least not if you want to borrow money.

Good night, chilluns.  Pleasant dreams! ;)
Very good discussion, and spot on. Bears are usually WAY better at handling munny than those dumbshits at Stearns!  >:(