Law School Discussion

Nine Years of Discussion
;

Author Topic: Grad Plus VS Private, let's discuss  (Read 12301 times)

hbb

  • Sr. Citizen
  • ****
  • Posts: 228
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #10 on: May 13, 2008, 08:13:06 PM »
Quote
What am I missing.

Eligibility for the federal LRAP/IBR programs made available as a result of the CCRAA.


Also, it doesn't appear that you are taking into account the repayment incentives most GradPLUS lenders offer, which can reduce the interest rate ~!.25%


Edit: Sorry, the above rate should be 1 not !  - held the shift key down too long

jack24

  • Sr. Citizen
  • ****
  • Posts: 1050
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #11 on: May 13, 2008, 08:36:58 PM »
Quote
What am I missing.

Eligibility for the federal LRAP/IBR programs made available as a result of the CCRAA.


Sorry, I don't know anything about those.
Can you help us find information about those programs please?

I'm financially conservative so I'd really prefer a fixed rate.


hbb

  • Sr. Citizen
  • ****
  • Posts: 228
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #12 on: May 13, 2008, 08:43:57 PM »
Quote
Can you help us find information about those programs please?

Here is a link to a PDF that summarizes the benefits of the CCRAA

Edit: This link contains some outdated information - reporting requirements for married borrowers have changed.


hbb

  • Sr. Citizen
  • ****
  • Posts: 228
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #13 on: May 13, 2008, 09:12:26 PM »
Quote
I'm financially conservative so I'd really prefer a fixed rate.

The Bank of America loan comparison chart you've provided a link to indicates that GradPLUS loans will be discounted 1.5% for borrowers enrolling in an automatic payment plan, lowering the fixed rate to 7%, which is lower than the 7.19% you've estimated you can expect to find during the repayment period on a private loan.


jack24

  • Sr. Citizen
  • ****
  • Posts: 1050
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #14 on: May 13, 2008, 09:43:31 PM »
Quote
I'm financially conservative so I'd really prefer a fixed rate.

The Bank of America loan comparison chart you've provided a link to indicates that GradPLUS loans will be discounted 1.5% for borrowers enrolling in an automatic payment plan, lowering the fixed rate to 7%, which is lower than the 7.19% you've estimated you can expect to find during the repayment period on a private loan.



Thanks.  I overlooked that.  I've been planning on doing my loan through US bank but BOA might be a good option with that kind of discount.  I thought the discount was only .25

jacy85

  • LSD Obsessed
  • *****
  • Posts: 6859
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #15 on: May 13, 2008, 10:07:13 PM »
I think one benefit of Grad Plus is fixed interest rate. Yes, the rate is great now, but in 5-10 years, what will the rate be? You don't know. I think I remember a financial aid person saying that normally, GP is always a better deal (if the adjustable rate is above 9% or whatever), but right now, private might be, although there is substantially more risk down the line that it won't be and you'll be screwed.

I don't know if there are other benefits to GP, since it's a federal program, that might also weigh in its favor.

Hoping to hear more information from more well-informed people than me...

If you have good credit, DO NOT get the GradPlus.  I have really good credit, and my private loans have way lower interest than the fixed 8.5%.  Also, there is NO grace period for the GradPlus.  Mine technically went into repayment today, as I graduated yesterday.  I had to use my one "freebie" financial hardship deferment to avoid paying it over the summer before I start work in October.  If I need a financial hardship deferment again (knock on wood), it may be more difficult to get one.

Bottom line, for me, I absolutely 150% regret taking out the GradPlus loan I have.  I should've just taken out a private loan my second year like I did for 1L and 3L.

SCK2008

  • Sr. Citizen
  • ****
  • Posts: 1366
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #16 on: May 14, 2008, 12:19:32 AM »
A lot of GradPlus lenders have "origination fees" of 1.5-3% and these seem like the bank's way of saying "we're going to take your $ just b/c we can".  These are the nickel and dime type of fees that I'm looking out for...

Interesting to hear Jacy's take on it though...definitely something to consider...

But in the end don't most people end up consolidating/re-financing all of the different loans upon graduation?  Aren't the terms of the newly consolidated loan really what matters?

Or is that not how it works?
Honorable Mention/All-Valley Tournament

vjm

  • Sr. Citizen
  • ****
  • Posts: 1070
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #17 on: May 14, 2008, 12:36:21 AM »
If you are planning on using the federal LRAP, it does not apply to private loans. Just something to consider.

I also would love to see somebody get one of these private loans right now. Many lenders are not offering them anymore, despite what their websites say.

hbb

  • Sr. Citizen
  • ****
  • Posts: 228
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #18 on: May 14, 2008, 02:13:10 AM »
Quote
A lot of GradPlus lenders have "origination fees" of 1.5-3%

The 3% origination fee is federally mandated

jacy85

  • LSD Obsessed
  • *****
  • Posts: 6859
    • View Profile
Re: Grad Plus VS Private, let's discuss
« Reply #19 on: May 14, 2008, 08:03:32 AM »
If you are planning on using the federal LRAP, it does not apply to private loans. Just something to consider.

The fed gov't is rolling out their own LRAP type that will be available after you all graduate.  They talked to us about it at my exit counseling session.