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Author Topic: Please take 2 seconds to explain student loans to me (im financially literate)  (Read 718 times)

LawyersGunnersnMoney

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i understand you cant apply for student loans until jan 1.  so if i apply then and am offered prime + .25 for example, can i lock that in?  the reason i ask is that i will run up some cc debt before law school that i will pay back before i start in the fall.  just curious as to how i should time this as i realize credit scores are a fickle equation

LostMyMonkeys

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Well, are you talking FAFSA/federal stafford loans or private loans?

As far as private loans go, the rate is generally locked when you apply/sign your promisory note, I think. Given that it's prime + XXX, and prime changes, that can change monthly, but for example, I have mine lined up at prime + 5% (credit sucks after buying a house) and with prime being 7.25% right now, I am sucking. But that will go down as prime floats. But only the prime part, not the + XXX.

Federal stafford loans do not require credit check and the rates can't go above 8% (or thereabouts)

Nice ass won't get you through your whole life. When you turn 30 you better have a personality

LawyersGunnersnMoney

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Well, are you talking FAFSA/federal stafford loans or private loans?

As far as private loans go, the rate is generally locked when you apply/sign your promisory note, I think. Given that it's prime + XXX, and prime changes, that can change monthly, but for example, I have mine lined up at prime + 5% (credit sucks after buying a house) and with prime being 7.25% right now, I am sucking. But that will go down as prime floats. But only the prime part, not the + XXX.

Federal stafford loans do not require credit check and the rates can't go above 8% (or thereabouts)



thanks, i was talking about private loans.  i realize prime will float but wasnt sure if the + xxx can change if your credit changes before you use the $.  how do they decide how much to approve you for? 

LostMyMonkeys

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Once they approve you I think you are locked. As far as how much you can get, that depends on a few things, the biggest being the difference in the in your school's cost of attendance and the amount of other aid received.
The Cost of Attendance is things like tuition and fees, but also non tangibles like books, room, board, living expenses, etc. So say your schools cost of attendence is $38K (which mine is) and you are approved for $18,500 from the feds (this is per two semesters, for me, spring and summer 06) the difference is in the $14K range. After the stafford loans pay my tution, I still owe about $3000 out of pocket for tuition and fees and the rest goes to me directly, in theory to pay for room, board, books and other such living expenses.

Most private loans do it this way, but whethere or not you get approved for the full amount you request, I don't know. I personally did and I had a crap credit score and had been denied across the board until I applied with sallie mae law loans and they gave me the whole shebang and it was really easy.

Nice ass won't get you through your whole life. When you turn 30 you better have a personality