Which loan will be better?

[Stiganator]

Current Loans from Undergrad:

19,000 @ 5.8% variable unsub
16,000 @ 5.5% variable unsub
20,000 @ 5.375% fixed unsub
2,500 @ 5.375% fixed sub
1,200 @ 8.9 credit card (Arg, I almost had it paid off, then I had to get new brakes and tires!)


This year as a grad student and for the next 5 years I make ~21,500 so after rent, taxes, food, gas I have about $7,000 / year but probably more realistically $5,000 of unallocated money.

Grad Loans that I can get each year:

8,500 @ 6.8% fixed sub
12,000 @6.8% fixed unsub
5,000 @ 7.9% fixed unsub (this one really sucks, so I won't take it. 4% fee, immediate repayment)


I think take the 8,500 sub, take out the credit card and send the rest towards that 19K@5.8%.

I'm wondering if I should "trade" the 5.5% variable for a 6.8% fixed? Any rate increases on the horizon?

One benefit from "trading" would be a program I just learned about. If you have a PhD and work for an NIH sponsored project, they will forgive up 35,000 per year from government loans aka Direct Loans. So that would be one way to rapidly pay off my loans once I get my PhD. Trouble is I don't know if it will still exist by the time I finish.

General Eligibility Criteria

To be eligible for consideration, individuals must be (1) citizens, nationals, or permanent residents of the United States; (2) hold a Ph.D., M.D., D.O., D.D.S., D.M.D., Pharm.D., or equivalent doctoral level degree; or a P.A., B.S.N. or A.D.N. degree {NOTE: Applicants with a doctorate of veterinary medicine (D.V.M.) are eligible for all intramural LRPs except the Clinical Research LRP for Individuals from Disadvantaged Background unless they also hold one of the degrees listed above.}; (3) must be employed by or have a firm commitment of employment from an authorized official of the NIH (Please be advised that IRTA and CRTA fellows are not considered NIH employees and are not eligible for LRP benefits.); and (4) have qualifying educational debt in excess of 20 percent of their annual NIH base salary on the expected date of program eligibility. The expected date of program eligibility is the date by which (a) an applicant begins a qualified research assignment (see below) as an NIH employee and (b) the Secretary executes his or her LRP contract. The applicant must have a formal appointment in the NIH intramural research program (click here for additional information on research eligibility determination).

Qualified Research Assignments

For the AIDS and CR LRPs, qualified research assignments must involve AIDS or clinical research (see Appendix III) and be approved by the Loan Repayment Committee (LRC) (see "Application Process"). In support of the objectives of these LRPs, if applicable, an individual who is already employed by the NIH and applies to these LRPs must demonstrate his/her ability and intention to transfer from a non-qualified to a qualified AIDS or clinical research assignment.

Unlike the AIDS and CR LRPs, the General LRP is not targeted towards a specific area (e.g., AIDS) or type (e.g., clinical) of research. Rather, the focus is on attracting and retaining highly talented investigators to pursue biomedical research studies and investigations in a variety of scientific disciplines. Generally, this LRP is used to attract or retain more senior researchers, rather than trainees. For the General LRP, a "qualified research assignment" is one that is approved by the LRC (see "Application Process") based on the nature of the proposed research and its relationship to the mission and priorities of the NIH.

 

[Stiganator]

Hello?

 

[Farang]

Originally posted by: Stiganator
Hello?

hi there

 

[Whisper]

I'm not all that great with finances, so I don't have an actual reply to your question at the moment, but I will say this...

Good LORD, you have it nice. During my first three years in grad school, I made $10,500/year BEFORE rent, utilities, food, etc. If you add in my tuition waiver, it came to something like $14.5k/year. Now don't get me wrong, I'm not complaining--getting paid to be a student certainly beats the alternative. But yeah, as you would guess, I've essentially maxed out on loans up to this point. Good times ahead once I actually earn my degree and the deferment grace period ends.

 

[fishmonger12]

Um, take that extra 5k a year and pay off your credit card debt. Taking on more debt, to pay off debt, is not a good idea. From the numbers you've given it will take 1/4 of a year to pay off. Why mess around with another loan?

Continue to live like a graduate student (read: poor) for the 5 years of your phd program while paying off your debt. Is this really that complicated?

 

[RaistlinZ]

Geez, and I thought my 17k at 2.9% was a lot to pay off. I hope you aren't just going to make minimum payments on all that debt after you graduate. You'll be in debt forever.

 

[Stiganator]

Well subsidized loans don't accrue interest until you graduate, so that seems like it would make a difference. 5 years of interest vs. no interest.

 

[ggnl]

Originally posted by: Stiganator
Well subsidized loans don't accrue interest until you graduate, so that seems like it would make a difference. 5 years of interest vs. no interest.

Are you planning on taking loans out every year for the next five years? The interest is nothing compared to the massive amount of principal you're going to accrue.

 

[Stiganator]

I don't understand why I would be accruing anything. I would be taking out subsidized loans to directly pay off unsubsidized loans. I'm not keeping any of the loan money. Does that make it better or am I missing something?

 

[Stiganator]

Any one else have $0.02?

 

[Special K]

Originally posted by: Stiganator
Any one else have $0.02?

Do they even give you the money directly to use as you want? Some of these loans just send the money directly to the school, which would prevent you from using the money for other things.

What index is your variable rate loan tied to?

 

[darkxshade]

Originally posted by: Stiganator
Any one else have $0.02?

I had .02 until I got arrested for using it to solicit a cop

 

[CycloWizard]

I have almost identical loans from undergrad that I'm now starting to pay off after five years of grad school... Consolidation is a ripoff right now, so I will just pay the loans individually. No credit card debt for me though.

The subsidized loan is a no-brainer. Any time you can get a subsidized loan with a comparable rate, you should take it. That just means someone else is paying your interest for you while you're in school. Fixed rate is also likely better because rates will almost inevitably increase over the next few years (according to my economist brother ). If you have to choose between a variable prime rate loan and a fixed LIBOR, you're probably better off going with the variable prime, at least for the short term.

As far as the government's debt forgiveness programs, don't rely on those. Sometimes you can get them and sometimes you can't, depending on which specific department you go into, who your supervisor is, and which way the wind is blowing in HR that day. The wind blew the wrong way for me and I didn't get the $60k debt forgiveness I was expecting.

 

[Stiganator]

Originally posted by: Special K

Originally posted by: Stiganator
Any one else have $0.02?

Do they even give you the money directly to use as you want? Some of these loans just send the money directly to the school, which would prevent you from using the money for other things.

What index is your variable rate loan tied to?

Before July 2006 Ford Loans were tied to 91 day Tbill, but it seems as if they have set an arbitrary value on them now of 6.8% for sub or unsub loans. A number of my loans were from before July 2006, I'm wondering if I can reconsolidate them to the lower rate if it truly is 91 Tbill+1.7 then the effective rate should be 1.71+1.7= 3.41 % which is a full 2.1% better than what I'm getting right now at 5.5%.

The money does go directly to me as my school pays my tuition.

 

[dullard]

It is a no-brainer to take the subsidized loan. Suppose you even had a 1000% interest rate on the subsidized loan, as long as you pay it off before you graduate, you have gained. This is because you have 5 years of 0% interest for which you can put your $5k/year into the unsubisized loans that you already have. From my calculations, you'll likely end up paying the $19k loan and the $16k loan ~6 months sooner if you took the $8.5k subsidized loan (and paid it off in full too). That means 6 months of payments that can go towards the other loans. You'll gain a couple thousand dollars in the end.

As for the fixed unsubsidized loan, I personally wouldn't take that gamble YET. It'll cost you $120/year if interest rates stay the same. It'll cost you more if interest rates fall. If interest rates rise THEN take the fixed unsubsidized loan. There is no reason you have to take it now. This is more of a political gamble. Democrats tend to want to lower that interest rate (encourage education -> more costs now but much more income and thus tax revenue later which more than makes up for the costs). Repuplicans tend to want to raise education interest rates (federal government should stay out of education since it isn't in the constitution).

You got my hopes up on the debt forgiveness. I have a PhD and work doing NIH research and I've never heard of that program. But then I saw that I have too little student loans to qualify.

 

[compman25]

Get all the loans, send me the money and I'll tell you which one was best after I spend it.