Question about loans with options...

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shouryuujo
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Question about loans with options...

Postby shouryuujo » Tue May 24, 2011 2:17 pm

I have a couple of loan options available:

1. direct grad plus

2. private loan

3. my parents - i didn't ask them but they really want to help out - they could take out a loan at 2.7 for me and they calculated I could save quite a bit in interest ~30ishk if i pay them back...

i read another thread here about a deeper analysis between private and direct and the consensus seems to be direct is safer with IBR and other options that private loans might not have. I am curious if I should just take the direct grad plus loans and not rely on my parents even though they are very much willing to help? My parents probably will retire in 5ish years so I dont think it is a good idea to have them take out the loan for me - they could pay it back but still.... Suggestions/tips?

Z3RO
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Re: Question about loans with options...

Postby Z3RO » Tue May 24, 2011 2:32 pm

first parents, then gradplus, then private.

09042014
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Re: Question about loans with options...

Postby 09042014 » Tue May 24, 2011 2:37 pm

How much of their networth would they be lending you. If it's unsubstantial, go to them. If it's 20%, then you shouldn't.

shouryuujo
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Re: Question about loans with options...

Postby shouryuujo » Tue May 24, 2011 2:53 pm

Desert Fox wrote:How much of their networth would they be lending you. If it's unsubstantial, go to them. If it's 20%, then you shouldn't.


They will be mortgaging their house for the loan i believe. I am not sure about their networth but i dont think they have ~100k liquid if that helps? They do have a lot in retirement etc. and there's pension...

Another thing about private loan is the one i am looking at (salli mae) is based off of libor + 2% and from the data below:
--LinkRemoved--

it seems even if we go back to 2007's numbers the rate is still <7.9%. of course there's no IBR and no forgivance but there's no orig. fees either.. i guess this analysis is almost like another one about the Prime rates..... But all in all between the 7.9 direct plus and libor avg (i estimated 6% avg) i would be saving maybe ~15k or so which kinda goes back to the other thread about "is it worth IBR/forgivance etc.".

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brose
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Re: Question about loans with options...

Postby brose » Thu May 26, 2011 12:00 pm

I wouldn't take that much money from my parents, especially if they are mortgaging their house. If something were to go wrong, shit would hit the fan.

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sambeber
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Re: Question about loans with options...

Postby sambeber » Thu May 26, 2011 12:01 pm

brose wrote:I wouldn't take that much money from my parents, especially if they are mortgaging their house. If something were to go wrong, shit would hit the fan.

aliarrow
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Re: Question about loans with options...

Postby aliarrow » Thu May 26, 2011 12:03 pm

It sounds like your parents are still pretty well off. I wouldn't let them mortgage their house to pay for your law school, but they should at least be able to help out with cost of living so you don't have to borrow as much. For the rest just take out Federal Direct and GradPlus loans.

09042014
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Re: Question about loans with options...

Postby 09042014 » Thu May 26, 2011 12:07 pm

brose wrote:I wouldn't take that much money from my parents, especially if they are mortgaging their house. If something were to go wrong, shit would hit the fan.


A lot of people think law school is like med school, a guaranteed path to an upper middle class life. This isn't even true for HYS.

shouryuujo
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Re: Question about loans with options...

Postby shouryuujo » Thu May 26, 2011 12:07 pm

they brought up another plan - have me borrow until i graduate - then they pay it all off without mortgaging or borrow from their bank. then i pay them back on a monthly basis. I can buy higher premium disability/life so that if something were to happen to me they are "covered" for a bit. They said this way they dont need to mortgage their house and take loans and I can avoid a hefty interest from borrowing at 7.9.... They are very adamant about it... should i take up on their offer? Things could change after i graduate so basically the "final decision" can be decided at the end though?

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Nom Sawyer
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Re: Question about loans with options...

Postby Nom Sawyer » Thu May 26, 2011 12:13 pm

Here, I wrote some stuff about this that might be helpful to your decision making:

viewtopic.php?f=22&t=124530&hilit=+guide+to+law+school+loans

If you have anymore questions, I'd be happy to help.

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sambeber
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Re: Question about loans with options...

Postby sambeber » Thu May 26, 2011 12:13 pm

If they can "pay it all off" without another mortgage or taking a loan after you graduate, can they just do that beforehand and you will still pay them afterwards?

One problem with this plan is you have to pay the 6.8% or 7.9% interest that gets charged and compounded each year when you're in school, in addition to the 1-4% (IIRC) origination fees that the federal government charges when they issue the loans. That's essentially money down the drain if they can just pay it now.

shouryuujo
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Re: Question about loans with options...

Postby shouryuujo » Thu May 26, 2011 12:22 pm

i dont think they have 100k liquid now. they do save a lot into retirement and i wouldnt want them to take it out of that... they do plan to retire in a few years but they have pension etc. as well..

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sambeber
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Re: Question about loans with options...

Postby sambeber » Thu May 26, 2011 12:23 pm

shouryuujo wrote:they brought up another plan - have me borrow until i graduate - then they pay it all off without mortgaging or borrow from their bank. then i pay them back on a monthly basis. I can buy higher premium disability/life so that if something were to happen to me they are "covered" for a bit. They said this way they dont need to mortgage their house and take loans and I can avoid a hefty interest from borrowing at 7.9.... They are very adamant about it... should i take up on their offer? Things could change after i graduate so basically the "final decision" can be decided at the end though?


In that case, can you clarify what you mean by the bolded text above?

shouryuujo
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Re: Question about loans with options...

Postby shouryuujo » Thu May 26, 2011 12:34 pm

sambeber wrote:
shouryuujo wrote:they brought up another plan - have me borrow until i graduate - then they pay it all off without mortgaging or borrow from their bank. then i pay them back on a monthly basis. I can buy higher premium disability/life so that if something were to happen to me they are "covered" for a bit. They said this way they dont need to mortgage their house and take loans and I can avoid a hefty interest from borrowing at 7.9.... They are very adamant about it... should i take up on their offer? Things could change after i graduate so basically the "final decision" can be decided at the end though?


In that case, can you clarify what you mean by the bolded text above?



Say I borrow total of 60k. Upon my graduation my parents will pay off the debt with money on hand - not loaned or mortgage money. So basically right now my parents may not have the entirety cash in liquid but in 2 years they will have more than enough. I would still need to pay the 2 year interest, original fees etc. but it is certainly insignificant compared to possible savings from the interest post graduation...

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brose
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Re: Question about loans with options...

Postby brose » Thu May 26, 2011 5:45 pm

shouryuujo wrote:

Say I borrow total of 60k. Upon my graduation my parents will pay off the debt with money on hand - not loaned or mortgage money. So basically right now my parents may not have the entirety cash in liquid but in 2 years they will have more than enough. I would still need to pay the 2 year interest, original fees etc. but it is certainly insignificant compared to possible savings from the interest post graduation...


This is a better plan, but I think you need to give your parents some sort of insurance in case something does happen to you. They're not the federal government - forgiving your loan of 60k will be a lot if something were to happen.

shouryuujo
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Joined: Tue May 24, 2011 2:09 pm

Re: Question about loans with options...

Postby shouryuujo » Fri May 27, 2011 11:26 am

brose wrote:
shouryuujo wrote:

Say I borrow total of 60k. Upon my graduation my parents will pay off the debt with money on hand - not loaned or mortgage money. So basically right now my parents may not have the entirety cash in liquid but in 2 years they will have more than enough. I would still need to pay the 2 year interest, original fees etc. but it is certainly insignificant compared to possible savings from the interest post graduation...


This is a better plan, but I think you need to give your parents some sort of insurance in case something does happen to you. They're not the federal government - forgiving your loan of 60k will be a lot if something were to happen.



yeah. once i find my first job post grad I will purchase higher premium life and disability insurance (not sure there's unempl insurance too?). I dont need to buy life during school since i am with Direct plus so if i die the debt wouldnt fall on my parents.




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