Public Vs. Private Student Loans

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
KSalmeri
Posts: 2
Joined: Thu Mar 28, 2013 4:16 pm

Public Vs. Private Student Loans

Postby KSalmeri » Thu Jul 25, 2013 10:55 am

So I am going to be a 1L at William and Mary in the Fall. I am currently trying to decide what loans to take out. I have to take out about $30,000 to cover my expenses. As of right now I have most of that covered by Unsub Staffords at 6.8 and originally I was going to cover the rest with either a HESAA loan at 6.65% which increases to 7.35% or a PLUS Loan at 7.9%. However, I recently applied for a Discover Loan with a parent cosigner and was offered 6.49%. I was tempted to just take none of the public Loans and do all $30,000 in the Discover Loan at the lower interest rate. I was wondering if anyone had any advice/ experience with Discover Loans and could tell me what they think my best option would be. Thanks

dstars823
Posts: 327
Joined: Thu Mar 24, 2011 12:51 am

Re: Public Vs. Private Student Loans

Postby dstars823 » Thu Jul 25, 2013 10:57 am

i think this has been discussed before, but the huge con of getting a private loan is not having the ability to use PAYE or IBR which can help with debt burdens greatly.

nick417
Posts: 168
Joined: Wed Dec 26, 2012 11:09 am

Re: Public Vs. Private Student Loans

Postby nick417 » Thu Jul 25, 2013 11:06 am

KSalmeri wrote:So I am going to be a 1L at William and Mary in the Fall. I am currently trying to decide what loans to take out. I have to take out about $30,000 to cover my expenses. As of right now I have most of that covered by Unsub Staffords at 6.8 and originally I was going to cover the rest with either a HESAA loan at 6.65% which increases to 7.35% or a PLUS Loan at 7.9%. However, I recently applied for a Discover Loan with a parent cosigner and was offered 6.49%. I was tempted to just take none of the public Loans and do all $30,000 in the Discover Loan at the lower interest rate. I was wondering if anyone had any advice/ experience with Discover Loans and could tell me what they think my best option would be. Thanks



You probably got the same letter in the mail as I did from Discover. I was looking at this too. You can get a fixed Discover Loan that appears to be cheaper than the Unsub Staffords loans. I wish I could offer some advice. However, I am staying with the Unsub Stafford loans though because of the risks with private loans. I generally don't trust Credit Card companies to begin with as they are always trying to squeeze you for more $$$. They also love to put in hidden costs and rates into their contracts. Also, customer service at Credit Card companies is awful (regardless of the stupid Discover commercials re: customer service). If an issue ever came up, It would next to impossible to fix it.

I am interested in seeing what others think though.

KSalmeri
Posts: 2
Joined: Thu Mar 28, 2013 4:16 pm

Re: Public Vs. Private Student Loans

Postby KSalmeri » Thu Jul 25, 2013 11:23 am

nick417 wrote:
KSalmeri wrote:So I am going to be a 1L at William and Mary in the Fall. I am currently trying to decide what loans to take out. I have to take out about $30,000 to cover my expenses. As of right now I have most of that covered by Unsub Staffords at 6.8 and originally I was going to cover the rest with either a HESAA loan at 6.65% which increases to 7.35% or a PLUS Loan at 7.9%. However, I recently applied for a Discover Loan with a parent cosigner and was offered 6.49%. I was tempted to just take none of the public Loans and do all $30,000 in the Discover Loan at the lower interest rate. I was wondering if anyone had any advice/ experience with Discover Loans and could tell me what they think my best option would be. Thanks



You probably got the same letter in the mail as I did from Discover. I was looking at this too. You can get a fixed Discover Loan that appears to be cheaper than the Unsub Staffords loans. I wish I could offer some advice. However, I am staying with the Unsub Stafford loans though because of the risks with private loans. I generally don't trust Credit Card companies to begin with as they are always trying to squeeze you for more $$$. They also love to put in hidden costs and rates into their contracts. Also, customer service at Credit Card companies is awful (regardless of the stupid Discover commercials re: customer service). If an issue ever came up, It would next to impossible to fix it.

I am interested in seeing what others think though.


Actually I am working at the Financial Aid Office at my Undergrad for the summer and I was talking with out loan coordinator and he suggested I try giving the Private Lenders a shot. With my mom cosigning Discover gave me the %6.49 interest rate on my application so its not like a promotional thing that is the actual interest rate I would pay. My concern is sort of in line with what you were saying about not having the safety net when I leave. However, my hope is to pay down my interest while I'm in school so making payments on a 6.49% loan is way better than a 6.8% or a 7.9%. However, I am also weary of CC companies. I am also interested to see what others have to say. Especially people who may have taken out Discover Loans

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rinkrat19
Posts: 13916
Joined: Sat Sep 25, 2010 5:35 am

Re: Public Vs. Private Student Loans

Postby rinkrat19 » Thu Jul 25, 2013 11:32 am

KSalmeri wrote:
nick417 wrote:
KSalmeri wrote:So I am going to be a 1L at William and Mary in the Fall. I am currently trying to decide what loans to take out. I have to take out about $30,000 to cover my expenses. As of right now I have most of that covered by Unsub Staffords at 6.8 and originally I was going to cover the rest with either a HESAA loan at 6.65% which increases to 7.35% or a PLUS Loan at 7.9%. However, I recently applied for a Discover Loan with a parent cosigner and was offered 6.49%. I was tempted to just take none of the public Loans and do all $30,000 in the Discover Loan at the lower interest rate. I was wondering if anyone had any advice/ experience with Discover Loans and could tell me what they think my best option would be. Thanks



You probably got the same letter in the mail as I did from Discover. I was looking at this too. You can get a fixed Discover Loan that appears to be cheaper than the Unsub Staffords loans. I wish I could offer some advice. However, I am staying with the Unsub Stafford loans though because of the risks with private loans. I generally don't trust Credit Card companies to begin with as they are always trying to squeeze you for more $$$. They also love to put in hidden costs and rates into their contracts. Also, customer service at Credit Card companies is awful (regardless of the stupid Discover commercials re: customer service). If an issue ever came up, It would next to impossible to fix it.

I am interested in seeing what others think though.


Actually I am working at the Financial Aid Office at my Undergrad for the summer and I was talking with out loan coordinator and he suggested I try giving the Private Lenders a shot. With my mom cosigning Discover gave me the %6.49 interest rate on my application so its not like a promotional thing that is the actual interest rate I would pay. My concern is sort of in line with what you were saying about not having the safety net when I leave. However, my hope is to pay down my interest while I'm in school so making payments on a 6.49% loan is way better than a 6.8% or a 7.9%. However, I am also weary of CC companies. I am also interested to see what others have to say. Especially people who may have taken out Discover Loans

My snap judgment is that I don't think that small of a difference (between the stafford and the private loan) in interest rate is worth giving up the safety nets of PAYE and the rest, but do the math to figure out if it's a significant difference in monthly payment for the same length of loan.

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trojandave
Posts: 389
Joined: Sun Jun 17, 2012 5:25 pm

Re: Public Vs. Private Student Loans

Postby trojandave » Thu Jul 25, 2013 1:28 pm

I like private loans in the right circumstances - way more than most people on this board - and will probably use Discover myself, but I think in this case taking all 30k in Discover is a huge mistake. First of all, the senate just passed new student loan legislation yesterday which will probably become law in the next week or two that will lower the grad Stafford rate to something around 5.5. Way better than the rate you got from Discover, AND you have the federal benefits. You can be delinquent longer, get out of default easier, use IBR and PAYE... If the interest rates are in the same ballpark it is Stafford hands down.

Secondly, keep in mind that over 10 years, the interest differential of 1-2% points isn't unbearably huge, and may be worth it for the peace of mind that federal loans offer... At 30k per year, you're looking at 90k total. At a 6.8% interest loan, you pay a total of $34,286.91 in interest on that 90k. At a 5.5% interest loan, you pay a total of $27,208.24 in interest. Would you rather save $7,000? Of course. But that's over 10 years... The difference is just $58 per month and gives you some pretty awesome benefits that, in this economy, are definitely worthwhile. Read the terms of each loan and you'll see... The federal benefits are pretty awesome IF you need them (and while no one wants to need them, you just never know...)

If Stafford goes down lower than Discover, definitely do that instead - then use Discover for the rest (if you decide it's better than the other options.) If Stafford doesn't go down, I'd still say split the difference and max out Stafford (considering the small extra cost an insurance policy.)




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