Private Loan (for college) Guidance
June 14, 2017 11:17 AM Subscribe
I am going to an 11-month accelerated second-bachelor's BSN (nursing) program in the fall. I need to take out approximately 60K in private loans to finance this, I have a lot of other life stress right now, and I'm feeling really overwhelmed at the process of trying to choose a lender. Hope me?
(To head off potential derails - I know that debt in general and private loan debt in particular are something to be cautious about, and I know that there may be cheaper routes to a BSN. Please don't give me advice about those things here--I've given thought to my age, current life/job satisfaction, current income, conservative estimates of future monthly income minus what I'd be paying back in loans, etc and decided it's worth it.)
Factors:
1) I have good or great credit
2) I do not have anyone who could be a co-signer (trust me on this)
3) I do not have any debt, although I need to take out a small loan to buy a used car within the next month (should I try to qualify for my student loans first? will doing that mess up my ability to get a small car loan? The car loan is unavoidable for various reasons.)
4) My income for the past several years has been quite low (approx $20k/year)
I know that things to consider include fees, variable or fixed interest rates, loan terms, quality of the lender's customer service, whether I have to start paying the loan back immediately (while I'm in school), whether there are penalties for paying the loan back early (which ideally I would like to do--I'm used to living pretty frugally), whether I can put payments on pause in the case of financial hardship (I want to have that option as a safety net for myself). But it's been hard to compare those things across different lenders, or even to figure out which lenders I should be considering - my school has a list of lenders their students have used historically, but there are no specific recommendations and all the private lenders seem pretty slimy in general.
So specific questions:
1) Can anyone (ideally with recent/personal experience) recommend a specific lender?
I checked with my credit union and they do student loans though LendKey but there's a $20k maximum "per year," and I was told that the only way to get around that would be to take out 4 separate loans for each quarter of the program I'm doing, which means 4 different hard pulls on my credit and 4 different interest rates. Presumably that's a bad thing. They also only do 10-year terms.
2) Should I try really hard to get a fixed interest rate? Are interest rates likely to go up? It seems like a lot of loans are variable rate and while I haven't followed the past decade's financial crises tightly, I seem to remember that's what caused some people a lot of problems.
3) Is taking out multiple different loans - possibly from different lenders - an awful idea? What are the ramifications of that?
4) Are there downsides to doing a loan with a longer repayment term (20+ years) with the intent of paying it back much sooner, if the loan says there are no penalties for early repayment? Basically - I know I am capable of living pretty frugally, and plan to try to pay back loans as soon as I can, but I want to have the flexibility to make smaller payments if that ends up being necessary/seeming wise in a particular situation.
I'm sorry for throwing the whole kitchen sink in here - I try to be well-informed and cautious and I've been researching this but loans scare me and my life is chaotic right now and I need to get this stuff squared away so I can put my attention to other things.
(To head off potential derails - I know that debt in general and private loan debt in particular are something to be cautious about, and I know that there may be cheaper routes to a BSN. Please don't give me advice about those things here--I've given thought to my age, current life/job satisfaction, current income, conservative estimates of future monthly income minus what I'd be paying back in loans, etc and decided it's worth it.)
Factors:
1) I have good or great credit
2) I do not have anyone who could be a co-signer (trust me on this)
3) I do not have any debt, although I need to take out a small loan to buy a used car within the next month (should I try to qualify for my student loans first? will doing that mess up my ability to get a small car loan? The car loan is unavoidable for various reasons.)
4) My income for the past several years has been quite low (approx $20k/year)
I know that things to consider include fees, variable or fixed interest rates, loan terms, quality of the lender's customer service, whether I have to start paying the loan back immediately (while I'm in school), whether there are penalties for paying the loan back early (which ideally I would like to do--I'm used to living pretty frugally), whether I can put payments on pause in the case of financial hardship (I want to have that option as a safety net for myself). But it's been hard to compare those things across different lenders, or even to figure out which lenders I should be considering - my school has a list of lenders their students have used historically, but there are no specific recommendations and all the private lenders seem pretty slimy in general.
So specific questions:
1) Can anyone (ideally with recent/personal experience) recommend a specific lender?
I checked with my credit union and they do student loans though LendKey but there's a $20k maximum "per year," and I was told that the only way to get around that would be to take out 4 separate loans for each quarter of the program I'm doing, which means 4 different hard pulls on my credit and 4 different interest rates. Presumably that's a bad thing. They also only do 10-year terms.
2) Should I try really hard to get a fixed interest rate? Are interest rates likely to go up? It seems like a lot of loans are variable rate and while I haven't followed the past decade's financial crises tightly, I seem to remember that's what caused some people a lot of problems.
3) Is taking out multiple different loans - possibly from different lenders - an awful idea? What are the ramifications of that?
4) Are there downsides to doing a loan with a longer repayment term (20+ years) with the intent of paying it back much sooner, if the loan says there are no penalties for early repayment? Basically - I know I am capable of living pretty frugally, and plan to try to pay back loans as soon as I can, but I want to have the flexibility to make smaller payments if that ends up being necessary/seeming wise in a particular situation.
I'm sorry for throwing the whole kitchen sink in here - I try to be well-informed and cautious and I've been researching this but loans scare me and my life is chaotic right now and I need to get this stuff squared away so I can put my attention to other things.
Response by poster: What was so bad about Sallie Mae? Mainly the forbearance or other things too? I'm curious because I hear bad things about them too, but in browsing it seems like all the lenders suck so it might just be wading through to find out which one sucks least.
posted by needs more cowbell at 11:53 AM on June 14, 2017
posted by needs more cowbell at 11:53 AM on June 14, 2017
It's not that they're so terrible--it's just that I didn't shop around, and I should have.
posted by 8603 at 12:01 PM on June 14, 2017 [1 favorite]
posted by 8603 at 12:01 PM on June 14, 2017 [1 favorite]
Variable rate loans are essentially gambling on the stock market. I personally would not gamble with a large amount of debt.
posted by cnidaria at 12:25 PM on June 14, 2017 [1 favorite]
posted by cnidaria at 12:25 PM on June 14, 2017 [1 favorite]
I can't really tell from your question--have you mentally already committed to private loans? Because I went with the federal government's Direct Loan program for my MLS, and although I took out way more than I should have, the experience in general has been good. My interest rates are high (because I consolidated), but stable, and I was advised against refinancing with a private loan company here. The good thing about government loans is that they have a wide range of repayment plans, they will generally work with you on deferment or forbearance if you lose your job, etc., and you might also be qualified for programs like Public Service Loan Forgiveness, among others. I repay my loans through MyFedLoan; the website is easy to use and everyone I've ever talked to on the phone has been knowledgeable and competent.
Also--have you already selected your school? I know that many schools have Financial Aid offices that will work with you on the questions you're asking--I know that you just want to cross this task off your list, but I feel like this is one instance where taking a bit of time and working with people who have done this before could really help you. I feel like I rushed through my loan process and although it worked out, that didn't have much to do with me being thoughtful and considered about it.
posted by stellaluna at 1:55 PM on June 14, 2017 [1 favorite]
Also--have you already selected your school? I know that many schools have Financial Aid offices that will work with you on the questions you're asking--I know that you just want to cross this task off your list, but I feel like this is one instance where taking a bit of time and working with people who have done this before could really help you. I feel like I rushed through my loan process and although it worked out, that didn't have much to do with me being thoughtful and considered about it.
posted by stellaluna at 1:55 PM on June 14, 2017 [1 favorite]
Response by poster: Unfortunately I don't qualify for much in federal loans because it's a second bachelors instead of a graduate/masters degree. I wish that weren't the case! Initially I'd thought that I would be able to do Stafford loans for most of it because the lifetime limit is 60k, but it turns out that there's also an annual limit of 12.5k.
I thought hard about waiting to try to go to a direct entry MSN program instead so that I could do federal loans, but given the current political climate I felt like waiting ~2 more years to gamble on the continued existence/funding of loan forgiveness for public service programs didn't make sense for me.
posted by needs more cowbell at 2:50 PM on June 14, 2017 [1 favorite]
I thought hard about waiting to try to go to a direct entry MSN program instead so that I could do federal loans, but given the current political climate I felt like waiting ~2 more years to gamble on the continued existence/funding of loan forgiveness for public service programs didn't make sense for me.
posted by needs more cowbell at 2:50 PM on June 14, 2017 [1 favorite]
A classmate got a loan through Discover and liked that there was a cash bonus for good grades. It seemed to be a pretty seamless application process and she was able to borrow enough to cover tuition and living expenses as a second degree BSN student in a traditional program.
Is there any possibility of doing a combination of federal loans and private? A lot of agencies/hospitals (e.g. IHS) will provide loan repayment assistance but only for federal loans.
posted by charmcityblues at 7:25 PM on June 14, 2017 [1 favorite]
Is there any possibility of doing a combination of federal loans and private? A lot of agencies/hospitals (e.g. IHS) will provide loan repayment assistance but only for federal loans.
posted by charmcityblues at 7:25 PM on June 14, 2017 [1 favorite]
Are you already an RN? If so, via a Community college program, for example, it would be easy and cheaper to transfer to a BSN completion program. You can pass the Nursing Boards and practice in every state I know of as an Associates degree - prepared RN, and it is often approached as financially much more feasible by many nursing students. (Some employers, like academic hospitals, now insist on BSN, but not all employers). RN to BSN classes are often offered for working nurses and are scheduled to accommodate them, although there may be parts, such as clinical practicums that will have to be scheduled to accommodate the sponsoring organization. If you have a job, there might be tuition assistance, as well.
I did this, almost exactly. With an Associates RN you would also be in prime position for an RN-to-MSN program, which takes you directly to a Masters in Nursing and a Nurse Practitioner license. Believe me, nobody will care if your Bachelors isn't in Nursing with an MSN. There is a MUCH more robust job market for NPs than RNs, and loans might be significantly easier to obtain. An Associates in Nursing program is as cheap as any Community College degree, and with your previous Bachelors, you would probably not need most prerequisites. I didn't, and thus didn't even need to attend all the semesters full-time, so I could keep a part-time job. I needed all 4 semesters because certain classes (and all the clinicals) needed to be taken in certain semesters. I'd urge you to consider various ways to get to your nursing goal. You can even sometimes take BSN classes as a non-matriculated student while attending Community College and get a head start on your next degree if you can fit them into your schedule. I also did this, and it worked out well for me.
posted by citygirl at 2:36 PM on June 15, 2017
I did this, almost exactly. With an Associates RN you would also be in prime position for an RN-to-MSN program, which takes you directly to a Masters in Nursing and a Nurse Practitioner license. Believe me, nobody will care if your Bachelors isn't in Nursing with an MSN. There is a MUCH more robust job market for NPs than RNs, and loans might be significantly easier to obtain. An Associates in Nursing program is as cheap as any Community College degree, and with your previous Bachelors, you would probably not need most prerequisites. I didn't, and thus didn't even need to attend all the semesters full-time, so I could keep a part-time job. I needed all 4 semesters because certain classes (and all the clinicals) needed to be taken in certain semesters. I'd urge you to consider various ways to get to your nursing goal. You can even sometimes take BSN classes as a non-matriculated student while attending Community College and get a head start on your next degree if you can fit them into your schedule. I also did this, and it worked out well for me.
posted by citygirl at 2:36 PM on June 15, 2017
Response by poster: Well - that kind of suggestion is what I was hoping to head off, but in trying to be wise and consider multiple options:
I am not already an RN. The RN/ADN programs at community colleges near where I live right now (which is a city I want to leave anyway) are pretty impacted and hard to get into (there are lottery systems). Even if I went to a community college elsewhere, it seems I'd need to apply now to start in fall of 2018, and then do a 2-year program. So I would come out with (only) an ADN in maybe mid-2020. Right now, realistically, I have very low earning power and am doing work that is draining me because it's not in line with my values. In theory I could network a lot to get other jobs and work my way up somewhere but life has shown that I am not good at that--at really working my connections or selling myself. So if I worked during an ADN program, I would likely not be making much money. So in my best estimate, it makes more sense to start the expensive program I'm already admitted to and come out being able to work as an RN/BSN at the end of 2018 (I'd finish this program in Sept 2018.) Even a conservative estimate of $50-$60k starting salaries (assuming East Coast cities) seems like it would be a better bet. I'm also (regrettably) enough of a free agent right now that I could do travel nursing or go where jobs are for a bit if I had to, to make more money and pay back loans.
I wish I had tried to do a cheap RN program at a community college near me several years ago, but I can't turn back the clock.
posted by needs more cowbell at 10:42 AM on June 16, 2017 [1 favorite]
I am not already an RN. The RN/ADN programs at community colleges near where I live right now (which is a city I want to leave anyway) are pretty impacted and hard to get into (there are lottery systems). Even if I went to a community college elsewhere, it seems I'd need to apply now to start in fall of 2018, and then do a 2-year program. So I would come out with (only) an ADN in maybe mid-2020. Right now, realistically, I have very low earning power and am doing work that is draining me because it's not in line with my values. In theory I could network a lot to get other jobs and work my way up somewhere but life has shown that I am not good at that--at really working my connections or selling myself. So if I worked during an ADN program, I would likely not be making much money. So in my best estimate, it makes more sense to start the expensive program I'm already admitted to and come out being able to work as an RN/BSN at the end of 2018 (I'd finish this program in Sept 2018.) Even a conservative estimate of $50-$60k starting salaries (assuming East Coast cities) seems like it would be a better bet. I'm also (regrettably) enough of a free agent right now that I could do travel nursing or go where jobs are for a bit if I had to, to make more money and pay back loans.
I wish I had tried to do a cheap RN program at a community college near me several years ago, but I can't turn back the clock.
posted by needs more cowbell at 10:42 AM on June 16, 2017 [1 favorite]
As a direct-entry-nursing dropout who left a master's program with a BSN, I agree with the logic in your update. The only "catch" is that you've got to be interested in working as an RN, which you are. My "error" is that I decided in nursing school to go into medicine instead.
Looks like you've got suggestions of SLMA, SoFi, and Discover--if I were you, I would run the numbers on these 3, looking carefully at forbearance options, and then pick one.
posted by 8603 at 1:42 PM on June 17, 2017 [1 favorite]
Looks like you've got suggestions of SLMA, SoFi, and Discover--if I were you, I would run the numbers on these 3, looking carefully at forbearance options, and then pick one.
posted by 8603 at 1:42 PM on June 17, 2017 [1 favorite]
Response by poster: Update! Discover ended up being the only lender of the few I checked out (I think I did Wells Fargo & Sallie Mae?) who would accept me without a co-signer, even though my credit score is over 800. (I don't earn a lot so that was a strike against me.)
I chose fixed rate even though it was a higher rate because evidence really points to interest rates going up. They didn't give me a choice of how long - 15 years was the only option.
The person I spoke to at Discover before signing final paperwork insisted that if I were to continue on to a Master's program (or I guess any other schooling) full-time at some point, I could defer payments on the loan while in school again.
Moving forward to go to school this fall really feels like the right choice for me, both in terms of personal needs and projected income/debt/etc. It's a shame that most of my debt won't qualify for the loan forgiveness programs, but honestly I'm not confident that those programs will continue under this administration anyway. And at least if the country falls apart I can provide basic medical care!
posted by needs more cowbell at 11:08 PM on August 18, 2017 [1 favorite]
I chose fixed rate even though it was a higher rate because evidence really points to interest rates going up. They didn't give me a choice of how long - 15 years was the only option.
The person I spoke to at Discover before signing final paperwork insisted that if I were to continue on to a Master's program (or I guess any other schooling) full-time at some point, I could defer payments on the loan while in school again.
Moving forward to go to school this fall really feels like the right choice for me, both in terms of personal needs and projected income/debt/etc. It's a shame that most of my debt won't qualify for the loan forgiveness programs, but honestly I'm not confident that those programs will continue under this administration anyway. And at least if the country falls apart I can provide basic medical care!
posted by needs more cowbell at 11:08 PM on August 18, 2017 [1 favorite]
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I would check out SoFi, which offers personal loans and favorable terms on student loan refinancing. You might be able to refinance your other private loans, once you get them, with SoFi.
posted by 8603 at 11:47 AM on June 14, 2017 [1 favorite]