Monday, August 10, 2009

How Are You Paying for School?

I received an email, requesting insight from the N&B community:

"Sweet Jesus! Tuition & Fees this year total nearly $36k. I scoped out my "offer letter", only to find $20.5k in federally subsidized & unsubsidized loans. The money I made this summer will cover my rent for the year, plus a little food here and there. Minimally, I need about $15k to make up the tuition gap. How the hell are other people paying for this? Private loans? Does anyone have any recommendations?

I have no savings, no parental assistance, and my wife is a student as well. I'd rather not just grab my ankles and accept the grad plus loans, as the terms seem quite unfavorable to students, and the commercial loan market has better alternatives. Right now, including my grad school debt, I'm sitting at $100k in loans (prior to this year). Thoughts?"

I'm in a similar boalt. Well?



Anonymous Anonymous said...

You have to e-mail financial office and request grad plus loans. They'll give you as much as you want, up until your total need (usually very high - like $52k total).

8/10/2009 10:14 AM  
Blogger Matt said...

I'd recommend going private - when economies recede, interest rates tend to lower in an effort to stimulate spending and revive the economy. I've been going private all three years, and getting interest rates in the 3-4 percent range, which is substantially better than GradPLUS. When I finish, I'm planning to consolidate them, ideally into something with a fixed rate, and use whatever leftover funds I have (probably a few thousand dollars) to lower the principal that I start with.

The UC Office of the President maintains a preferred lender list (warning: PDF file), which provides some of the best options out there. I'd recommend starting with that.

8/10/2009 10:26 AM  
Anonymous Anonymous said...

Anyone know what happens w/ LRAP and/or the new federal program if you take out private loans? I was under the impression it only applied to federal and grad plus loans, but that could just be a vicious rumor.

8/10/2009 10:42 AM  
Anonymous Anonymous said...

I plan on just taking out grad plus loans and then consolidating them after graduation. I had a buddy who did this and got an interest rate around 6%.

8/10/2009 11:26 AM  
Anonymous Anonymous said...

This is off topic but I just looked at my schedule and half of my classes are not in Boalt. What is up with that?

8/10/2009 1:50 PM  
Anonymous Anonymous said...

I talked with the financial aid office last year, and they told me that for LRAP purposes, grad plus loans are the way to go.

While the rates are lower for commercial lenders, I'm under the impression LRAP won't repay commercial loans.

And, since I'm really not sure yet exactly what I'll be doing, this essentially forces me to gamble on whether I'll find a job that qualifies for LRAP...

8/10/2009 3:22 PM  
Anonymous Anonymous said...

Responding to the guy that is going off topic:

I also have a class not at Boalt. It is in Hearst Annex. Where is that? Why aren't all the classes at Boalt anymore?

8/10/2009 11:08 PM  
Anonymous Anonymous said...

Think about being a TA or reader for an undergrad class in another department. We're grad students, and all majored in something as an undergrad. You get a modest hourly wage but a big chunk off tuition for a bit of fairly easy work.

8/10/2009 11:40 PM  
Blogger Toney said...

I was a TA in grad school.. what sort of fee remission are we talking about for teaching an undergrad course?

8/11/2009 8:47 AM  
Blogger Armen said...

Toney, I think it's all your non-PDF fees. So the large chunk of the fees will remain, but whatever you owe to main campus is crossed off.

A word of caution, I think the 1st priority goes to grad students in a particular department. And since law students are mostly liberal arts, you have to fight with starving history grad students.

8/11/2009 9:32 AM  
Anonymous Anonymous said...

In re the off-site classes at Hearst Annex--that's the PFA building down the block on Bancroft, where the journals were temporarily relocated last year. It's because of the construction--the new classrooms aren't ready yet and some of the old classrooms are still off-limits.

8/11/2009 10:18 AM  
Anonymous Anonymous said...

You can be a GSI pretty easily for the Legal Studies Dept, although it's probably true that JSP students get first dibs. There are sometimes ads in the BBB looking for Boalt students to be GSIs for Legal Studies classes (which are sometimes taught by Boalt faculty).

8/11/2009 10:23 AM  
Anonymous Anonymous said...

So are we only going to be in Hearst Annex for a couple of weeks and then move?

8/11/2009 11:12 AM  
Anonymous Anonymous said...

Not sure how people plan to "consolidate" private loans. I had about 80k in private loans from undergrad that could not be consolidated. My understanding is that only federal loans may be consolidated. Thoughts? Experience otherwise?

8/11/2009 1:22 PM  
Blogger Toney said...

I think any loan can be consolidated. All "consolidated" means is that another lender is buying out all your debt (paying it off for you), and giving you one bill, instead of 4 or 5. I don't see how they can put restrictions on federal loans that don't allow this, since they want them paid off and that's exactly what consolidation does.

8/11/2009 1:28 PM  
Anonymous Anonymous said...

BB's email made it seem like we'd be stuck at the Hearst Annex for quite a while.

8/11/2009 1:32 PM  
Blogger Armen said...

Toney, you can consolidate federal loans pretty much as a matter of course (and you lock in the low Fed rate). But you can't bring in private loans into this federal consolidation.

Conversely, of course you can sign up any private lender to consolidate all your loans, but then you'd lose the subsidized interest rate (sure private rates might be low now, but they're not going to stay low forever, whereas the fed rates are consistently low).

Personally, I'd see if I can consolidate private loans right now at a fixed interest rate, esp. if you have good credit, cosigner, etc.

8/11/2009 1:33 PM  
Anonymous Anonymous said...

Warning regarding federal loan consolidation:

I don't know where Armen is getting his info about "locking in a low federal rate." I'm an '09 grad with all federal loans. I spoke with the Financial Aid office recently about my loans (GradPlus and Subsidized and Unsubsidized federal loans), and consolidation only saved me 0.25%! Gee great!

So in other words, don't count on post-graduation federal loan consolidation to save you much.

8/11/2009 2:10 PM  
Blogger Armen said...

WTF is this GradPlus, I've seen it pop up a lot and I think I saw it on SallieMae's website. But to clarify what I meant:

I had a variety of direct and indirect federal loans at a variety of rates. Of course I also had private loans, namely "Lawloans" from SallieMae, which sounds like it's been replaced by this GradPlus business. I consolidated the fed loans at under 3%. The private loans remain unconsolidated but mine are adjustable and tied to the prime rate (yours might be tied to LIBOR). Because the prime rate is so low, the interest is nearly the same as the fed loans, but that won't necessarily be the case once rates inevitably rise.

I really don't understand why anything I said was taken as a universal truth applicable in all cases and circumstances. Certainly not meant as such.

8/11/2009 2:16 PM  
Anonymous Anonymous said...

GradPLUS loans are the loans you get beyond the Stafford Subsidized/Unsubsidized Loans. GradPLUS loans are federal. I haven't heard anything about these "Lawloans" you mention, but they sound incredible.

You can get GradPLUS loans up to the unaccounted-for balance of your student budget. Unaccounted for, in this case, means the balance that isn't covered by Stafford loans, scholarships, required contributions, etc. The interest rate is variable and high (currently 8.5%). There is a 3% origination fee. These loans are "bad."

Having said this, I'm taking them anyway because of LRAP fears, the hope that the interest will be subsidized at some point (how's that for optimistic), and general ease of acquisition. But it sure costs, because that pdf that Matt posted makes it look like I'm getting reamed.

8/11/2009 2:50 PM  
Blogger Armen said...

Thanks 2:50. I just quickly looked on SallieMae's website and sure enough, the precious LawLoans is gone and replaced with this pile of crap. I had 0 origination fees and my rates are 0.5 minus the prime rate, and 0.25 off that for recurring payments and 0.25 off that for 24 consecutive monthly payments. Who knows, when the interest rates go up because of the Obamacare death panels 8.5 might sound fantastic.

8/11/2009 2:56 PM  
Blogger Matt said...

To dispel any rumors, Berkeley Law publishes an LRAP Guide (again, PDF file), which says (on page three): "LRAP will assist with repayments made on the principal and capitalized interest of federal and private educational loans borrowed for the J.D. Program . . . ."

8/11/2009 2:58 PM  
Anonymous Anonymous said...

2:50 here again. This is what I'm hoping for, but I know it's a long-shot:

Thanks to wikipedia sources for making it easy to find.

And thanks for posting that link, Matt. Unfortunately, a little late for many of us to start shopping for loans for this semester.

8/11/2009 3:05 PM  
Anonymous Anonymous said...

Any Stafford loan since like June of 2006 has a fixed interest rate. So do Plus loans. When you consolidate them it just takes the weighted average of those amounts and then it's fixed for life. But the benefits are kind of gone since you aren't getting any lower of a rate. And maybe you'd prefer to pay off your 8.5% Plus loans fast and stretch out repaying the 6% Stafford ones. But federal consolidation loans max out at 8.25%, so if ALL you have is PLUS loans, it would pay a tiny bit to consolidate them.

Consolidation DID save people tons of money a few years ago because the interest rates were all variable. In 04-05 they hit the lowest rates ever (until now) and when you'd consolidate, you locked in whatever the rate was right then.

As I say, the rates now are beating those. As of July 1 it's 2.48 and if you do it during your grace period (like if you just graduate) it's 1.88 and lots of lenders take off another .25 if you pay with direct debit. So any of us who just graduated should DEFINITELY consolidate any pre-06 undergrad loans and lock in that <2% interest rate for 30 years.

The more recent fixed rate loans (i.e. what financed my entire law school education) are far less likely to help. And before you're like, "What the hell, at least consolidation will make making my payments easier," make sure that your lender doesn't have some incentive (like 2% interest deduction after 48 on time payments or getting back your 3% origination fee after 24 on time payments) that you'll lose if you consolidate.

8/11/2009 10:43 PM  
Blogger Boomtime said...

I realize that many people think that private loans can be consolidated along with federally subsidized loans, but I tried to do just that after college and found that my private debt could *not* be consolidated. Has anyone ever saved any money by consolidating loans from private lenders? I am quite sure that only the feds let you do that.

8/12/2009 11:00 AM  
Anonymous Anonymous said...

As Dean Edley stated in his May 8 e-mail to students, LRAP is undergoing some major changes. It is my understanding that FAO will post the details by mid-September. Generally speaking, current students will have the option of using the current LRAP program or enrolling in the new one. The current program covers private law school loans, but only covers up to $100K in debt. The new program has no debt limit, but requires students to enroll in the federal program, which only covers federal loans.

From Edley's e-mail:

Improvements to the Loan Repayment Assistance Program

The faculty and student Financial Aid Committee is now completing a major overhaul of the Loan Repayment Assistance Program (LRAP). Boalt’s current program is among the most generous in the nation, providing full coverage for monthly payments for up to $100,000 of law school debt for graduates earning $58,000 per year or less in qualifying employment in the public interest or public service sectors. Coverage is provided on a sliding scale for graduates earning more than $58,000 per year up to a theoretical maximum of $100,000 in earnings. Details for the current program (which will be maintained for current students and participants until 2013) are available here.

The new program option will eliminate the $100,000 loan limit, providing coverage for any amount of law school student loan debt and extending coverage to some undergraduate loans. The new program will provide full coverage for those earning up to $65,000 per year and similar sliding scale benefits for those earning more up to a limit of $100,000 per year. Participation in the new program will be contingent upon enrollment in the Income Based Repayment (IBR) option created under the College Cost Reduction and Access Act. This new program option will be available starting with the January 2010 LRAP eligibility period. Further program details will be forthcoming over the summer.

Extension of New LRAP Option to Previous Graduates

The new LRAP program will be made retroactively available to any previous graduate or LRAP participant who still qualifies for support under the program rules. More details about the new options will be forthcoming over the summer.

Deferred Private Sector Graduates & LRAP

LRAP will not cover graduates who have been deferred for a year and are receiving a stipend to do volunteer public interest work before joining their private law firms. LRAP is solely designed to provide assistance to graduates who are interested in pursuing public interest work or government employment as a career. For this reason, LRAP similarly does not cover graduates who are employed as a judicial clerk for a year before joining their private law firm. Deferred graduates can take advantage of the Income Based Repayment program on their federally backed student loans.

8/13/2009 8:27 AM  

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