After last week’s post, I received quite a few emails and DMs (some with anxiety) regarding elaborating on the loan situations. Sorry guys, I did not mean to scare you, but unfortunately, the huge burden of loans are VERY real and like any problem, they must be tackled head on, which is why we’ll dedicate next few blogs on school finances. The best way of doing this is if I go through how to pay for tuition initially and then we can focus on how to pay back the said loans after graduating.
The tuition is by far the biggest chunk of the pie (the worst pie in the world). In order to cover your tuition, there are a couple of options, most common being federal loans. The federal government will offer student loans to graduate students with the value and interest rate depending on your income, assets and current loans. These are exactly like your undergraduate loans, with a subtle difference in that your interest rate are higher. This made no sense to me. Why are loans for grad students higher than undergrad students? It still comes out of the same government funds! On top of that, what is the incentive for the citizens to continue higher education if they’re being penalized for continuing to learn? Plus, if students are already nose deep in loans, what sense does it make to increase interest when they’re not even done paying them back? But, I digress!
Another option is private loans. Most of your loans will be covered by federal loans, however not all will be covered. For the little chunk that is left over, private loans is an option. Private loans is also the only option for those, like me, who do not have permanent residency or citizenship of this country (of course I got my Green Card 4 months after graduating PA school, sigh!). Private loans are tricky, but I’ve found that today’s internet entrepreneurship has created competition, driving interest rates down tremendously. In fact, my private loans were at a lower interest rate than federal loans (silver lining). In terms of private loans, there are state and federal funded private student loans, private companies (such as Sallie Mae and other sharks), and banks. My recommendation is explore all these options to see who will give you the best rates. Interest rates will depend on when you want to start paying loans back (immediately vs. after graduating vs. 6 month grace period after graduation), how much dough you have in your bank account and your payback period (3 years vs. 5 vs. 10 vs 20). The quicker you choose to pay it back, the lower your interest rates.
The next options is government help. No, not government loans. The US Dept of Health and Human Services offers massive scholarships via the National Health Services Corps (NHSC), which gives you $60,000 in tuition repayment if you choose to dedicate two years of your profession in high-need health professional shortage area (HPSA). This may be a great option for those who already want to practice in rural area.
If you do not want to choose that route, your next option is to apply to scholarships. Scholarships are rarer to come by in grad school, however not impossible. Inquire within the school if they offer any scholarships. AAPA offers a few scholarships, inquire within you state chapter, (NYSSPA for NY) and all specialty and subspecialty profession chapters. And then, there’s the internet. There are rich people out there looking to give away their $$$, take advantage! Beyond everything, apply, apply and keep applying to as many as you can.
And finally, when all your options run dry, ask friends and family! Ask them to invest in you because you know, when you get out, you’ll be a hotshot buying everyone Lamborghinis and Malibu houses. Ok, maybe you won’t be the 1st pick in the NBA draft, but give them a good pitch, where they’ll feel confident in investing in you.
You don’t truly realize how much money you owe until you have to pay it back. When you take loans out, it will feel like monopoly money. When you are in school and you’re using that money, you’ll feel like the richest person alive! However, when you graduate and have to pay it back is when you truly realize the deep abyss that you are in. Don’t get me wrong, this is definitely the best investment you will make in your lifetime. But, if you can lower the burden as much as possible, why not?!
Next week, we will talk about strategies on paying loans back after you graduate.
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