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College Students and Recent Grads, Student Loan ReFi

5 Best Private Student Loans for 2018

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Taking out private student loans to pay for college is one of the most expensive ways to borrow for school, yet many college students make the mistake of turning to private loans first before pursuing other financing options.

Nearly half (47%) of undergraduates who took out private student loans during the 2011-12 school year didn’t use the maximum available in federal loans, according to a 2016 report by The Institute for College Access and Success (TICAS).

The danger with private loans is in how costly they can be — interest rates on private student loans were as high as 14.24% in September 2017 vs. 4.45% for federal student loans — and how few flexible repayment options they carry for borrowers who struggle to pay them back.

It’s generally best to find ways to fund your education for free with grants and scholarships, turn to your savings and then exhaust your federal student aid. Federal student loans tend to offer lower interest rates and more lenient repayment plans than private student loans, which is why federal aid is often a good first choice.

However, federal loans can only go so far, especially if you are pursuing a postgraduate degree that requires many more years of schooling. Once you’ve tapped out all your access to federal aid and you still need money to cover educational costs, a private student loan could help you fill the gap.

While federal student loans offer a fairly uniform application process and loan terms, private student loan terms can vary widely from one lender to another. If you’re thinking about paying for school with a private student loan, it’s important to compare lenders’ offerings and find the one that’s best for you.

How we ranked the best private student loans

There’s a lot to compare when you’re considering taking out a student loan from a private lender. Your annual percentage rate (APR), fees and loan term could impact how much you pay in interest over the lifetime of the loan. But other features, such as a straightforward application process and the option to apply for cosigner release, can also be important to borrowers.

We started the search for the best private student loan companies by identifying the 10 largest national private student loan lenders. Each lender’s undergraduate student loan got graded on seven important factors:

Private lenders offering loans with varying interest rates depending on the applicant’s creditworthiness. However, they do advertise an interest-rate range that you can use to compare one lender with another. Each lender was assigned grades based on its lowest and highest APRs compared with the average lowest and highest APRs for all 10 lenders. Each lender received four scores, as they all offer variable-rate and fixed-rate loans, and the lenders with below-average APRs received top marks.

Lenders may charge a fee to submit an application or an origination fee that’s based on your loan balance. Only one of the top 10 lenders charges an origination fee, and it didn’t make the top five list.

All the lenders offer an online application, but the clarity and ease of use can vary. The lenders with a simple and easy-to-understand process got the best grades.

Many private student lenders, including all 10 of the lenders we compared, offer a 0.25% interest rate discount if you enroll in autopay from your bank account. A few lenders earned extra points for offering a 0.50% interest rate discount with autopay, or an additional interest rate discount if you have an eligible account with the lender when you take out a student loan.

Most of the private student loans we compared offered several repayment terms with a maximum of 15 years. Lenders that cap their loan’s term below 15 years didn’t score as well. A long repayment term could increase the total amount of interest you pay, but it will also lower your monthly payments and there’s no penalty for prepaying student loans if you find you can afford more.

Most students have a creditworthy cosigner, who can help you qualify for a loan or lower your interest rate. Some private student loan lenders let you apply to release your cosigner after you make consecutive, on-time full principal and interest payments, and pass a credit check. Twelve payments set the bar for a top score as that’s the shortest option available among the lenders we compared.

You may be able to choose from different repayment plans, such as making interest-only payments while you’re in school or fully deferring payments until your post-school grace period ends. Lenders that offer full interest and principal deferment got top marks.

A few lenders earned extra credit because they offer something extra, such as a principal rate reduction or cash back when you graduate.

After assigning the lenders a score for each factor, we compared their average scores and ranked them from highest to lowest. Here are the resulting top five student loan lenders:

Our top picks for private student loan companies

 

SunTrust Custom Choice Loan

Wells Fargo Collegiate Loan

Sallie Mae Smart Option Student Loan

LendKey Private Student Loan

Citizens Bank Student Loan

Ranking

No. 1

No. 2

No. 3

No. 4

No. 5

Borrowing limit

$150,000

$120,000

School-certified cost of attendance

Varies by lender

$120,000

Variable APR*

3.75-12.75%

5.40-10.84%

4.00-9.04%

4.63-9.61%

6.01-11.27%

Fixed APR*

5.35-14.05%

6.84-11.67%

5.75-8.68%

5.36-9.69%

6.39-11.65%

Application fees

None

None

None

None

None

Online application

Good

Good

Good

Very good

Good

Interest rate discounts

0.25% with autopay, or 0.50% if you autopay from a SunTrust Bank account.

0.25% with autopay. Additional 0.25% to 0.50% interest rate deduction if you have an eligible Wells Fargo account when you get your student loan.

0.25% with autopay

0.25% with autopay, you may have to pay from an account with the lender to qualify.

0.25% with autopay. Additional 0.25% interest rate deduction if you have an
eligible Citizens Bank account when
you get your student loan.

Repayment terms

5, 7, or 15 years

15 years

5 - 15 years

10 years

5, 10 or 15 years

Cosign release option

Yes, you can apply after 36 to 48 consecutive full payments

Yes, you can apply after 24 consecutive full payments. Or, after 48 consecutive full payments if your first payment is late.

Yes, you can apply after
12 consecutive full payments

Yes, you can apply after 12 to 36 consecutive full payments

Yes, you can apply after 36 consecutive full payments

Max deferment

Full deferment

Full deferment

Full deferment

$25 monthly payments

Full deferment

Bonus

Request a 1% principal (the loan amount that was disbursed) reduction after you graduate.

None.

None.

None.

None.

*Rates are current as of May 1, 2018, and may include a 0.25% autopay discount.

#1 SunTrust Custom Choice Loan

SunTrust Bank took the top spot in our comparison of the top private student loan lenders with its Custom Choice Loan. The bank also offers Union Federal Private Student Loans through a partnership with Cognition Lending.

Why we like SunTrust

There are several savings opportunities that help SunTrust’s Custom Choice Loan that help it stand out from the competition. First, as of April 1, 2018, SunTrust had the lowest possible fixed interest rate of the 10 lenders we compared.

Additionally, you can get a 0.50% interest rate discount if you sign up for autopay from a SunTrust Bank account, or a 0.25% interest rate discount with autopay from a different account. And SunTrust Bank will reduce your loan balance by 1% of the disbursed loan amount when you apply for the reduction and show proof of graduation with a bachelor’s degree or higher.

Borrowers can also choose from four different repayment plans: start making full payments immediately, make interest-only payments, pay $25 a month or fully defer payments.

Where SunTrust may fall short

The one big drawback to the SunTrust’s Custom Choice Loan is that you’ll have to make 36 or 48 consecutive full payments before you can apply to release a cosigner.

#2 Wells Fargo Collegiate Student Loan

You’ll likely recognize Wells Fargo, as it’s one of the largest banks in the U.S., but you may not have realized that it offers student loans. In fact, the company actually has several different student loan programs, with offerings for community college students, undergraduates or graduates and professional school students.

Why we like Wells Fargo

Like many other lenders, Wells Fargo offers a 0.25% interest rate discount if you enroll in autopay. In addition, you can get a permanent 0.25% to 0.50% interest rate reduction if you or your cosigner have an eligible Wells Fargo student loan, consumer checking account or Portfolio by Wells Fargo relationship.

Where Wells Fargo may fall short

You have to choose a 15-year term for your student loan, and if you stick to making your required payment amount you could wind up paying more in interest than if you took out a shorter loan elsewhere.

Also, be sure that you make your first full payment on time. If it’s late, you’ll need to make 48 consecutive full payments (rather than 24) before you can apply to release a cosigner.

#3 Sallie Mae Smart Option Student Loan

Sallie Mae offers a wide range of student loans to undergraduate, graduate and professional students, and their parents. That may not come as a surprise though, Sallie Mae is one of the most widely known private student loan companies.

Why we like Sallie Mae

The undergraduate Smart Option Student Loan has a few standout benefits, such as the option to release a cosigner after making 12 consecutive monthly payments. You can also choose from three repayment plans: full deferment, $25 monthly payments or interest-only payments. And if you’re having trouble making payments after graduation, you can request to make 12 interest-only payments.

Borrowers also get non-loan related perks, such as quarterly access to one of their FICO credit scores. You can also choose to get 120 minutes of free tutoring from Chegg Tutors or free access to Chegg Study for four months (or a combination of the two).

Where Sallie Mae may fall short

Overall, Sallie Mae offers borrowers a variety of choices and benefits. However, it doesn’t offer as many potential discounts as some of the other top lenders. Still, if you find you qualify for a lower pre-discount rate with Sallie Mae than another lender, Sallie Mae could indeed be a smart option.

#4 LendKey Private Student Loan

LendKey stands apart from the other lenders on the top five list because it technically doesn’t loan you money. Instead, LendKey has created a centralized, uniform (and easy-to-use) application that you fill out to get student loan offers from regional banks and credit unions.

Why we like LendKey

Being able to fill out a single application and compare multiple loan options can help you find a low rate, plus the application is quick and easy to fill out. Additionally, some of LendKey’s lenders may let you release a cosigner after making 12 consecutive full payments, which ties for the fewest number of required payments among the top lenders.

LendKey particularly stands because the high-end APR rate for variable- and fixed-rate loans from its lending network are 2% to 3% lower than other competitors. That may not seem like a big difference, but it could lower your monthly payments and lead to saving hundreds to thousands of dollars over the lifetime of the loan.

Where LendKey may fall short

Regional banks and credit unions may not offer student loans nationally, so the interest rate ranges that LendKey advertises may not be available to every borrower. The fine print and eligibility requirements could also vary from one lender to another.

For example, some lenders may require you use autopay from an account with the lender to qualify for a 0.25% interest rate discounts (others may let you qualify with autopay from any account). And how many consecutive payments you need to make before you can apply for a cosigner release, if you can apply at all, could also vary.

All LendKey lenders only offer a 10-year loan term. Other lenders offer a shorter term, which sometimes corresponds with lower interest rates, or you want to lower your monthly payment by choosing a longer term from a different lender.

Also, LendKey student loans don’t offer full deferment and you’ll have to make $25 monthly payments once your loan is disbursed. This could lower your total cost of borrowing compared with full deferment, but if you don’t have any income while you’re at school, it could be difficult to afford the monthly payment.

#5 Citizens Bank Student Loan

Citizens Bank is a large traditional bank with over 1,000 branches in the Midwest and along the East Coast. It offers student loans to undergraduate and graduate students, their parents and student loan refinancing.

Why we like Citizens Bank

Citizens Bank’s lowest possible variable-rate APR is the lowest of our top five lenders, but even if you don’t qualify for the lowest rate it’s worth considering. And if you or your cosigner have a qualifying bank account or loan from Citizens Bank, as that could make you eligible for a permanent 0.25% interest rate reduction on your student loan.

You may also qualify for multi-year approval if you have more than a year left before you graduate. Often, you may need to apply for a student loan at the start of each term. But with multi-year approval, you could choose (there’s no obligation) to borrow additional money for another term without having to fill out a new application.

Where Citizens Bank may fall short

The primary drawback is the 36-payment requirement to apply to release a cosigner. This aside, Citizens Bank offers competitive rates, a variety of loan terms and interest rate discounts that are in line or could be better than many of the other private student loan companies.

Determine if a private student loan is right for you

After comparing your options, you may be able to identify the private student loan lender that offers you the best overall loan. However, you may want to take a step back and consider all your options before committing.

Federal student loans. Often, federal student loans should be a borrower’s first choice if he or she has to borrow money. In part, this is because federal student loans offer loan forgiveness programs, repayment plans and guaranteed options to defer payments or put your loans in forbearance that aren’t available from private student lenders.

Also, if you haven’t built credit of your own and don’t have a creditworthy cosigner, federal student loans could be your only option. Most don’t have a credit requirement, and the federal loans for graduate or professional students and parents that have a credit check don’t vary their interest rate based on your credit. By contrast, even with a creditworthy cosigner, you may wind up with higher interest rate if you take out a private student loan.

However, there may be times when a private student loan makes sense or be a necessity. For example, undergraduate federal student loans have annual ($5,500-$7,500) and aggregate (up to $31,000) borrowing limits that may not be enough to cover your educational expenses.

Even if your unsure about whether you’re going to take out federal or private student loans, you may want to fill out and submit the Free Application for Federal Student Aid (FAFSA) every year. In addition to being a requirement for federal student loans and work-study aid, you may need to submit the FAFSA to qualify for some grants and scholarships.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Louis DeNicola
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Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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College Students and Recent Grads

A Beginner’s Guide to Using a Credit Card

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Are you thinking about opening a credit card? Or have you recently opened a card? You may be overwhelmed by the various terms associated with credit cards, but worry not — we’ve compiled a guide to walk you through the common fees you may encounter as well as how to use your credit card beneficially.

How credit cards work

On a basic level, credit cards are lines of credit that you can use over and over again as long as you pay off your balance. They’re a handy way to pay for purchases and can help you build credit when used responsibly. Credit cards usually have detailed terms and conditions that list fees, rewards, benefit restrictions and more. As a new cardholder, you may be confused by these terms, but we’re here to help you understand common features so you can avoid unnecessary fees.

Typical credit card terms

  • Annual fee: This is the fee you will be charged each year — if your card has one.
  • Credit limit: The maximum amount of credit you can charge on your card.
  • APR: This is the annual percentage rate or, simply, the interest rate you will be charged on balances carried. Since the rate is annual, divide it by 12 to get your monthly interest rate. Most often, this rate is variable and fluctuates with the prime rate, so your APR may change at any time.
  • Cash advance APR: If you use your card to take out cash, you will be charged at a higher interest rate versus regular purchases.
  • Penalty APR: This is a higher APR than you are typically charged and is often the result of a late payment or returned payment. The penalty APR can be in effect for several months or indefinitely, depending on the issuer.
  • Intro 0% period: You may be fortunate to have a credit card that offers an introductory period — upward of six months — where you can benefit from carrying a balance and not being charged interest during that time. The terms for these intro periods vary.
  • Late payment fee: If you pay late, you will incur a fee typically greater than $30.
  • Returned payment fee: Payments you submit that aren’t approved may be subject to a fee usually upward of $30.
  • Foreign transaction fee: Some cards charge a fee for purchases made outside the U.S. that is typically around 3%.
  • Cash advance fee: Cash advances you request most likely will be charged a 3%-5% fee of the amount requested.
  • Balance transfer fee: Any balances you transfer from an existing credit card to an eligible new card may be subject to a balance transfer fee, on average 3%-5% of the amount transferred.

Other common credit card features

  • Sign-up bonus: Your card may offer a sign-up bonus, which typically requires you to spend a certain amount within a given time period (usually three months) to receive a bonus.
  • Rewards: Many credit cards offer rewards programs that can earn you cash back, points and miles for purchases. This can be a great way to be rewarded for your spending, but don’t overspend and risk falling into debt for the sake of earning rewards.
  • Alerts: Issuers often let you set up fraud or balance limit alerts and reminders when it’s time for a payment.
  • Autopay: If available, set this up so you avoid late or missed payments.

Choose a card that fits your needs

There are numerous credit cards available for a wide range of needs from building credit to earning rewards, to getting out of debt and more. You should decide what your goal is with a credit card, then compare cards from various issuers prior to applying. Some issuers allow you to fill out a pre-qualification form that performs a soft pull on your credit to see if you may qualify for a card. This does not affect your credit score and is a great way to shop around for the best deals. One note: Pre-qualification is not a guarantee of approval.

Read our list of the best credit cards in a variety of categories to find a card for your needs.

Read the terms and conditions

An important step prior to applying for a credit card is to review the cardmember agreement. Each card has different rates and fees that vary based on any number of reasons, including credit history, actions you take (or don’t take), the prime rate in the market and more. It’s key to review the cardmember agreement so you’re aware of any fees you may be charged as well as how the card works. On our site, we’ve reviewed cards from top issuers as well as lesser known cards to help you make sense of some of the terms you face — but still be sure to read the cardmember agreement before you apply.

Practice responsible credit behavior

Make on-time payments. Perhaps the most important part of maintaining a credit card is to make timely payments. By doing so, you avoid late payment fees and penalty APRs that hurt your credit score. Autopay is a helpful feature to ensure your bill is paid on time, or you can set up reminders.

Pay your balance in full. A great goal is to always pay your bill in full so you don’t carry a balance. Any unpaid balance will be charged interest (unless associated with a promotion) and can cause you to rack up debt. This also negatively affects your credit score.

Avoid overspending. It’s common for people to mismanage their credit cards and be tempted to overspend, but with proper budgeting, you can avoid falling into debt. A good rule of thumb is to only spend what you can afford to pay at the time of purchase — this way you know you can pay off your balance. Also, if you have a rewards card, don’t overspend just to earn rewards because the debt you incur will counteract any rewards.

Keep a low utilization rate. The percentage of available credit you use is known as utilization, and is a factor in your credit score. It’s important to keep a low utilization rate so issuers see you’re not a risk. Constantly maxing out your card raises concerns for issuers and can cause you to fall into debt.

Check your monthly statements. By simply reviewing your monthly statements, you can proactively notice any fraud that may occur on your account and isn’t flagged by your credit card company. Most companies send notifications if they think there’s fraud on your account, but they don’t catch every instance of suspicious behavior.

Check your credit score and credit report. Checking your credit score on a monthly basis is a good habit to get into and can promote positive credit behavior. Read our guide for where to access your free credit score and other credit tips. It’s also a good idea to check your credit report every few months to make sure everything checks out and no unknown accounts are open in your name. Annualcreditreport.com is the only source for authorized credit reports from the three major credit bureaus and you can run one report every year for each bureau — we recommend spacing them out every four months.

Secure your card. Don’t leave your card unattended and don’t loan it to friends since neither of those actions have a positive result. Your card is your responsibility and should be treated with care. If you happen to lose your card or it’s stolen, contact your issuer immediately and put a hold on your account until your card is found or replaced.

Don’t request a cash advance. Cash advances are notorious for high fees and tricky terms than can draw you into debt, so it’s best to avoid them at all costs. If you need cash, look to personal loans, which may have better terms.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Alexandria White
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Alexandria White is a writer at MagnifyMoney. You can email Alexandria at alexandria@magnifymoney.com

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College Students and Recent Grads

Everything You Need to Know About the TEACH Grant

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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A March government study found that about 12,000 recipients of the TEACH Grant, a grant for college students who agree to teach needed subjects at lower-income areas, had their grants converted into loans.

This happens sometimes because students didn’t fulfill their service obligations, and other times it was due to minor process errors, according to the U.S. Department Education’s study of the TEACH Grant program.

The report said 63 percent of TEACH Grant recipients who began their teaching service before July 2014 had their grants converted to a loan, either because they had not met the service requirements or the annual certification requirements. When TEACH Grant recipients first received their grants, the study says, 89 percent participants thought they were likely or very likely to meet the service requirements.

Ashley Norwood, consumer and regulatory adviser at American Student Assistance, a nonprofit organization dedicated to helping students complete the financing and repayment of higher education, told MagnifyMoney she has seen more grant recipients face the grant-loan-conversion issue as more students have signed up for the program, and it happened for various reasons.

“I don’t think anyone is all at fault. I think that it’s a combination of errors,” said Norwood.

The program is complicated — the amount of paperwork and procedures required to administer and participate in the TEACH Grant is onerous, she said. Oftentimes, schools don’t offer rigorous upfront counseling about the grant due to a lack of resources or personnel. And on the students’ part, they don’t always stay on top of the service obligations and other requirements they agreed to, Norwood said.

In this guide, we offer expert tips for getting the grant and avoiding the grant-loan conversion. We also provide actionable advice for grant recipients whose grants have been converted to loans.

What is a TEACH grant?

Since 2008, the federal government has been offering TEACH grants to college students who commit to teach in a needed field, like math and science, at a school that serves students from lower-income families.

A student can receive a Teacher Education Assistance for College and Higher Education (TEACH) Grant of up to $4,000 a year, but budget cuts reduced the maximum award in recent years:

  • For any 2017–18 TEACH Grant first disbursed on or after Oct. 1, 2016, and before Oct. 1, 2017, the maximum award was $3,724.
  • For any 2017–18 TEACH Grant first disbursed on or after Oct. 1, 2017, and before Oct. 1, 2018, the maximum award is $3,736.

Recipients must complete coursework needed to begin their career as a qualifying teacher, and must sign an agreement to teach at least four years in an eight-year time frame after graduation. After finishing their program, they must provide an annual certification that they are currently teaching in a high-need field and a low-income school or intend to do so. Those who do not meet the requirements will see their TEACH Grants be converted to unsubsidized loans.

How to get the TEACH grant

Step 1: Do the research

If you are interested in applying for TEACH Grant, you should contact the financial aid office at your school to find out whether your school participates in the TEACH Grant and which courses of study are TEACH Grant-eligible. The financial aid office staff should be able to walk you through the benefits and service requirements.

As of the first quarter of the 2017-18 academic year, 572 higher education institutions participated in the grant, according to the American Association of Colleges for Teacher Education. Schools determine which programs are TEACH Grant-eligible.

It’s not as simple as an English major hoping to teach English after graduation being eligible for the grant. A program of study that’s eligible for the TEACH Grant is a specific program designed to prepare students qualified to teach in a high-need subject. You want to make sure you are enrolled in the right program. It could be an undergraduate, graduate or post-baccalaureate program.

A post-baccalaureate program is not TEACH Grant-eligible if your school also offers a bachelor’s degree in education.

Step 2: Apply

Once you decide to participate in the program and are enrolled in the right program, you will need to apply for a TEACH Grant by completing a FAFSA form.

Step 3: Complete counseling

Then you will need to complete TEACH Grant Initial Counseling, which occurs online and explains the terms and conditions of the TEACH Grant service obligation.

This is an important task because you will learn what exactly you are signing up for during the process. It takes about 20 minutes to complete the counseling, and you will need a FSA ID and your school name for it. You must complete the counseling process every year you receive a TEACH Grant, and you can do so here.

Step 4: Sign the agreement

The last step in the grant application process is completing an Agreement to Serve, a legally binding document that explains the service obligations and conditions of the TEACH Grant, as well as your rights and responsibilities if the grant is converted to a loan. You commit to those terms when signing the Agreement to Serve.

Each year you receive a TEACH Grant, you must sign an Agreement to Serve. A read-only version of the agreement can be accessed here. You can sign the document here. Your school will be notified once you submit your Agreement to Serve.

An additional note

It is important to keep a copy of all of your TEACH Grant paperwork and correspondence with your grant servicer for your records.

What to do while you’re still in school

You only qualify for a grant if your score is in the top 25th percentile on college admissions tests, and you need to maintain a cumulative 3.25 GPA to maintain your eligibility for the funds, according to the American Association of Colleges for Teacher Education. Remember to complete the counseling and the Agreement to Serve each year that you receive a TEACH Grant.

When you’re looking for employment, make sure that you are going to teach full time in a high-need subject in a school serving low-income families.

Experts suggest grant recipients be cognizant that this grant can turn into a loan if you are not careful.

Norwood said if you decide that you are not going to teach or you are not going to serve in a low-income area, you may return the grant, but you have very little time to make that decision. You can cancel the full grant or a portion of it the first day of the school’s payment period or 14 days after your school sends you a notification stating your right to cancel. If you do so during the timeframe, your school will return to the Department of Education your awarded funds, which won’t be converted to a loan.

How to prevent the TEACH grant from turning into a loan

Meet all the service requirements

Once you complete your education, you have to meet all the requirements stated in your Agreement to Serve:

1. You must teach in high-need fields

They are identified by the federal government or a local education agency. Common high-need fields include bilingual education, science, reading specialist, math and foreign language. The subject you teach must be listed within the Teacher Shortage Area Nationwide Listing for the state in which you teach, either when you begin your service or when you sign the Agreement to Serve, according to the Department of Education. The most recent list is here.

Norwood said that it’s fine if teachers bounce around qualifying subjects, but if you teach any of the fields not considered a high-need one, then you’re not performing the required service.

2. You must work full time in qualified fields for at least 4 years

They don’t have to be four consecutive years, but you need to finish your teaching service within eight years of graduating. And more than half of the classes you teach each school year are in high-need fields.

3. You must teach in a school serving low-income families

You must perform the teaching service as a highly qualified teacher (defined by Title IX) at a low-income elementary school, secondary school (public or private) or educational service agency.

Qualified schools are listed in the department’s annual Teacher Cancellation Low-Income Directory. Schools operated by the U.S. Department of the Interior’s Bureau of Indian Education (BIE) or on Indian reservations by Indian tribal groups under contract or grant with the BIE qualify as low-income schools. That list is here.

4. You must provide your TEACH Grant servicer with documentation of service performance process

Within 120 days of completing the education for which you received a TEACH Grant, you must tell your TEACH Grant servicer in writing that you are working as a full-time teacher (or that you plan to do so), according to the terms and conditions of the TEACH Grant service obligation.

Complete the annual certification

Every year, you have to offer your grant servicer paperwork documenting your teaching service. You can obtain the required form from your servicer. The paperwork must be signed off by the chief administrative officer or an authorized official at the school where you taught for the year being certified. The official must confirm you performed qualified service in the right school and more than half of your classes were in high-need fields.

If you have completed your education but are not employed in a qualifying teaching position, you must notify your grant servicer at least once each year that you still intend to satisfy your service obligation.

Your TEACH Grant servicer is supposed to contact you periodically to confirm your intent to satisfy your obligation, but experts said you need to be on top of providing annual information. Take it upon yourself to make regular contact with your servicer, particularly if you don’t start your qualified service immediately after finishing your education.

At the latest, you should start your qualified teaching service four years after completing the program where you received the TEACH Grant, Norwood said.

If you don’t meet any of the service requirements, your grant will be converted to a direct unsubsidized loan. Read more about conditions that convert a TEACH Grant to a loan here.

Common problems

Norwood said many people encountered issues because they didn’t get the right paperwork to keep the servicer updated of their progress, possibly because they didn’t keep their address up-to-date with their servicer. It could also be that they didn’t complete the form correctly or missed the deadline to submit their annual certification.

“If I had a piece of advice, I would say just to students to make sure they really pay attention to what they’re signing, and open mail from the Department of Education or a servicer as soon as it comes,” Norwood said. “Don’t ignore it.”

A staff member at the American Federation of Teachers spoke on background that sometimes the grant is converted to a loan because the recipient made a minor error in their paperwork, but there is no appeal process with the servicer, and so the teacher can’t correct it.

Because the servicer is very particular and exact about details, the American Federation of Teachers advises educators to carefully review all the forms they send to the servicer.

What to do if you feel you your grant is wrongly converted to a loan

The Department of Education contracts servicers to handle the TEACH Grant, and FedLoan Servicing currently services TEACH Grants. It monitors the process to make sure recipients do everything correctly and, after you complete the paperwork certifying that you’ve met all the qualifications, you send over the documentation. In the event that a grant must convert to a loan, FedLoan Servicing will execute it, apply interest retroactively and begin loan servicing.

If you think you have done everything correctly and met all the requirements but your grant is converted to a loan, experts suggest you engage with your grant servicer first.

Norwood advised grant recipients in this situation to reach out to the people whom you have been working with on the grant. If that doesn’t work, you can then seek help from the servicer’s ombudsman, an impartial mediator who will take a look at the situation, identify problems and help settle the issue, Norwood said.

If FedLoan Servicing’s ombudsman can’t help solve the problem, you can then file a dispute with the Federal Student Aid Ombudsman Group with the education department. The ombudsman is established as a neutral party to help fix problems that include grant-loan conversion.

You can reach the ombudsman online, by phone at (877) 557-2575, or at:
Office of the Ombudsman
U.S. Department of Education
830 First Street NE, Mail Stop 5144
Washington, D.C. 20201-5144

Depending on specific situations, Norwood said issues caused by recipients, such as missing a deadline, may not get much sympathy. But if processing errors occurred on either side, there may be some leeway there, and a loan may revert back to a grant, Norwood said.

How to repay a TEACH grant that converted to a loan

If the grant converts to a loan, you will be given the opportunity to pay the interest that accrued before it capitalizes.

“If you can make extra payments,” Norwood said, “I would make extra payments to help pay down that interest.”

But if you can’t, interest capitalizes when the loan enters repayment at the end of a 6-month grace period, which starts the day after your grant is converted to a loan.

Norwood advises you make sure to get on a repayment plan that works for you. If you have other federal loans in your name, you may consolidate them.

Interest rates

The loan servicer will retroactively apply interest, which accrues from the time you received your first grant, as if you signed a loan instead of received a grant.

For instance, if you signed the agreement in September 2013, it would be subject to the interest rate applied to unsubsidized direct loans disbursed in September 2013. The servicer will calculate your outstanding interest as if it had accrued over the last five years.

If the grant is wrongly converted to a loan, Norwood suggests the recipient still make payments, because you could always get refunded later.

You can also ask for the loan to be placed in forbearance while your case is being investigated by the Department of Education. This way, you can put off making payments until you’ve received a resolution. If the grant was indeed wrongly converted to a loan, Norwood said you won’t need to get a refund because you haven’t paid anything upfront. But if the loan doesn’t revert back to a grant, you at least paid the interest that accrued during the forbearance.

Repayment plans

The repayment plans for a student loan converted from a TEACH Grant are the same for all other federal loans. You can go with the standard repayment plan, graduated plan or income-driven plan, among others. Your loan servicer will be FedLoan Servicing.

Consolidate and refinance

You can consolidate the loan with other eligible federal loans, but there’s no refinancing option in the federal loan program. However, you could refinance with a private lender, Norwood said. Just remember you will lose all of the federal benefits such as Public Service Loan Forgiveness, deferment, forbearance and income-driven repayment plans if you are out of the federal student loan system.

This article may include links to SimpleTuition, a subsidiary of LendingTree, MagnifyMoney’s parent company.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at shenlu@magnifymoney.com

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College Students and Recent Grads

Should I Upgrade My Student Credit Card When I Graduate?

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Graduating from college is an exciting time filled with the promise of new challenges. Taking control of your finances is one of the more difficult challenges you’ll encounter, especially if you’re looking to build up a solid credit history.

While you were in school, you might have signed up for a student credit card. If you used your card responsibly while working toward your degree, you will likely graduate with a solid credit score and an important choice to make — should you upgrade your student card after graduation?

So long as your credit is strong, you’ll likely have the chance to upgrade to an equally good, if not better, credit card.

In this guide, we’ll help you decide if you should upgrade your student card and what to watch out for, as well as how credit card issuers handle student cards.

Should I upgrade my student card?

First of all, let’s discuss what upgrading your card really entails since you have several options:

Transitioning to a new card with the same issuer. If you like the issuer of your current credit card, you can request to transition your account to a new card they offer. For example, if you have the Discover it® Student Cash Back, you may decide the Discover it® chrome is more suited toward your spending habits. Call the number on the back of your card to request the transition, but keep in mind you’re not guaranteed the new card. Issuers look at various credit factors prior to the transition. If you are moved to the new card, the majority of the time issuers will issue your new card with the same account number.

Pros:

  • By simply transitioning to a new card, you aren’t closing your existing account. That means you won’t lower the average age of your credit, which can sometimes hurt your credit score.
  • Often similar terms and fee structure.
  • Familiarity with the online and mobile interfaces.
  • Typically, the ability to keep the same account number.
  • Don’t need to manage multiple credit card accounts.

Cons:

  • May have an annual fee.
  • May require a higher credit score.
  • Because you are technically applying for a new card in a sense, the credit issuer will have to pull your credit again. That will result in a new credit inquiry, which could lower your score by a few points.

Keeping your student card open and applying for a new card somewhere else. If you want a new credit card, a good option to consider is keeping your student card open and applying for a new card elsewhere, whether it’s a store card like Target or a card from another issuer. By keeping your student card open, you help your credit score in several ways.

Pros:

  • Improves your credit score by increasing your credit utilization rate (the amount of your total credit you use vs. the amount of credit you have available to you).
  • Doesn’t lower your average length of credit as significantly as closing your student card. This is likely your oldest credit account and when lenders calculate your credit score, they consider the average age of your credit accounts in that math. The older your accounts are, the better your score could be.
  • You may be able to find a card that offers rewards or benefits your student card does not

Cons:

  • New terms and fees to keep track of.
  • May have trouble managing two accounts.
  • Results in a new credit inquiry, temporarily lowering your score a few points.

Closing your student card and opening a new card. You may decide that you don’t want to keep your student card open anymore, and instead want to close it and open a new card. However, we don’t recommend closing your student card since it hurts your credit score. Most student credit cards don’t charge fees anyway, so you have nothing to lose by keeping your account open.

Pros:

  • Don’t need to manage multiple credit card accounts.

Cons:

  • Lowers your credit score by decreasing your average length of credit history.
  • Lowers your credit score because it will decrease the total amount of credit you have available to you. When that happens, it’s much easier for you wind up with a higher utilization rate. Your utilization rate is the amount of your total credit you use vs. how much you have access to.
  • Results in a new credit inquiry, temporarily lowering your score a few points

What if I have a poor credit score?

A poor credit score is typically considered to be anything under 669. It’s not impossible to qualify for credit cards, but you won’t have as many options as someone with good credit.

Applying for credit cards dings your credit score slightly, though it will bounce back. So, if your score is already less than perfect, applying for a new card or cards that you may have low approval odds for isn’t the best idea for a number of reasons.

Besides temporarily lowering your score for each application you submit, opening a new card lowers the average length of your credit history — which is an important factor in your credit score.

An alternative is to request a credit limit increase on your student card, which can help your credit score by improving your credit utilization (the amount of your total credit you use). Overall, it can be more beneficial to continue using your student card coupled with responsible credit management in order to improve your credit score. Then, when you’ve established good credit, consider applying for a new credit card.

But, if you’re eager to open a new card, check to see if the issuer offers pre-qualification. This allows you to check if you may be approved for a card without harming your credit score and can give you a good idea of where you stand. However, keep in mind pre-qualification is not a guarantee that you’ll be approved for the actual card.

What if I have good or excellent credit?

If you have good or excellent credit, you can apply for a new card or stick with your student card. Having good or excellent credit when you graduate is great, and opens you to the best credit cards on the market. If you want a different card that suits your spending more than your student card, shop around for different cards like rewards and cashback, then apply for the card of your choosing.

What to watch out for when upgrading to a new card

Annual fees. Your student card most likely doesn’t have an annual fee, but many non-student credit cards come with annual fees that can have lows around $39 but highs of $550. Since you’re still relatively new to credit, it may be a good idea to stick with no-annual fee cards until you can justify an annual fee card. Check out the best no annual fee rewards cards here.

APRs. APR stands for Annual Percentage Rate. This is the fee you may have to pay the bank on any overdue balances. Unless you pay your balance in full with each statement month, you’ll get charged your APR on top of whatever you owe. The majority of credit cards have variable APR ranges, and you won’t know yours until after you apply. That means if a card has a 12.24%-24.24% variable APR, you may get the lowest rate, a rate in between or the highest rate — and it can change at any time. Therefore, you should take note of the APR range before you apply. However, if you always pay your bill on time and in full, the APR you receive won’t be a major factor, though it’s something to note in case of an unexpected emergency.

Overspending. When you open a new card post-graduation, you most likely will have more income to report than during college (due to a full-time job). And, as a result, issuers may grant you a higher credit limit than you had with your student card. This increased line of credit may tempt you to overspend, but don’t fall into common debt traps. Try to spend only what you can afford to pay when your statement is due — or better yet, only spend what you can afford to pay immediately.

What should I do with my student card?

Don’t cancel it! If you decide to open a new card, don’t cancel your student card since that will hurt your credit score. Canceling your card lowers your average length of credit history and your utilization rate — two factors that make up 45% of your FICO® Score.

Continue to use it. Don’t put your student card in a drawer and forget about it. Most issuers will close your account if there is no activity for a while. To keep your card active, set up a small recurring payment for a monthly service, like Netflix or Spotify.

What happens to my student card when I graduate?

Many of the top credit card issuers offer a non-student version of their student card with nearly identical terms. Since the two cards are so similar, you may be able to keep the same student card without any action on your part, or your issuer will transfer you to a similar non-student card. Below, we list the student card you may have and what happens when you graduate.

Student card

 

Card when you graduate

Discover it® Student chrome

Discover it® Student chrome

No action required, card remains the same

Discover it® Student Cash Back

Discover it® Student Cash Back

No action required, card remains the same

Citi ThankYou® Preferred Card for College Students

Citi ThankYou® Preferred Card for College Students

No action required, card remains the same

Bank of America® Cash Rewards Credit Card for Students

Bank of America® Cash Rewards Credit Card for Students

No action required, card remains the same

Bank of America® Travel Rewards Credit Card for Students

Bank of America® Travel Rewards Credit Card for Students

No action required, card remains the same

Wells Fargo Cash Back College℠ Card

Wells Fargo Cash Back CollegeSM Card

Automatic upgrade to the Wells Fargo Cash Back Visa® Card when you graduate and meet the credit requirements.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at alexandria@magnifymoney.com

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College Students and Recent Grads

Parent Loans (Parent PLUS and Private Parent Loan Options)

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

College and graduate students may have several options when it comes to paying for school, including federal student loans that don’t depend on the student’s income or credit, or the family’s financial situation.

However, sometimes a student hits the federal loan limit and still needs money for school or living expenses. Parents who want to help shoulder some of the financial burden also have options. They may be able to take out a federal parent PLUS loan after their child submits a Free Application for Federal Student Aid (FAFSA), or apply directly with a private lender, and use the money to pay for a student’s educational expenses.

In this guide, we’ll explain everything you need to know about parent loan options.

Private vs. federal: Which is the right choice for you?

You have two choices in parent loans, federal parent PLUS loans or a parent loan from a private student lender. In either case, the loan will be in your name (rather than the student’s), there’s a credit check and you’ll be responsible for repaying the debt. However, there are important differences to consider.

Eligibility: The parent PLUS loans have a credit check which looks for an adverse credit history, such as a recent default, foreclosure, repossession or bankruptcy. However, parent PLUS loan eligibility isn’t dependent on a credit score or the applicant’s income or other debts that are in good standing. And every borrower during a given loan disbursement period receives the same fixed interest rate and pays the same disbursement fee.

Private student loans are also credit-based, and the lender may have a more rigorous underwriting process than what you undergo for a federal student loan. Your eligibility for a loan could depend on your income, debts, credit history and credit score, and these can also affect your interest rate.

Cost: While private student loans often don’t charge disbursement or origination fees, your annual percentage rate (APR), which is the cost of borrowing inclusive of fees, could be higher with a private student loan than a parent PLUS loan. On the other hand, especially creditworthy borrowers may find private student loans are a much less expensive option.

Terms and benefits: In addition to the cost of borrowing, you may want to consider the loan’s term, repayment plans and benefits. For example, a federal parent PLUS loan will be discharged if the student dies. The policies may vary from one private lender to another, and depending on the servicer that the lender partners with to collect loan payments.

Flexibility: Also, consider your options if you’re having trouble making payments later. You may be able to put a parent PLUS loan into forbearance and temporarily stop making payments. There are different repayment plans that can lower your monthly payments, and private lenders may vary their policies and offerings.

Parent PLUS loans: Explained

Parent PLUS loans are a subtype of direct PLUS loans, which are part of the U.S. Department of Education’s William D. Ford Federal Direct Loan program. The department offers direct PLUS loans directly to graduate and professional degree students and parents of dependent undergraduate students. Sometimes these loans are called grad PLUS loans.

Parent PLUS loans have a fixed interest rate and disbursement fee for all borrowers, although it may vary from one year to the next.

Parent PLUS loan rates

Interest rates for loans disbursed July 1, 2017 to June 30, 2018

7%

Disbursement fee for loans disbursed on or after Oct. 1, 2017 to Sept. 30, 2018

4.264%

Annual and aggregate loan limits

Cost of attendance minus the student’s other financial aid.

Unlike some types of federal student loans which limit how much you can borrow each year, or aggregate, parent PLUS loans don’t have a preset limit. However, you’re still limited to the school-determined cost of attendance for the student, minus other financial aid that the student received.

Eligibility requirements

To qualify for a parent PLUS loan, you must meet these requirements:

  • Your child must complete the Free Application for Federal Student Aid (FAFSA).
  • You meet the basic eligibility requirements for federal student aid.
  • You can’t have an adverse credit history.
  • You must take out the loan on behalf of a biological or adoptive child. Stepchildren may also qualify, in some cases.

The student you’re borrowing money for also must meet the eligibility guidelines for federal aid and must be taking at least a half-time course load at an eligible school. Your child also has to be a dependent student as determined by the education department, which uses different guidelines than tax-related dependency status.

If you don’t qualify for a parent PLUS loan due to having an adverse credit history, you may still be able to still take out a parent PLUS loan if you add an eligible endorser (similar to a cosigner on the loan) to the loan. The endorser will have to repay the loan if you’re unable to make payments in the future.

You may also qualify if you can prove that the there’s an error in your credit reports that led to the adverse credit, or if there are extenuating circumstances related to your adverse credit. For example, if you have adverse credit due to recent foreclosure, you may be able to qualify if you sold the home with a short sale and can prove the sale was approved and completed.

If you’re qualifying for a parent PLUS loan because of an endorser or extenuating circumstances, you’ll also need to take an online PLUS Credit Counseling session. All borrowers are required to take an online entrance counseling course.

How to apply for a Parent PLUS loan

Fill out the FAFSA. To take out a parent PLUS loan, your child will need to complete the FAFSA, which you can find on FAFSA.gov. You’ll need to share some information for FAFSA, including your Social Security number, tax and some financial information. MagnifyMoney has a guide to filling out the FAFSA, and the education department offers shares helpful information and guides online.

Resubmit FAFSA each year. Your child will need to resubmit the FAFSA each year to remain eligible for federal financial aid, and for you to qualify for parent PLUS loans.

For students beginning their first year at school, they’ll hear back from all the schools that received their FAFSAs with financial aid offers. Otherwise, they’ll just get a response from their current school. The award letter will list the types of aid the student is eligible for and maximum loan limits.

Review your financial award letter. The next step can vary from school to school, so you should reach out to the school’s financial aid office if it hasn’t already given you instructions on how to request a PLUS loan.

Your child’s award letter may list a parent PLUS loan, but even if it doesn’t, you could still be eligible for a parent PLUS loan. On the other hand, even if a parent PLUS loan is on the award letter, you’ll still need to meet the eligibility criteria to qualify for the loan. In either case, you may need to apply for the loan on StudentLoans.gov.

Complete your paperwork. If you qualify, you’ll also need to sign the direct PLUS loan Master Promissory Note. If you’re not able to get a parent PLUS loan, your child may be eligible for additional direct unsubsidized loans.

Repaying a parent PLUS loan

How PLUS loans are disbursed: The education department disburses (sends) the money you borrow with a parent PLUS loan to your child’s school to cover his or her expenses, such as tuition and fees. If the parent PLUS loan is for more than your child’s outstanding expenses, the school will send you a refund for whatever is left over. You can alternatively authorize the school to send the money to your child.

Making payments: Parent PLUS loans have a standard 10-year repayment plan and you may need to start repaying your loan after the last disbursement. You can also apply to defer your loan for as long as your child is enrolled at least half time at an eligible school, and for the six months after he or she leaves the school. However, your loan will accrue interest during this period, which could add to your total cost of repaying the loan.

Repayment plan options: In addition to deferring the loans, you may be able to switch to a different repayment plan. Changing plans to the extended repayment plan will increase your loan’s term and lower your monthly payments. You can also switch to the Income-Contingent Repayment plan after consolidating your parent PLUS into a direct consolidation loan. The ICR plan bases your monthly payments on your income, family size and where you live.

Liability: Some parents have an arrangement with their child where the child helps repays the parent PLUS loan. However, because you took out the loan in your name, legally you must repay the money. Children won’t be able to take legal responsibility for a parent PLUS loan, even after they graduate, unless they apply for student loan refinancing from a private lender that lets them include a parent’s loan.

Private student loans for parents: What are your options?

Similar to parent PLUS loans, some private student lenders offer student loans to parents who want to help finance a child’s education. These are credit-based loans, and each lender may have different underwriting requirements and loan offerings. Therefore, if you’re considering a parent loan from a private student lender, you may want to compare lenders and their loans’ terms.

Where to find private parent loans

Parents can find private parent loans from banks, credit unions and student loan companies. The five companies featured here are among the largest national private student loan lenders that offer loans specifically for parents who want to finance a student’s education.

There’s no single company that’s best for every parent borrower, nor is there one lender that will always offer you the lowest APR. Even the lender with the lowest advertised APR might offer you a higher rate than a different lender. However, there may be other requirements or features, such as the minimum loan amount or repayment plans, that make one lender a better fit for your situation.

Pre-approval with private parent loans

Some private lenders let you apply for loan pre-approval with a soft credit inquiry, which won’t affect your credit score. If you’re pre-approved, you may see an estimated APR, or APR range, which could help you decide between lenders.

When you decide to take out a loan, you’ll need to agree to a hard credit inquiry and will then see your official loan offers. You can still decide to turn down the loan and keep looking if you want.

A hard credit inquiry could hurt your credit score. However, multiple hard credit inquiries from student loans get treated as a single inquiry for credit-scoring purposes when they occur within a 14-day period. Since you’ll eventually have to agree to at least one hard inquiry to take out a private parent loan, you may want to apply with several lenders (including those that don’t offer a soft credit inquiry pre-approval) once you’re ready to take out a loan.

Private parent loans options

All of these rates and loan terms are current as of March 26, 2018, and may include a 0.25% autopay discount.

SoFi

Variable APR*

4.090%-7.515%

Fixed APR*

4.250%-8.000%

Loan terms

Five or 10 years

Loan balance range

$5,000 to the cost of attendance

Fees

No application, disbursement, origination or prepayment fees.

Late fee is up to $5.

Interest rate discount

0.25% with autopay

Additional 0.125% if you were a SoFi member before applying.

Soft credit check

Yes

Alternatives to parent loans

Some parents may want to help pay for a child’s education but don’t want to take out a parent loan or are having trouble getting approved for a student loan with a good rate.

Here are a few alternatives options you can consider.

Max out federal aid

Whatever you do, you and your student’s first step should always be to max out the federal student aid options, from grants to student loans. These options are nearly always the best bet financially, because they come with more flexible loan terms, repayment plans and typically have lower rates than what you’ll find from private lenders.

If you still feel the need to seek additional sources of aid, here are some alternatives:

A personal loan

Personal loans are unsecured loans that you can take out for almost any purpose. However, check the lender’s restrictions as some loan companies specifically state you can’t use a personal loan for educational expenses.

A personal loan may be a good idea if you want to receive the money directly rather than have it sent to your school. And personal loans may be easier to get discharged during a bankruptcy. But those two potential pros are outweighed by many cons.

Personal loans may have a much higher interest rate than student loans. If you have poor credit, the APR could be over 30% and you may have to pay origination fees that can eat into how much money you receive. Those with poor credit may be able to get a much lower interest rate with a federal parent PLUS loan, which doesn’t have a minimum credit score. And they’ll have access to federal loan repayment programs and benefits in case they have trouble making payments later.

Those with good-to-excellent credit may get a lower rate with a private student loan. Although private student loans can be harder to discharge than personal loans during a bankruptcy, private student lenders may offer forbearance or deferment options that let you temporarily stop making payments.

Also, you may be able to deduct up to $2,500 in interest payments on student loans, including private students loans, which isn’t an option with a personal loan.

Compare personal loan offers at MagnifyMoney’s parent company, LendingTree.

A home equity loan

If you’ve built equity in your home, you may be able to take out a home equity loan and use the money to help pay for college.

In turn, you may be able to save money if you use a home equity loan as interest rates could be similar, or maybe even lower, than on a parent loan. The home equity loan won’t be eligible for federal student loan repayment plans, but sometimes you can make interest-only payments on the loan. Although, as with student loans, making smaller payments now will increase your overall cost of repaying the loan.

There are also a few downsides to taking out a home equity loan. Since the passing of Tax Cuts and Jobs Act of 2017 (the new tax bill), if you use a home equity loan to pay for educational expenses, the interest payments aren’t tax-deductible. But one of the biggest drawbacks is that you could be taking on a lot more risk.

With a student loan or unsecured personal loan, if you don’t make payments you could wind up getting charged fees, hurt your credit and lead to your wages or Social Security payments being garnished. Falling behind on a home equity loan can also result in fees, damage to your credit and garnished wages, and the lender may foreclose on your home.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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College Students and Recent Grads, Reviews

Sallie Mae Student Loans Review for 2018

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

mortar board cash

Most students who borrow money for their education should start with federal student loans. The federal loan programs offer borrowers a variety of repayment, forgiveness, cancellation and discharge programs that aren’t available from private lenders.

But if you reach your federal loan limits, or exam your options and find you might be better off with a private student loan, you can compare loan offerings from private student lenders. One of the largest private student loan companies, Sallie Mae, has a dozen education loan products you can consider.

What is Sallie Mae?

Started over 40 years ago, Sallie Mae has played a variety of roles in the student loan space, including lending federally guaranteed loans and private student loans, and servicing federal and private loans.

Sallie Mae spun off a portion of its student loan servicing business to form a new company, Navient, in 2014. And due to changes in the federal student loan programs Sallie Mae no longer originates federally guaranteed loans. Now, Sallie Mae offers and services its private student loans, and also has banking products, such as savings accounts.

Types of student loans Sallie Mae offers

Whether you’re a parent of a grade school student or about to begin your doctorate, Sallie Mae may have a student loan that fits your needs. Its loan products include two for parents or sponsors of students; seven for students enrolled in a degree, training or certification program; and three for health profession and law students to cover residency or bar exam costs.

  1. K-12.For a parent or sponsor of a child who wants to take out a loan to pay for a student’s private kindergarten-through-high school education.
  2. Parent.For a parent or sponsor of a child who wants to take out a loan and pay for an undergraduate, graduate or certificate program.
  3. Career training. For students at eligible non-degree granting schools.
  4. Undergraduate. For students at degree-granting schools who are earning an associate or bachelor’s degree.
  5. Graduate. For students at degree-granting schools who are earning a master’s, doctorate or law degree.
  6. MBA. For business school students.
  7. Health professions graduate. For graduate health profession students, including those in nursing, psychology and dental assistant programs.
  8. Dental school. For graduate dental degree students, including those in dentistry, endodontics and orthodontics programs.
  9. Medical school. For graduate medical degree students, including those in allopathic, osteopathic and podiatric programs.
  10. Medical residency and relocation. For medical residency students to help pay for board examinations and residency-related travel and moving expenses.
  11. Dental residency and relocation. For dental residency students to help pay for board examinations and residency-related travel and moving expenses.
  12. Bar study. For law students and recent graduates to help pay for bar review courses, registration and living expenses while you study.

Sallie Mae student loans in a nutshell

Most of Sallie Mae’s loans are identical when it comes to fees, cosigner release options and discounts.

Fees

  • Aside from the K-12 loan’s 3% disbursement fee, none of the loans have application, origination, disbursement or prepayment fees.
  • Late payments result in a fee that’s 5% of the amount due (capped at $25).
  • Returned checks carry a $20 fee.

Cosigner release

  • You can apply to release a cosigner after making 12 consecutive, on-time, full interest and principal payments. However, parent loans don’t offer a cosigner release option.

Discounts

  • With all but the K-12 loans, you can receive a 0.25% interest rate discount if you sign up for automatic payments.
 

K-12 loans

Parent loans

Career training

Undergraduate loans

Graduate loans

MBA loans

Fixed APR range*

Not available

5.74% - 12.87%

Not available

5.74% - 11.85%

5.75% - 8.68%

5.75% - 8.68%

Variable APR range*

8.99% - 15.64%

5.49% - 11.87%**

6.24% - 13.35%**

4.00% - 10.86%**

4.00% - 9.04%**

4.00% - 9.04%**

Loan terms

Three years

10 years

Five to 15 years

Five to 15 years

Five to 15 years

Five to 15 years

Loan amount

$1,000 minimum

Borrow up to the school-certified cost of tuition

$1,000 minimum

Borrow up to the school-certified cost of attendance

$1,000 minimum

Borrow up to the school-certified cost of attendance

$1,000 minimum

Borrow up to the school-certified cost of attendance

$1,000 minimum

Borrow up to the school-certified cost of attendance

$1,000 minimum

Borrow up to the school-certified cost of attendance

Repayment plans

Full interest and principal payments

Full interest and principal payments

Interest-only payments

$25 a month

Interest-only payments


12-month interest-only repayment that begins after your separation or grace period ends

Deferment

$25 a month

Interest-only payments

12-month interest-only repayment that begins after your separation or grace period ends

Deferment

$25 a month

Interest-only payments

12-month interest-only repayment that begins after your separation or grace period ends

Deferment

$25 a month

Interest-only payments

12-month interest-only repayment that begins after your separation or grace period ends

**Variable rates are capped at 25%.

 

Health professions

Dental school

Medical school

Medical residency

Dental residency

Bar study

Fixed APR range*

5.75% - 8.68%

5.75% - 8.37%

5.74% - 8.36%

Not available

Not available

Not available

Variable APR range*

4.00% - 9.04%**

4.00% - 8.74%**

4.00% - 8.74%**

4.91% - 11.22%

4.79% - 11.22%

4.99% - 11.69%

Loan terms

Five to 15 years

20 years

20 years

Up to 20 years

Up to 20 years

Up to 15 years

Loan amount

$1,000 minimum

Borrow up to the school-certified cost of attendance

$1,000 minimum

Borrow up to the school-certified cost of attendance

$1,000 minimum

Borrow up to the school-certified cost of attendance

$1,000 minimum

Borrow up to $20,000

$1,000 minimum

Borrow up to $20,000

$1,000 minimum

Borrow up to $15,000

Repayment plans

Deferment

$25 a month

Interest-only payments

12-month interest-only repayment that begins after your separation or grace period ends

Deferment

$25 a month

Interest-only payments

12-month interest-only repayment that begins after your separation or grace period ends

Deferment

$25 a month

Interest-only payments

12-month interest-only repayment that begins after your separation or grace period ends

Full interest and principal payments

Two- or four-year interest-only repayment

Full interest and principal payments

Two- or four-year interest-only repayment

Full interest and principal payments

Two- or four-year interest-only repayment

**Variable-rate loans have a 25% APR cap.

How Sallie Mae compares with other lenders

Sallie Mae is one of MagnifyMoney’s top five private student lenders for 2018. We compared undergraduate student loan products and began with the nation’s 10 largest national lenders. The reviews focused on loans’ APR ranges, discounts, fees and repayment terms, as well as lenders’ policies for releasing a cosigner, deferring loan payments and their online applications.

Sallie Mae took third place, behind SunTrust Bank and Wells Fargo, partially because it only offers one discount opportunity (the other two allow borrowers to get up to 0.50% or 0.75% interest rate discounts).

In addition to having a top-rated undergraduate loan, Sallie Mae differentiates itself by offering such a wide variety of different student loans. Many of these other loans share characteristics with the undergraduate loan, including the 12-payment cosigner release requirement, lack of a specific maximum loan amount and 0.25% interest rate discount for auto debit.

However, as with any lender, there are pros and cons to consider before taking out a loan from Sallie Mae.

Advantages of Sallie Mae Student Loans

You may be able to choose a repayment plan. Depending on the loan product, you may be able to choose from up to three different repayment plans. A plan that requires you make payments while you’re in school could help you save money in the long run; however, deferring your full payments can give you more money to cover education and living expenses now.

12-month payment requirement for cosigner release. With most Sallie Mae student loans, you can apply to release your cosigner once you make 12 consecutive, full, on-time payments. Other lenders may let you apply for cosigner release, but it could take longer to qualify. For example, some lenders require you make 48 full monthly payments before you can apply.

In addition to the payments, you’ll need to pass a credit check and meet Sallie Mae’s requirements for releasing a cosigner.

Discharge due to death or permanent disability. Similar to the federal student loan guidelines, Sallie Mae will waive a borrower’s current balance if he or she dies or becomes permanently and totally disabled. The benefit may be especially important to borrowers who have a cosigner or dependents, such as a spouse or child, who could be affected if the debt isn’t waived.

No preset loan limit. While some federal student loans and private student loans set dollar-amount limits on how much you can borrow, most Sallie Mae student loans allow you to borrow up to your school’s certified cost of attendance.

Loans for less than half-time students. Some private school lenders require borrowers to have at least a half-time course load to qualify for a student loan. Sallie Mae’s loans for students don’t have this requirement.

Forbearance and deferment options. Putting your loans into forbearance or deferment lets you temporarily stop making payments without getting charged late payment fees or hurting your credit. Forbearance is generally for when you have trouble making payments, perhaps due to losing a job or a medical emergency, and deferment may apply to other circumstances, such as returning to school.

Sallie Mae could approve up to 12 months of forbearance in three-month increments and up to 60 months of deferment in 12-month increments. Interest continues to accumulate and your long-term costs may increase, but forbearance or deferment are still better options than missing a payment or letting a loan go into default.

Extra perks. Many of Sallie Mae’s student loans also come with the Study Smarter benefit. Borrowers can get four months of free study tools or 120 minutes of live online tutoring through Chegg Study® or a combination of the two.

All of Sallie Mae’s loans also give borrowers and cosigners quarterly access to a FICO® credit score.

Drawbacks of Sallie Mae Student Loans

No additional interest rate discount. Sallie Mae’s 0.25% interest rate discount is standard for most federal and private student loans. But other private lenders offer borrowers opportunities to get an additional 0.25% to 0.50% interest rate discount by having other financial products from the same lender or making auto debits from an account with the lender.

Sallie Mae assigns loan terms. Many Sallie Mae student loans have a repayment term that ranges from five to 15 years. Other lenders that offer a range of terms let borrowers choose their term, and the corresponding monthly payment and interest rate. Sallie Mae will assign you a term.

No loan pre-approval. Private student loans require a credit check. Some lenders will do a soft credit pull, which doesn’t hurt your score, to determine if you can qualify for a loan or need a cosigner and to show you estimated interest rates if you qualify. Sallie Mae will only show you rates after a hard credit inquiry, which could hurt your score.

What it takes to qualify with Sallie Mae

All Sallie Mae student loans have the same basic requirements:

Minimum credit score. Sallie Mae doesn’t disclose a minimum credit score requirement. In 2016, applicants that were approved for a Sallie Mae student loan on average had a 748 FICO® Score 8 at the time of approval.
Minimum age for borrowers. Borrowers must be the age of majority in their state (often 18 years old). Younger applicants will need an eligible and creditworthy cosigner.
State residency requirements. Sallie Mae student loans are available in every state.
Eligible schools. Sallie Mae doesn’t publish a list of eligible schools, but you can search for the name of a school at the beginning of the loan application to see if your school qualifies.

 

K-12 loans

Parent loans

Career training

Undergraduate loans

Graduate loans

MBA loans

Additional requirements

The student you’re taking the loan out for has to be enrolled in a private school.

The student you’re taking the loan out for has to be pursuing a certificate or an associate, bachelor’s or graduate degree at a degree-granting school.

You must be enrolled at a non-degree granting school and pursuing professional training or a certification.

You must be a enrolled at a degree-granting school and pursuing a certification or an associate or bachelor’s degree.

You must be enrolled at a degree-granting school and pursuing a master’s, doctorate or law degree.

You must be enrolled at a degree-granting school and pursuing a masters of business administration degree.

 

Health professions

Dental school

Medical school

Medical residency

Dental residency

Bar study

Additional requirements

You must be enrolled at a degree-granting school and pursuing a degree in one of the eligible areas of study.

You must be enrolled at a degree-granting school and pursuing a degree in one of the eligible areas of study.

You must be enrolled at a degree-granting school and pursuing a degree in one of the eligible areas of study.

You must either have a half-time course load and be in your last year at an eligible school, or graduated from an eligible school in the previous 12 months.

If you didn’t already earn your medical degree, you must expect to earn the degree in the current academic program year.

You must either have a half-time course load and be in your last year at an eligible school, or graduated from an eligible school in the previous 12 months.

If you didn’t already earn your dental degree, you must expect to earn the degree in the current academic program year.

You must either have a half-time course load and be in your last year at an eligible school, or graduated from an eligible school in the previous 12 months.

You must take the bar exam within 12 months of graduating.

What borrower is Sallie Mae best for?

Sallie Mae offers a variety of student loan products that could be a good fit for parents or students. If you, or a student you’re supporting, can’t take out additional federal student loans but need more money for school, Sallie Mae’s lack of a predefined loan limit could make it a good option.

The medical and dental residency programs and the bar study loan do have a loan limit. But even then, it’s higher than the limit of some competitors’ who offer similar types of loans.

You also may want to consider Sallie Mae if you think you’ll need a cosigner and would like to release the cosigner later. Although you still may not qualify depending on your creditworthiness, the 12 months of consecutive full payments is shorter than some other lenders require.

Taking a closer look at the online platform

You can learn a lot of details about Sallie Mae’s student loans on its website. There are landing pages for each loan product that have a lot of the basic information you’ll want to know. And there are pages with generally helpful information, such as how to make a loan payment or options if you’re having trouble making payments.

Some of the informational pages, such as on the one about interest rates and interest capitalization, also have quick video explainers to help you understand the topic and why it’s important to student loan borrowers.

The actual loan application doesn’t have quite as nice of a design as the other parts of the Sallie Mae website. But the application is still easy to navigate and fill out.

The fine print

The Sallie Mae product and informational pages give you a lot of the basic information you’ll want if you’re comparing student loans from several lenders. There are also loan application and solicitation disclosure forms for many of the loans online. In these, you can see fine-print items like the variable-rate loans’ interest rate cap and late payment fees.

It’s more difficult to find fine-print information on some of the loans, though. The K-12, residency and bar loans don’t have application and disclosure forms on their pages, for example. We were only able to confirm these loans’ fees and interest rate caps by reaching out to a representative from Sallie Mae.

While you would have a chance to review your loan details after agreeing to a credit check but before signing the loan agreement, it would be nice to have that information up front.

We were also disappointed in how difficult it is to understand how loan terms work with Sallie Mae student loans.

Some private lenders only offer one term. Others offer a variety of terms and let borrowers choose their loan term. Most of Sallie Mae’s undergraduate and graduate student loans have a five- to 15-year term, but Sallie Mae chooses which term to offer you. The loan term range, and the fact that Sallie Mae chooses the term rather than the borrow, isn’t clearly disclosed on the loan’s main page.

What to expect during the application process

Sallie Mae has an online loan application system that makes the process fairly uniform for all its student loans. A few questions may differ, but you can expect the process to be similar to the following steps. Applicants with cosigners may need their personal information, including the cosigner’s Social Security number and date of birth.

Basic information

General information. Basic information about the student and borrower:

  • Your name, email address and phone number.
  • Your date of birth, citizenship status and Social Security number.
  • Your relationship to the student, if you’re taking out a loan for someone else.

Address. Your permanent address and a previous address if you moved in the last year. If you have a different mailing address you’ll have to fill that in, too.

Student and school information. If you’re taking out the loan for a student, you’ll need the student’s name, date of birth, citizenship status and Social Security number.

Enter the name of the school and your, or the student’s academic information:

  • Degree type or certificate of study
  • Major or specialty
  • Enrollment status
  • Grade level
  • Academic period that the loan will cover
  • Anticipated graduation or certification graduate date

Loan application

Loan amount. The cost of attendance, which the application can help you estimate, as well as your estimated financial assistance.

You’ll automatically have a loan amount for the difference between your cost of attendance and financial assistance. You can choose to request less money, and even if you’re approved, Sallie Mae could offer you less than what you requested.

Employment info. Fill in information about your work, including:

  • Employment status
  • Employer’s name
  • Your occupation
  • Work phone number
  • Years with the current employer
  • Gross annual income.

Financial info. You can list additional income and assets you have, such as:

  • Income from alimony, child support or a rental property
  • Investments
  • Disability
  • Social Security
  • Income from a household member, such as a spouse

Your current assets that could be in checking, savings, CD or money market accounts.

You’ll also be asked about your expenses, including monthly housing payments (when applicable).

Personal contacts. Unless you’re taking out a loan for someone else, you’ll have to share two personal contacts that Sallie Mae can use as references. These could be a relative or family friends, and you’ll have to have their name and phone number.

Submit application. Choose to apply on your own or add a cosigner. You’ll be prompted to read and agree to an electronic delivery consent form, and may then get a copy of the loan’s disclosure form and Sallie Mae’s privacy policy.

You’ll have to agree to let Sallie Mae review your credit history to submit your application.

Finalize the loan

Once you’ve completed an application, you may need to send verification information (such as pay stubs or tax returns). But generally, Sallie Mae will offer a quick response based on your credit.

If you’re approved, you can choose your type of interest rate and repayment plan before accepting the loan. Once you accept the loan offer, Sallie Mae will contact your school to verify that you’re eligible for the loan and loan amount.

The school certification process may take several weeks, and could even be put on hold until about a month before your term begins. As long as everything checks out, Sallie Mae will send the loan to you or your school, depending on the type of loan.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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College Students and Recent Grads

Common Student Loan Debt Relief Scams and How to Avoid Them

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Students Studying Learning Education
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If you’re looking for relief from your student loans and see a claim that seems too good to be true, it probably is. Knowing that borrowers can find themselves in dire straights, scammers may advertise that you can get some or all of your loans forgiven due to a new law or rule. They may take your money and do nothing. Or, they may not rip you off completely, but charge you a one-time or monthly fee to sign up for a federal program — a program that you could easily sign up for free on your own.

In October 2017, the Federal Trade Commission (FTC), 11 states and the District of Columbia launched Operation Game of Loans, which is a coordinated effort to address student loan scams. And in case you thought the reference to “Game of Thrones” was unintentional, the acting chairman Maureen K. Ohlhausen, said, “Winter is coming for debt relief scams that prey on hard-working Americans struggling to pay back their student loans.” The resulting court cases claim that the companies collected over $95 million from student loan borrowers looking for help.

While managing student loans can be tricky, take your time and research a company or person before agreeing to pay for assistance and watch out for scams.

Student loan debt relief scams to watch out for

Some companies provide legitimate help to borrowers who want to better understand or deal with their student loans. But it’s best to be cautious. The scams often involve similar promises or premises, and some of the most common scams include:

Student loan debt elimination/cancellation/settlement scams

One of the most enticing offers involves a promise to eliminate or cancel all your student loan debt. It may sound great, and vaguely possible as you may have heard of legitimate student loan forgiveness, repayment, discharge or cancellation programs. However, a promise that you can quickly get rid of your student loans is almost certainly a scam.

Companies may alternatively claim they can help you settle your debts for less than you owe. However, this is rarely the case. If you stop making payments, or the scammers tell you that they’ll make payments on your behalf, but they don’t, you could be left owning additional money in fees and accrued interest.

Lower monthly payment or interest rate scams

Some companies will ask for upfront enrollment fees or monthly maintenance payments with a promise to lower your monthly payments or reduce your interest rates. The companies may switch your federal repayment plan, which can lower your monthly payments but is also something you can do for free.

Even worse, some companies may request you send your monthly payments to them, instead of your loan servicer, and they simply keep the money and let your loans go into default.

The interest rate on federal loans is locked in when you the loan is disbursed and generally can’t be changed. You may be eligible for a 0.25 percent interest rate reduction on Direct Loans if you sign up for autopay. But again, this is something you can easily do for free by contacting your loan servicers.

Loan consolidation scams

If you have multiple student loans, consolidating (combining) the loans could make it easier to manage your finances and may lower your monthly payment. Eligible federal loans can be consolidated for free through the Direct Loan consolidation program. You may be able to consolidate private student loans by refinancing them with a new student loan.

The scam is when a company charges you hundreds or thousands of dollars to consolidate your loans without offering any additional aid or consultation. The Department of Education (ED) even has a warning on its site about paying others to consolidate your loans since there’s no application fee and the process is easy and free.

There is a lot to consider before consolidating or refinancing student loans. For example, if you consolidate a federal Perkins Loan, it won’t be eligible for the Perkins Loan cancellation and discharge options but may now be eligible for other federal forgiveness programs. Or, after you refinancing federal loans, they won’t be eligible for any federal programs. You may want to pay for an expert analysis of your situation and options. But spending hundreds of dollars to simply have someone else apply for consolidation on your behalf may not be a wise way to spend your money.

Red flags to watch out for

The specifics of a particular scam may vary, but there are a few trends and common themes that can tip you off that something isn’t right. For instance, Joshua Cohen, a student loan attorney based in West Dover, Vermont, says if the claim or offer has Trump or Obama in the name, that’s generally a clear red flag that it’s actually a scam.

Here are a few others to watch out for:

  • You’re promised all your loans could immediately be forgiven or cancelled. There are programs that may lead to loan forgiveness or cancellation, but they only apply to certain types of loans and the process can take years to complete.
  • There’s an upfront fee. Legitimate companies and individuals may charge fees to help you better understand your situation and options. However, it may be illegal for companies to charge a fee before they’ve done any work. In some cases, the scammers may try to convince you that the initial fee will pay down your debts, but then they actually pocket the money. Also, watch out for companies that ask you to make your monthly payments to them rather than your loan servicer.
  • They promise you relief based on a “new” program. Student loan programs may come and go, but tying an offer to a new program can be a warning sign. “Any company that claims there is a ‘new’ program under the Trump administration is a huge red flag,” says Cohen. “There is no ‘Trump forgiveness,’ nor was there ever ‘Obama forgiveness.’”
  • They pressure you with a limited-time offer. Some companies may tell you that you need to act now otherwise a program may end and you’ll miss out. Cohen says this tactic may be becoming more popular since many people know there haven’t been any new forgiveness programs under President Trump. “What I have seen is, ‘Sign up now before they take forgiveness away,’ or change the laws,” says Cohen. The added pressure can make some people fall for this trick. Cohen says while there are proposals that would end some federal forgiveness programs, they only affect future borrowers.
  • The salesperson isn’t knowledgeable about student loans. Whether you’re meeting with someone in person, on the phone, on social media or via email, do some independent research first and make sure what they say or write matches what you find on official government websites. “If the sales rep can’t explain the options, can’t point to a reference from the Dept of Ed. or offer anything in writing, that’s also a red flag,” says Cohen.
  • You’re asked to share your FSA ID. Your Federal Student Aid ID (FSA ID) is the username and password you use to sign on to federal websites and manage your loans. While it may seem like the same info you use to log into dozens of other sites, your FSA ID may be much more important. It can be used to sign loan agreements, apply for different student loan repayment plans and to consolidate a loan. A company could make irreversible changes to your loans using your FSA ID.
  • You’re asked to give them legal authority. By signing a power of attorney or third-party authorization form, you may be giving the company the legal right to make changes to your loans on your behalf. The company could then change the contact info in your account so you won’t notice that it isn’t paying your bills.
  • They claim to be part of the Department of Education. Scammers may go as far as using the ED’s seal, or a logo that looks like it could belong to a government agency, to gain your trust and try to convince you they can offer something special or exclusive. But that’s not how forgiveness programs work. If you have federal student loans, StudentAid.gov is a reliable and official source of information. With private student loans, contact your servicer before trusting a third party.
  • The company doesn’t act professionally. Misspelled words, grammatical errors, a notice urging you to sign up in all caps or other unprofessional communications could also be a red flag. Even if the company has the best intentions, you may not want to work with it.

Already a victim of a student loan forgiveness scam?

If there are bells going off in your head and you realize that you may have been paying a company that isn’t following through on its promises or offering legitimate help, there are a few steps you can take to help rectify the situation.

1. Stop working with the company
First things first, if you suspect you’ve fallen for a scam you should stop paying the scammers. If you only paid a one-time fee, you may want to contact the company just to let it know you’ll no longer be needing its services. You could also ask for a refund, although the company may not have to give you one.

“If there is any kind of auto payment being made to the scam company, the borrower should call their bank immediately and cancel all future payments,” says Cohen. He says you should then call or write the company to cancel your contract and request a refund.

Also, let your loan servicers, the companies you send payments to, know that you were working with a scammer. If you gave the scammer legal authority to access and make changes to your account, ask the servicer what you need to do to take back full control.

2. Check the status of your loans
In some cases, the scammers take your money and don’t do anything to your loans. But other scammers may make changes to your account that need to be undone.

You can log into your accounts online or call your loan servicers to check the current status of your loans. Look for and ask about any missed payments, changes to your repayments plans and any other changes to the account or loans.

With federal student loans, you can check your loan balances on the National Student Loan Data System (NSLDS) website or by contacting your loan servicer. For private student loans, reach out to the company you were making payments to, which may be different than the company that lent you the money.

3. Tell the FTC and your State Attorney General
You can file a complaint against the company with the FTC, Consumer Financial Protection Bureau and your State Attorney General. Filing a complaint could lead to formal legal actions against the scammer, may save other borrowers from falling for the scam and in some cases could lead to refunds for victims.

4. Update your FSA ID.
If you gave the company your FSA ID, you can update your username and password online. You may also want to contact the Federal Student Aid Information Center (you can call them at 1-800-433-3243) if you think the company used your FSA ID to make changes to your federal student loans.

5. Monitor your credit
If you don’t already monitor your credit, you may want to sign up for a free or paid credit monitoring service. The scammers may have stopped making payments on your loans, which could lead to late payments or defaults that hurt your credit. Check your credit reports for these derogatory marks. Although you may not be able to get them removed, it’s good to know where you stand.

You can also add a fraud report to your credit reports by contacting one of the credit bureaus, which you may want to do if you shared your Social Security number or other personal information with the scammer.

Legitimate student loan debt relief strategies

Getting scammed can be frustrating, expensive and put you in a worse position with your student loans. However, there are legitimate paths that you may be able to take towards student loan forgiveness or relief.

Federal repayment plans

If you’re having trouble making payments on federal student loans, look into the federal income-driven repayment plans. Switching plans can lower your monthly payments and depending on your income, family size and where you live your payments may drop all the way to $0 a month. Also, the remainder of your loan balance will be forgiven after 20 to 25 years of making payments on an income-driven plan.

You can use the federal repayment estimator tool to see how switching plans could change your payment amount.

Federal loan consolidation

Consolidating your federal loans may extend your repayment term. Although you’ll wind up paying more overall, this could lower your monthly payments.

Depending on the types of loans you have, consolidating the loans may make them eligible for, or disqualify them from, certain loan forgiveness or cancellation programs. Also, since you’ll receive a new loan that pays off your existing loans, payments that you’ve made towards a forgiveness or cancellation program won’t carry over to your new loan.

Federal loan forgiveness, cancellation and discharge programs

Depending on your loans and situation, you may be eligible for legitimate federal loan forgiveness, cancellation or discharge programs. For example, with the Public Service Loan Forgiveness program, you may be able to get the remainder of your loan forgiven after making 120 payments while working full-time for an eligible nonprofit or government organization.

Loan deferment and forbearance

You may be able to put federal or private student loans into deferment or forbearance. Eligibility can depend on your situation and the type of loan you have. Deferment is often for when you can’t make payments because you return to school, are on a military assignment or working with a public service organization. Forbearance could be granted for economic hardship, perhaps due to a loss of job or medical emergency.

With either deferment or forbearance, you can temporarily stop making payments without incurring late fees or defaulting on the loan. However, your loans in forbearance may continue to accrue interest during these periods.

Get real help managing your student debt

There are also people and organizations that can genuinely help you understand and manage your student loans. Some of them charge fees, but that isn’t necessarily an indication that it’s a scam.

Cohen suggests borrowers start with the free route by checking official government website if you have federal student loans, or your loan servicer’s site for private student loans. “If the borrower is still confused or uncertain, contact a student loan lawyer,” says Cohen. “Most folks don’t need a lawyer, but at least the lawyer is regulated by the State Bar which creates a higher degree of accountability.”

You can also look for assistance from nonprofit organizations. The National Consumer Law Center has a student loan borrower assistance project that you may find helpful. Many nonprofit credit counseling organizations also offer student loan and debt management counseling for a $50 to $200 fee. The National Foundation for Credit Counseling can help you find a certified counselor.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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College Students and Recent Grads

The Ultimate Guide to Paying off Medical School Debt

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Part I: Is Medical School Worth It?

Getting accepted to medical school is a major accomplishment, but graduating from medical school can be life-changing for your finances. According to The College Payoff, a collaborative study conducted by the Georgetown University Center on Education and the Workforce, individuals with a doctoral-level degree enjoyed median lifetime earnings of $3,252,000 in 2009 dollars. This figure compares favorably to degrees that require a smaller commitment of time and resources, showing that pursuing a medical degree can pay off.

Now on to the bad news. While earning more money over a lifetime is advantageous, there’s a notable downside to going to medical school. While doctoral-level degrees can pay off with a lifetime of higher wages, the costs of pursuing this degree can be astronomical.

As the Association of American Medical Colleges notes, the average indebted 2017 medical school graduate left college with a median medical school debt of $192,000. No matter how you cut it, that’s a lot of money to borrow and spend.

Are you currently suffering from high-interest rates on your medical school loans? Jump down to our top picks for refinancing med school debt in 2018.

Medical school debt in the U.S.

The Association of American Medical Colleges shares statistics on average medical school debt. As of 2017, indebted medical school graduates left school with a median debt loan of $192,000. At public schools, the median debt load worked out to $180,000. Private medical schools, on the other hand, reported a slightly higher level of debt with a median debt load of $202,000.

The high levels of debt many medical school graduates endure are caused by myriad factors, including the rising costs of tuition. While average medical school tuition hasn’t been tracked since 2009, the price tag of a medical education was $29,890 that year.

In addition to the price of tuition, medical students need to pay for countless other expenses, some of which only apply to those in the medical field:

  • Room and board
  • Rent and utilities
  • Food
  • Travel and transportation
  • Health care
  • Instruments and supplies
  • Textbooks
  • Lab fees
  • Test fees
  • Relocation for residency

Lifetime earnings for a doctor

While the costs of medical school are high, doctors’ higher salaries can take the sting out of the long-term costs. In 2016, for example, family and general practitioners earned an annual mean wage of $200,810, while physicians and surgeons earned $210,170, on average. Several medical specialties earned even more.

The following table highlights profitable medical careers alongside careers that require only a bachelor’s degree:

Careers & Degree Requirements

Annual Mean Wage in 2016 (National)

Medical Careers:

Family and general practitioners

$200,810

Physicians and surgeons

$210,170

Anesthesiologists

$269,600

Surgeons

$252,910

Bachelor’s Degree Careers:

Petroleum engineers

$147,030

Biomedical engineers

$89,970

Registered nurses

$72,180

Market research analysts

$70,620

Elementary school teachers

$59,020

Is medical school worth the cost?

If you’re trying to decide between degree programs with varying costs and educational outcomes, it’s important to consider the ROI, or return on investment, for your education. While there’s no hard and fast rule to help you decide, figuring out your post-education monthly payment for medical school debt and comparing it to your potential salary can help.

As an example, the average medical school graduate with $192,000 in debt with a 6% interest rate would need to pay $2,131.59 per month toward their loans if they chose standard, 10-year repayment. According to the Bureau of Labor Statistics, however, the median weekly earnings for someone with a doctoral degree worked out to $1,664 in 2016.

During a month with four weeks of paydays, a doctoral graduate would bring in $6,656 before taxes and $4,659.20 after taxes, considering a 30% tax rate. While a $2,131.59 payment represents nearly half of this person’s income, it’s only for 10 years. Further, the percentage of income will only decrease as their income grows. And if they choose a higher paying medical specialty, the difference could be even greater.

Also keep in mind that doctors don’t have to choose 10-year, standard repayment as there are plenty of other options available, including repayment plans that span up to 25 years. If the graduate with the same level of debt as above chose to repay their loan over 25 years at the same interest rate, for example, they would pay only $1,237.06 per month.

Part II: Paying for Medical School

Federal student loans are usually the first source of funding medical students turn to as they seek to finance their education. Several different types of federal student loans are available, and each has their own benefits, drawbacks and practical limitations. Federal student loans tend to be a good option for medical students since they offer relatively low, fixed interest rates and help students qualify for federal perks like income-driven repayment, student loan forgiveness programs, deferment and forbearance.

Pros of federal student loans:

  • Fixed interest rates that can be competitive
  • Access to federal loan repayment and student loan forgiveness programs
  • Qualifying for subsidized loans means the government may pay the interest on your loans during school
  • Access to student loan forbearance and deferment (if you qualify)
  • No credit check

Cons of federal student loans:

  • Caps on how much you can borrow
  • You may need to take out private loans once you exhaust federal loans
 

Interest Rates

Maximum Annual
Borrowing Amount

Perkins Loans

5%

Up to $5,500 per year for
undergraduate students, depending
on financial need and other aid
received; up to $8,000 per year
for graduate students

Direct Subsidized Loans

4.45% for undergraduate
loans first disbursed on or
after July 1, 2017,
and before July 1, 2018

$3,500 to $5,500 per year for
undergraduate only

Direct Unsubsidized Loans

4.45% for undergraduate
loans first disbursed on or
after July 1, 2017, and before
July 1, 2018; 6% for graduate
loans

$5,500 to $12,500 per year for
undergraduate students;
up to $20,500 per year for
graduate students

Direct PLUS Loans

For Direct PLUS Loans first
disbursed on or after July 1, 2017,
and before July 1, 2018,
the interest rate is 7%

Maximum loan amounts
are limited to the cost of
attendance in school minus
financial aid received

Direct Consolidation Loans

Weighted average of the
loans being consolidated

No minimum or maximum
loan limits

Private student loan debt for medical school

Private student loans are commonly used once medical students max out the amount of federal money they can borrow for school. These loans are offered through private lenders, which means their rates and repayment terms are not fixed by the government. As a result, they can vary greatly but may be lower than rates offered through government programs.

Pros of private student loans:

  • Interest rates may be lower than federal student loans
  • Loan limits can be high enough to cover the entire cost of medical school
  • Loan disbursement may be faster
  • You can shop around among lenders to find the best deal

Cons of private student loans:

  • You need good or excellent credit to qualify on your own
  • Without good credit, you may need a co-signer
  • Interest rates can be fixed or variable
  • Private loans do not offer federal student loan forgiveness, income-driven repayment, or federally sponsored deferment or forbearance
  • You may need to make payments or pay interest while still in school

When to consider private student loans:

  • You’ve maxed out on federal student loan amounts
  • Private loans offer a better interest rate
  • You don’t plan to take advantage of government programs when it comes to repaying your loans

Private student loan lenders to consider

 

Interest Rates*


Borrowing Limits


Credit Requirement


Discover
Student Loans

Variable rates from 4.62%
to 8.62% APR; fixed rates
from 6.49% to 9.99% APR

Limited to 100% of the
cost of attendance minus
other aid

You may need a co-signer
to qualify if you don’t
have excellent credit


Sallie Mae
Student Loans

Variable rates available
from 3.62% to 8.36% APR;
fixed rates from
5.74% to 8.36% APR

Borrow up to 100% of
the cost of attendance

You need good or
excellent credit to qualify
without a co-signer


Wells Fargo
Student Loans

Variable rates available
from 4.59% to 9.10% APR;
fixed rates available from
6.66% to 10.18% APR

The lifetime limit for this
loan and all other
education-related debt,
including federal loans,
is $250,000 for allopathic
(M.D.) or osteopathic
(D.O.) medicine; $120,000
for all other disciplines

You have a better
chance to qualify if you
have a co-signer;
excellent credit required


Citizens Bank
Student Loans

Variable rates available
from 3.53% to 9.69% APR;
fixed rates available from
5.26% to 10.24% APR

Lifetime limit is $225,000
for medical school loans

Good or excellent credit
required without a
co-signer


College Avenue
Student Loans

Variable rates available
from 4.07% to 9.60% APR;
fixed rates available from
6.22% to 10.66% APR

Borrow up to 100% of the
cost of attendance

Good or excellent credit
required without a
co-signer

Grants for medical students

Grants for medical school students are offered through the government, research facilities, corporations and institutions of higher education. Students can seek out information on available grants by asking their school’s financial aid office, searching the internet, or checking government resources that cover the medical field.

Here are some popular grants available to medical students:

This Medical Scientist Training Program grant was created to assist students pursuing degrees in clinical and biomedical research. This program is offered at over 47 universities that help facilitate the grant.

  • Award amount: Amounts vary
  • Qualifications: Available to qualified M.D.-Ph.D. dual-degree students with a GPA of 3.0 or higher
  • Deadline to apply in 2018: Depends on the participating institution

The Ford Foundation Fellowship Program seeks to increase diversity and offers grants to medical students pursuing a Ph.D. with the goal of participating in medical research or teaching. Other Ph.D. students are considered as well.

  • Award amount: $20,000 to $45,000, depending on the specific program
  • Qualifications: Medical students in pursuit of a Ph.D. can apply
  • Deadline to apply in 2018: Applications closed January 9, 2018 at 5 PM EST

This American Medical Women’s Association grant awards four AWMA student members every year. This two-year fellowship focuses on global health and includes a trip to Uganda.

  • Award amount: $1,000 to fund local project planning and subsidize experiential education in Uganda
  • Qualifications: Must be AWMA member pursuing a medical education
  • Deadline to apply in 2018: The next application cycle is Aug. 1, 2018, to Oct. 30, 2018

This grant, which is offered through the Radiological Society of North America, was created for medical students considering academic radiology.

  • Award amount: $3,000 to be matched by a sponsoring department for a total of $6,000
  • Qualifications: Must be a full-time medical student and RSNA member
  • Deadline to apply: Feb. 1, 2018

This program, which is offered through the American Medical Women’s Association, is available to medical students and residents working in clinics around the world.

  • Award amount: Up to $1,000 in transportation assistance costs
  • Qualifications: Students must work in an off-campus clinic where the medically neglected will benefit, be an AMWA member in at least their second year of school, and must spend four weeks to one year serving the medically underserved
  • Deadline to apply in 2018: The next application deadline available is July 5, 2018

Scholarships for medical students

Scholarships are available to medical students from all walks of life and all backgrounds, although requirements vary based on the program. Medical students can seek out merit-based scholarships, institution-based scholarships and various other scholarships offered through research facilities and corporations.

Here are a handful of popular scholarship options for medical students:

This grant, offered through the American Medical Association, doles out scholarships to medical students who meet certain criteria. The goal of this program is to reduce the debt burden on medical school students across the country.

  • Award amount: $10,000
  • Qualifications: Must be a medical student who is nominated by their school dean and approaching their last year of medical school
  • Deadline to apply in 2018: Nomination applications are available every fall

The Herbert W. Nickens Award is available to third-year medical students who have shown proven leadership in the area of medical equality for all.

  • Award amount: $10,000
  • Qualifications: Must be a medical student who is nominated for excellence in leadership; checklist is available here
  • Deadline to apply in 2018: Applications due in April each year

This scholarship is open to all students pursuing a service career in health care, including medical students considering any medical field.

  • Award amount: $5,000 to $10,000
  • Qualifications: Must be a medical student with at least one year of medical school remaining
  • Deadline to apply in 2018: Application opens at the beginning of May each year and closes at the end of June

This scholarship is available to all medical students with financial need regardless of their gender, race or ethnicity. Applicants are judged on financial need, achievements, essays and community service records.

  • Award amount: $2,000 to $5,000
  • Qualifications: Must be a medical student who can demonstrate financial need and complete the application process
  • Deadline to apply in 2018: Applications are due by April 1, 2018

The Harvey Fellows Program was created for Christian students pursuing higher education in important fields such as medicine.

  • Award amount: $16,000
  • Qualifications: Must be a student who identifies as Christian and attends service regularly
  • Deadline to apply in 2018: Application deadline is Nov. 1 of each year

Part III: Medical School Loan Repayment Programs

Income-driven repayment (for federal student loan debt)

Income-driven repayment programs allow medical students to pay only a percentage of their income toward their federal student loans for 20 to 25 years no matter how much they owe. These programs can be advantageous since they let medical students with large debt loads pay a smaller percentage of their income every month than they would with standard, 10-year repayment. Several different income-driven repayment programs are available, each with their own rules and benefits. The following table highlights each program and how it works:

 

Payment Amount

Repayment Period

Eligibility

Pay As You Earn
Repayment Plan
(PAYE Plan)

10% of your
discretionary income,
but never more than your
payment on 10-year
Standard Repayment

20 years

Your payment must be
less than what you would
pay under standard,
10-year repayment

Revised Pay As You
Earn Repayment
Plan (REPAYE Plan)

10% of your
discretionary income

20 years for
undergraduate loans
and 25 years “if any
loans you’re repaying
under the plan were
received for graduate
or professional study”

Any borrower with
eligible federal student loans
can qualify

Income-Based
Repayment Plan
(IBR Plan)

10% of your
discretionary income
if your loan originated
after July 1, 2014,
but never more than
the 10-year Standard
Repayment Plan;
generally 15% of your
discretionary income
if you’re not a new
borrower on or after
July 1, 2014; either way,
you’ll never pay more
than the payment on a
standard, 10-year
repayment plan

20 years if you’re a
borrower on or after
July 1, 2014; 25 years
otherwise

To qualify, your
payment under this plan
must be less than what you
would pay under standard,
10-year repayment

Income-Contingent
Repayment Plan
(ICR Plan)

20% of your
discretionary income or
what you would pay over
the course of a fixed
12-year repayment plan

25 years

Any borrower with
eligible federal student loans
can qualify for the ICR Plan

Pros of income-driven repayment:

  • Pay a smaller amount of your income for up to 25 years
  • Have your student loan balance forgiven once you complete the program
  • Pay off your debts slowly and at your own pace

Cons of income-driven repayment:

  • You may have to pay income taxes on forgiven loan amounts
  • You may not qualify if you earn too much

Who is eligible?

These programs are available to graduates who have federal student loans and meet income requirements.

How to apply

You can apply for income-driven repayment programs using the U.S. Department of Education website.

Medical school loan forgiveness for doctors

There are numerous loan forgiveness programs available to doctors, each with their own criteria for applicants. Commonly, these programs offer loan forgiveness in exchange for service in a specific field or for a certain type of employer.

Some examples include:

Who is eligible?

Since loan forgiveness programs vary in their details and requirements, you’ll need to read terms and conditions of applicable programs to determine if you qualify.

Is this option right for you?

If you are willing to relocate or know that a loan forgiveness program is already available in your area, then loan forgiveness programs offer a great way to earn a living while having part of your debt forgiven. For this option to be right for you, however, you have to be willing to meet special program requirements such as working in an urban, rural or underserved community.

National Health Service Corps Loan Repayment Program

This program offers loan repayment assistance for individuals entering qualified healthcare careers in medical or dental fields. Licensed health care providers may earn up to $50,000 of tax-free loan forgiveness for a two-year commitment to NHSC-approved employment in a high-need area.

Who is eligible?

Medical graduates who agree to work in an NHSC-approved career for at least two years may qualify for this assistance.

How to apply

Contact the National Health Service Corps or visit the NHSC website for tips on the application process.

Is this option right for you?

If you’re willing to work in an area of high need after you graduate, this program may work well at the beginning of your medical career.

U.S. military loan repayment programs

United States Army

Army Student Loan Assistance offers up to $45,000 per year in loan assistance, along with a monthly stipend of up to $2,000. This assistance is available to U.S. residents working to complete an accredited residency.

The U.S. Army also offers up to $120,000 to pay down medical school debt in exchange for three years of service.

Lastly, the U.S. Army offers a Health Care Professionals Loan Repayment Program that provides up to $250,000 for repayment of “education loans for physicians in certain specialties who are serving in an Army Reserve Troop Program Units, AMEDD Professional Management Command, or the Individual Mobilization Program.”

How to apply

For additional information, contact your local Army recruiter, call 1-800-USA-Army, or visit Healthcare.GoArmy.com.

United States Navy

The Navy Student Loan Repayment Program offers up to $65,000 in repayment assistance, depending on your loan amount and year in school. Eligible applicants serve in the U.S. Navy and have federal student loans.

You may also qualify for the U.S. Navy’s loan forgiveness and repayment program, which offers up to $40,000 per year in loan assistance before taxes. You must be a final year medical student ready to join the U.S. Navy.

Lastly, the Navy Financial Assistance Program offers up to $275,000 in loan repayment assistance plus a monthly stipend to medical residents who agree to serve in the U.S. Navy. Physician sign-up bonuses may also be available.

How to apply

Contact your local Navy recruiter or visit the Navy Recruiting Command website.

United States Air Force

The Air Force Health Professions Scholarship Program offers up to $45,000 per year plus a monthly stipend up to $2,000 for medical students who join the U.S. Air Force and serve their country as a medical professional. Once you complete your residency, you’ll have a one-year obligation for each year you participate in the program plus one extra year.

How to apply

Contact a U.S. Air Force recruiter for more information, or visit the U.S. Air Force application page to apply.

State-level loan repayment programs for doctors

 

Program

Eligibility

Alaska


The SHARP Program offers new doctors
up to $35,000 in loan repayment
assistance per year.

Doctors must agree to work at least two
years in a high-need shortage area.

Arizona


The Arizona State Loan Repayment
Program
offers up to $65,000 per year in
repayment assistance for doctors for two
years, with lower repayment amounts
offered in subsequent years. You must
work in outpatient care to qualify.

The doctor must be a U.S. citizen who
agrees to work in a state-approved high
need position.

Arkansas


The Arkansas Department of Health
offers up to $50,000 in loan forgiveness
in exchange for a two-year contract.

You must agree to work in an
underserved area approved by the state.

California


The California State Loan Repayment
Program
offers doctors up to $50,000 in
loan forgiveness.

Applicants must be medical school
graduates and agree to at least a
two-year commitment in an eligible,
state-approved position.

Colorado


The Colorado Health Service Corps
offers up to $90,000 for doctors who
qualify.

Doctors must practice in a
state-approved shortage area that
accepts public insurance and offers
discounted services to the poor for three
years.

Delaware


The Delaware State Loan Repayment
Program
offers between $70,000 and
$100,000 in loan forgiveness for doctors
who qualify.

Doctors must agree to work in an area
with a substantial yet underserved
medical need for two years.

Georgia


The Georgia Physician Loan Repayment
Program
offers up to $25,000 per year
for two years.

Physicians must practice in a shortage
area and in one of the following medical
fields: family medicine, internal medicine,
pediatrics, OB/GYN, geriatrics or
psychiatry.

Hawaii


The Hawaii State Loan Repayment
Program
is a federal grant you can use
to pay off educational loans. Amounts
vary.

Applicants must agree to a two-year
commitment in a state-designated
shortage area.

Idaho


The Idaho State Loan Repayment
Program
offers doctors $2,000 to $25,000
per year in loan repayment assistance.

Doctors must agree to work in a health
care shortage area designed by the
state of Idaho.

Illinois


The Illinois National Health Service Corps
State Loan Repayment Program
offers up
to $50,000 in loan repayment assistance
for doctors who qualify.

Doctors must agree to a two-year
commitment in a health care shortage
area.

Iowa


Iowa’s Primary Care Recruitment and
Retention Endeavor
offers up to $50,000
for full-time doctors and up to $25,000 in
assistance for those who agree to work
part time.

Doctors must agree to work in a shortage
area approved by the state.

Kansas


The Kansas State Loan Repayment
Program
offers doctors up to $25,000 in
assistance per year.

Applicants must agree to a two-year
commitment in an eligible position.

Kentucky


The Kentucky State Loan Repayment
Program
awards up to $300,000 in loan
repayment assistance to up to 13
applicants who work in primary care.

You must agree to work in a designated
health care shortage area.

Louisiana


The Louisiana State Loan Repayment
Program
offers up to $30,000 annually for
up to a three-year commitment.

Applicants need to work in a traditionally
underserved health care shortage area.

Maryland


The Maryland Loan Repayment Assistance
Program
for Physicians offers up to
$50,000 per year for a two-year
commitment.

Applicants must be medical graduates
who are current on their student loans
and willing to work in a health care
shortage area.

Massachusetts


The Massachusetts Loan Repayment
Program
for Health Professionals offers
up to $50,000 for a two-year contract.

You must work in an area experiencing
exceptional medical need.

Michigan


Through the Michigan State Loan
Repayment Program
, doctors can receive
up to $200,000 in loan repayment
assistance.

Doctors must agree to a two-year,
full-time commitment in a health care
shortage area.

Minnesota


The Minnesota State Loan Repayment
Program
offers up to $20,000 in loan
assistance per year. Programs for rural
doctors
and urban physicians in
Minnesota also offer up to $25,000 per
year in assistance.

Dentists must agree to work in a
shortage area for at least two years to
qualify.

Missouri


The Missouri Health Professional State
Loan Repayment Program
offers up to
$50,000 in loan repayment assistance.

Doctors must agree to a two-year
commitment in a health care shortage
area.

Montana


The Montana Rural Physician Incentive
Program
offers up to $20,000 per year in
assistance for up to five years.

You must agree to work in a designated
rural or underserved community.

Nebraska


The Nebraska Loan Repayment Program
offers up to $60,000 per year in loan
repayment assistance.

Physicians must agree to work in
designated shortage areas for at least
three years.

Nevada


The Nevada Health Service Corps offers
varying amounts of loan repayment
assistance based on the term of service.

Doctors must agree to work in assigned
areas of need.

New Hampshire


This state program offers doctors up to
$75,000 in loan repayment for a full-time
commitment.

Applicants must agree to work in a
health care shortage area for at least
three years.

New Jersey


The Primary Care Practitioner Loan
Redemption Program
of New Jersey
helps doctors earn up to $120,000 in loan
repayment assistance.

Doctors must agree to a two- to
four-year commitment.

New Mexico


The Health Professional Loan Repayment
Program
of New Mexico offers up to
$25,000 in assistance per year.

Applicants must agree to a two-year
service agreement in a state-approved
position.

New York


Through Doctors Across New York, you
may qualify for up to $150,000 in
assistance over five years.

You need to work in a health care
shortage area for at least two years.

North Carolina


The state of North Carolina doles out
$100,000 in loan repayment assistance
for doctors who qualify.

Physicians must agree to work at least
four years in a health care shortage area.

North Dakota


North Dakota’s Federal State Loan
Repayment Program
offers up to $50,000
per year for up to two years.

Doctors must agree to work in a health
care shortage area for the duration of
the program.

Ohio


The Ohio Physician Loan Repayment
Program
offers $25,000 per year in
assistance for two years of service
followed by up to $35,000 per year for
third and fourth years.

You must agree to work in a health care
shortage area to qualify.

Oklahoma


The Oklahoma Medical Loan Repayment
Program
offers up to $160,000 for a
four-year commitment.

To qualify, physicians must work in a
rural or underserved area.

Oregon


The Oregon Partnership State Loan
Repayment program
offers tiered levels
of assistance based on a variety of
factors.

Applicants must agree to work in a
shortage area for at least two years.

Pennsylvania


The Pennsylvania Primary Health Care
Loan Repayment Program
offers up to
$100,000 in loan repayment assistance in
exchange for a full-time commitment.

Doctors need to agree to work in a
qualified position for at least two years.

Rhode Island


The Rhode Island Health Professionals
Loan Repayment Program
offers financial
assistance for doctors who qualify.

Doctors must agree to work in a shortage
area for at least two years.

South Carolina


South Carolina’s Rural Physician
Incentive Grant Program
offers $60,000
to $100,000 for a four-year contract.

Physicians must work in a rural or
underserved area of the state.

South Dakota


The South Dakota Recruitment Assistance
Program
offers up to $208,754 in
repayment assistance for doctors. The
benefit of the program changes annually.

Doctors must practice full time in a
health care shortage area for at least
three years.

Tennessee


The Tennessee State Loan Repayment
Program
offers up to $50,000 in
assistance for a two-year commitment.

Doctors must work in a designated
shortage area.

Texas


The state’s Physician Education Loan
Repayment Program
offers up to
$160,000 for a four-year commitment.

You must work in a designated
shortage area to qualify.

Utah


Utah’s Rural Physician Loan Repayment
Program
offers up to $15,000 per year in
assistance for doctors who qualify.

Doctors must work in a qualified rural
hospital.

Vermont


The Educational Loan Repayment for
Health Care Professionals program
of
Vermont gives out up to $20,000 in loan
repayment assistance per year.

Doctors in Vermont must work in
medically underserved communities for
at least 12 to 24 months.

Virginia


The Virginia Department of Health offers
loan repayment for doctors of up to
$140,000 for a four-year commitment or
up to $100,000 for a two-year
commitment.

Doctors must work in a state-approved
shortage area.

Washington


Washington’s Health Professional Loan
Repayment Program
offers a maximum
award of $75,000.

A commitment in a health care shortage
area is required.

Wisconsin


Wisconsin’s Health Professions Loan
Assistance Program
offers a maximum
award of $50,000 for doctors who qualify.

This program requires a three-year
commitment in a health care shortage
area.

Part IV: Paying Down Your Medical School Debt

While the very idea of medical school debt could have you feeling overwhelmed, it’s important to understand the many options available when it comes to paying off your loans sooner rather than later. In addition to paying off your loans faster, some strategies can help you save money on interest or secure a more manageable monthly payment.

Here are some tips that can help as you pay down medical school debt:

#1: Refinance your student loans to a lower rate.

Refinancing your student loans to a new loan product with a lower interest rate and better terms can help you save money and possibly even lower your monthly payment. With a lower interest rate, you’ll save money on interest each month, which could help you save money and pay off your loans faster, provided you keep making the same monthly payment.

Keep in mind, however, that there are notable disadvantages that come with refinancing federal loans with a private lender. When you refinance federal loans with a private lender, you lose out on special protections afforded to federal loan borrowers like deferment and forbearance. You also disqualify yourself from federally sponsored income-driven repayment and loan forgiveness programs.

Recommended lenders for refinancing your medical school loans

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.40% - 7.75%


Fixed Rate*

2.63% - 7.70%


Variable Rate*

No Max


Undergrad/Grad
Max Loan
Learn more Secured
earnestA+

20


Years

3.25% - 6.32%


Fixed Rate

2.57% - 5.87%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured
commonbondA+

20


Years

3.20% - 7.25%


Fixed Rate

2.57% - 7.25%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured
lendkeyA+

20


Years

3.15% - 8.79%


Fixed Rate

2.68% - 8.06%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
Learn more Secured
A+

20


Years

3.37% - 7.02%


Fixed Rate

2.80% - 5.90%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured
A+

20


Years

3.50% - 8.69%


Fixed Rate

2.62% - 8.07%


Variable Rate

$90k / $350k


Undergraduate /
Graduate
Learn more Secured
A+

20


Years

5.24% - 8.24%


Fixed Rate

4.74% - 7.99%


Variable Rate

$150k


Undergraduate /
Graduate
Learn more Secured

#2: Find ways to save on monthly expenses.

While graduating from medical school can be a momentous occasion, you can put yourself in a better financial position by living a modest “student” lifestyle as long as you can. Ways to save money include, but aren’t limited to, finding a roommate to share living expenses, skipping pricey dinners out, living without cable television, driving your older car as long as you can, and preventing lifestyle inflation as you start earning more.

#3: Pay all of your monthly payments on time.

Federal Direct Loans and some private lenders offer interest rate discounts after you complete a specific number of on-time monthly payments. Check with your lender to see if they offer this option. If not, you should still make on-time monthly payments to avoid late fees and keep your loans in good standing.

#4: Pay extra toward the principal of your loans.

If you don’t want to go through the trouble of refinancing, you can still pay off your loans faster by paying more than the minimum payment on your student loans each month. Throwing extra money at the principal of your loans reduces the amount of interest you owe with each passing month, helping you save money while paying off your loans faster.

#5: Pay interest while in school.

Some medical student loans let interest accrue while you’re still in school. If you have the financial means to make interest-only payments while you’re still in school, doing so can help you prevent your student loan balance from ballooning before you graduate.

Frequently Asked Questions

Tuition at medical schools is not fixed, meaning it can pay to shop around before you choose an institution. Private schools tend to be more expensive than public schools as well, meaning you can usually save money if you decide on a public education for your medical degree.

The amount you can save depends on your current interest rate and your new loan rate and its terms. To find out how much you could potentially save by refinancing, enter your old loan and new loan information in a student loan calculator.

You can lower the payment on your student loans in a few different ways. First, you can refinance your student loans into a new loan product with a lower interest rate or longer repayment timeline. Second, you can choose an extended repayment plan or even income-driven repayment.

Federal student loans come with important federal benefits and protections such as deferment and forbearance. They also leave you eligible for income-driven repayment plans and federal loan forgiveness.

As you shop for student loans for medical school, remember that the terms of your loan can make a big difference in how much you’ll pay over time. Compare loans based on the interest rate, any applicable fees, and the monthly payment amount you’ll need to make. You can also check student loan providers’ profiles with the Better Business Bureau and read student loan reviews for even more insight.

According to the Association of American Medical Colleges, some of most popular pre-med majors include biological sciences, physical sciences, social sciences and humanities.

According to Swarthmore College, medical schools are interested in students with excellent academic ability, strong interpersonal skills, leadership skills, and demonstrated compassion and care for others.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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College Students and Recent Grads

The Ultimate Guide to Paying off Dental School Debt in 2018

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Part I: Dental School Debt in the U.S.

How much debt do dental students have?

The American Dental Education Association (ADEA) shares numerous statistics about dental school debt and the profound impact it can make on new dentists’ lives. According to the agency, the average dental school debt for indebted dental school graduates from the class of 2017 reached $287,331. Large debt loads were reported at both public schools and private schools — $239,895 and $341,190, respectively.

Even more startling is the fact that more than 30% of indebted dental graduates from the class of 2017 reported debt loads of more than $300,000.

These statistics show just how expensive dental school can be, but they also make us wonder if dental school is truly worth the cost. This guide was created to show how a dental education can pay off with proper loan and money management. If you’re considering a future in dental school and worrying about the high price tag, keep reading to learn more.

Are you a dental school graduate currently suffering from high-interest loans? Jump down to our top picks for refinancing your dental school debt.

Is dental school worth it?

Before anyone can gauge whether dental school is worth it, it’s crucial to consider the level of income one can expect in this career. According to the U.S. Department of Labor’s Bureau of Labor Statistics, dentists earned an annual mean wage of $173,860 nationally as of May 2016. It is important to note, however, that the bottom 10% of earners brought in only $67,690 that year, while the bottom 25% of earners made an average of $106,180.

The key to deciphering dentist income is figuring out how much you might earn after you gain some experience and the type of dentistry role you might take on. It’s only natural to expect dentists to earn more as they progress through their careers, but the industry they work in can also impact their earnings.

As the BLS reports, some industries paid dentists considerably more in 2016, including residential intellectual and developmental disability, mental health, and substance abuse facilities ($184,620) and offices of dentists ($176,470).

Location matters, too, of course. Some states reported consistently higher incomes for dentists that year, including Delaware ($236,130), North Carolina ($236,020), Alaska ($234,240), New Hampshire ($220,480), and Nevada ($210,690).

With these salaries in mind, it’s easier to see how one might overcome $200,000+ in educational debt compared to workers in other, lower-paying industries.

Still, it’s important to note that dental school debt can still make a big impact on any dentist’s finances after graduation. A dentist with the average debt load of $287,331 at 6% APR would need to fork over a minimum of $3,189.96 per month if they chose standard, 10-year loan repayment after graduation per LendingTree’s loan calculator (Note: LendingTree is the parent company of MagnifyMoney). Because of this, some dentists choose alternative repayment options that allow them to pay smaller monthly payments for a lengthier timeline. How long it takes a dental graduate to repay their debt depends on whether they choose standard, 10-year repayment or opt for an alternative repayment plan instead.

Is dental school right for you?

Part II: How to Pay for Dental School

If you answered “yes” to all or most of the questions above, considering a dental education could be a smart move. Still, it’s important to learn more about the different ways to pay for dental education and the debt repayment options that may be available to you. We’ll cover these concepts and more in this section.

Federal vs. Private Student Loans for Dental School

Federal student loans for dental school

Federal loans can be valuable for students who need to borrow money for dental education. Several different types of student loans are available, each having their own benefits and drawbacks. Federal student loans are often a good option for dental students since they offer relatively low interest rates and help students qualify for federal perks like income-driven repayment and student loan forgiveness programs.

Pros of federal student loans:

  • Fixed and competitive interest rates
  • Access to federal loan repayment and student loan forgiveness programs
  • The government can pay your interest while you’re in college if you qualify for subsidized loans
  • Flexible repayment plans
  • Access to student loan forbearance and deferment (if you qualify)
  • You don’t need a credit check to qualify for most federal student loans
  • You can defer repayment until you graduate college or drop down to half-time

Cons of federal student loans:

  • Borrowing caps that limit the amount of federal loans you can take out
  • You may need to take out more loans to cover the costs of dental school
  • The government can garnish your wages if you miss payments

When to consider federal student loans:

  • You are gearing up for dental school and want a low, fixed-interest rate
  • You haven’t surpassed borrowing limits on federal loans yet
  • You want options in terms of deferment, forbearance, and income-driven repayment in the future

Type of Loan


Interest Rates


How much you can
borrow each year

Perkins Loans

5%

Up to $5,500 per year for undergraduate students, depending on your financial need and other aid you receive; up to $8,000 per year for graduate students

Direct Subsidized Loans

4.45% for undergraduate loans first disbursed on or after July 1, 2017, and before July 1, 2018

$3,500 to $5,000 per year

Direct Unsubsidized Loans

4.45% for undergraduate loans first disbursed on or after July 1, 2017, and before July 1, 2018; 6% for graduate loans

$5,500 to $12,500 per year for undergraduate students; up to $20,500 per year for graduate students

Direct PLUS Loans

For Direct PLUS Loans first disbursed on or after July 1, 2017, and before July 1, 2018, the interest rate is 7%

Maximum loan amounts are limited to the cost of attendance in school minus other financial assistance you receive

Private student loans for dental school

Private loans offer an alternative option for dental students to use instead of, or in addition to, federal student loans. Private student loans are offered through private lenders, which means their rates and repayment terms vary. Many dental students wind up taking out private student loans once they have borrowed as much federal aid as they could receive.

Pros of private student loans:

  • Rates can be lower than federal loans if you have excellent credit and/or a co-signer
  • Loan limits can be high enough to cover your entire cost of admission
  • The application process and loan disbursement may happen faster than federal student loans

Cons of private student loans:

  • You typically need good or excellent credit to qualify
  • You may need a co-signer
  • Interest rates can be fixed or variable
  • You don’t qualify for federal student loan forgiveness, income-driven repayment, or federally sponsored deferment or forbearance
  • You may need to make payments or pay interest while still in school

When to consider private loans:

  • You’ve tapped out your federal student loan limits but still need to borrow money
  • You qualify for a lower interest rate
  • You don’t want to take advantage of federal plans or protections on your student loans
 

Interest Rates


Borrowing Limits


Credit Requirement

Discover Student LoansDiscover Student Loans

Variable rates from 4.62% to 8.62% APR; fixed rates from 6.49% to 9.99% APR

Borrow up to 100% of the cost of attendance minus other aid

Students may need excellent credit to qualify without a co-signer

Sallie Mae Student Loans Sallie Mae Student loans

Variable rates available from 3.62% APR to 8.37% APR; fixed rates from 5.75% APR to 8.37% APR

Borrow up to 100% of the cost of attendance

You may need excellent credit to qualify without a co-signer

Wells Fargo Student LoansWells Fargo Student Loans

Variable rates available from 4.59% APR to 9.10% APR; fixed rates available from 6.66% APR to 10.18% APR

Lifetime limit for this loan combined with all other education-related debt, including federal loans, is $120,000

You may have a better chance to qualify if you have a co-signer; excellent credit required

Citizens Bank Student Loans
Citizens Bank Student loans

Variable rates available from 3.53% APR to 9.69% APR; fixed rates available from 5.26% APR to 10.24% APR

Loan amounts from $1,000 to $295,000

Good or excellent credit required

College Avenue Student LoansCollege Avenue Student loans

Variable rates available from 4.07% APR to 9.60% APR; fixed rates available from 6.22% APR to 10.66% APR

Borrow up to 100% of the cost of attendance

Good or excellent credit required without a co-signer

*Rates current as of Feb. 28, 2018.

Grants & fellowships for dental students

This program is offered through the Dr. Anthony Volpe Research Center and is open to 1-2 dental students per year. The goal is to help students apply classroom and lab experiences to real-world scenarios students will find in the field of dentistry.

  • Award amount: Award varies.
  • Qualifications: You must be a dental student to qualify.
  • Deadline to apply in 2018: Application period opened in mid-January and closes in mid-March.

This award was created to encourage dental students to conduct important research in their field by creating a financial incentive. The goal of the award is to promote advances in preventative dentistry.

  • Award amount: A $5,000 grant is awarded to one student each year.
  • Qualifications: According to the American Dental Association Foundation, dental students pursuing this grant must be in pursuit of one of the following dental degree programs at an eligible institution: D.D.S. or D.M.D., D.D.S./D.M.D. and Ph.D. dual degree, Ph.D. or equivalent, or M.P.H., M.S. or equivalent.
  • Deadline to apply in 2018: The application period opens the first Friday of each April and closes the last Friday of each June.

The Intel International Science and Engineering Fair Special Awards is a partnership between the Society for Science & the Public and the Intel Foundation. Students in high school can win a variety of prizes including scholarships, summer internships, equipment grants, and educational trips.

  • Award amount: Cash prizes total $3,500 for outstanding projects related to dentistry and oral health. The American Dental Association Foundation sponsors these awards.
  • Qualifications: The award is open to any student presenting at the Intel International Science and Engineering Fair.
  • Deadline to apply in 2018: Winners are selected among those who present at the fair.

Scholarships for dental students

This ADA Foundation scholarship helps select students defray the overwhelming costs of dental education and is meant to apply to academically gifted students.

  • Award amount: Scholarships up to $2,500 are available.
  • Qualifications: Students must be in their second year of school, must be enrolled full time, must demonstrate financial need, and must have a GPA of at least 3.25. References and minority status are also required.
  • Deadline to apply in 2018: Applications were due by 11:59 p.m. Central time on February 2, 2018.

This program offers two $5,000 awards to dental students who are nominated by someone else after demonstrating leadership skills in pursuit of their dental education.

  • Award amount: Two $5,000 awards are granted each year.
  • Qualifications: Students must be nominated and be in the process of earning a D.D.S. or D.M.D. degree from a dental school accredited by the Commission on Dental Accreditation. Students must also be under the age of 40 and a student, graduate student, or resident in their first five years of residency.
  • Deadline to apply in 2018: The nomination period begins the first Friday in April and ends the last Friday in June.

This scholarship is open to 27 dental students nominated by the dean of their school.

  • Award amount: Awards come in the form of $5,000 scholarships.
  • Qualifications: Students must be nominated by the dean of their school and must be in the class of 2018 or class of 2019 at a dental school accredited by the Commission on Dental Accreditation. Students must also demonstrate financial need.
  • Deadline to apply in 2018: A 2018 deadline will be announced soon.

The TYLENOL Future Care Scholarship is open to U.S. students who are actively seeking a degree that will help them treat patients.

  • Award amount: Scholarships are awarded in both $5,000 and $10,000 amounts.
  • Qualifications: Students must be in pursuit of a degree that leads to a career treating patients. Students must also have at least one year left in school.
  • Deadline to apply in 2018: The application period opens May 1, 2018 and ends on June 28, 2018 for the following school year.

This scholarship, which was created to commemorate Senator Barry Goldwater, is open to students who pursue research careers in natural sciences, mathematics, and engineering.

  • Award amount: Scholarships of up to $7,500 per year are available.
  • Qualifications: You must be a full-time sophomore or junior student pursuing a dental degree or a degree at a four-year or two-year school. Medical research must be a central part of your career goals.
  • Deadline to apply in 2018: Application period opens the first Tuesday in September and ends the last Friday in January.

Part III: How to Pay Back Dental School Debt

Due to the many federal and private loan programs available, students entering dental school have plenty of options to compare and contrast. Since dental school funds borrowed need to be repaid eventually, however, it’s important for students to educate themselves on their many repayment options as well.

Repayment programs to consider

Here are the repayment programs students can choose as they wrap up their dental degrees.

Income-Driven Repayment Plans

For federal student loan borrowers, there are several different income-driven repayment programs, each with their own stipulations and intended audience. The following table highlights each program and how it works.

 

Payment Amount

Repayment Period

Eligibility

Loan Forgiveness

Pay As You Earn Repayment Plan
(PAYE Plan)

Generally 10% of your discretionary
income, but never more than your payment on 10-year Standard Repayment Plan

20 years

Your payment under this plan must be less than what you would pay under standard, 10-year repayment

Yes

Revised Pay As You Earn Repayment Plan
(REPAYE Plan)

Generally 10% of your discretionary income

20 years for undergraduate loans and 25 years “if any loans you’re repaying under the plan were received for graduate or professional study”

Any borrower with eligible federal student loans can qualify

Yes

Income-Based Repayment Plan
(IBR Plan)

Generally 10% of your discretionary income if your loan originated after July 1, 2014, but never more than the 10-year Standard Repayment Plan; generally 15% of your discretionary income if you’re not a new borrower on or after July 1, 2014; either way, you’ll never pay more than the payment on a standard, 10-year repayment plan

20 years if you’re a borrower on or after July 1, 2014; 25 years otherwise

Your payment under this plan must be less than what you would pay under
standard, 10-year repayment

Yes

Income-Contingent Repayment (ICR Plan)

20% of your discretionary income or what you would pay over the course of fixed 12-year repayment plan

25 years

Any borrower with eligible federal student loans can qualify

Yes

Is an income-driven repayment plan right for you?

Income-driven repayment may be a good option for dental students who want to make lower monthly payments than they would with standard, 10-year repayment plans. These plans are also a good option for students who want their loans forgiven after 20-25 years. Keep in mind, however, that forgiven loan amounts are considered taxable income in the year they are forgiven.

How to apply

Apply for income-driven repayment programs using the U.S. Department of Education website.

Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Plan offers students the opportunity to have their student loans forgiven after 10 years provided they work in an approved public service position during that time. Once a student finds eligible employment and starts working, they can have their loans forgiven after 10 years and 120 months of timely loan payments.

While this program can be advantageous for dental graduates, it’s important to note that changes to this program could be on the way. It still works as promised for the time being, but budget cuts of the future could bring this program to an end or bring on considerable changes to benefits.

Who is eligible?

Dentists who agree to work in government-approved public service positions may be eligible for the Public Service Loan Forgiveness (PSLF) Program. You can learn more about qualifying employment here.

Is this program right for you?

This program can work well for dentists who want to work in public service or in an area with a high need for dentists and other health care workers. After 10 years, your loan balances will be forgiven, and you are free to move on to other employment if you wish.

How to apply

Fill out an application for PSLF with the U.S. Department of Education as soon as you can.

Army Dental Corps Program

This program offers tuition assistance up to 100% for individuals who serve in the U.S. Army while working on their degree. The Army will pay your tuition, your required books, and most academic fees while offering a monthly stipend of up to $2,000.

Who is eligible?

Dental students who qualify to serve in the U.S. Army may qualify for this program. You must be 21-42 years of age, be a U.S. citizen, and meet prescribed medical standards.

How to apply

For additional information, contact your local Army recruiter, call 1-800-USA-Army, or visit Healthcare.GoArmy.com.

National Health Service Corps Loan Repayment Program

This program offers tax-free loan repayment assistance for individuals entering qualified health care careers. Licensed health care providers may earn up to $50,000 for a two-year commitment to NHSC-approved employment in a high-need area.

Who is eligible?

Dentists who agree to work in an NHSC-approved career for at least two years can qualify for this assistance.

How to apply

Contact the National Health Service Corps to apply. You can also explore the NHSC website for tips on the application process.

State Loan Repayment Programs for Dentists

 

Program

Eligibility

Alaska


The SHARP Program for dentists offers new dentists up to $35,000 in loan repayment assistance per year.

Dentists must agree to a commitment of at least two years in a high-need shortage area.

Arizona

The Arizona State Loan Repayment Program offers up to $65,000 per year in
repayment assistance for dentists for two years, with lower repayment amounts offered in subsequent years.

You must be a U.S. citizen and dentist who agrees to work in a state-approved high-need position.

California

The California State Loan Repayment Program offers up to $50,000 in loan forgiveness for dentists.

Applicants must be a dental graduate who agrees to at least a two-year commitment in an eligible, state-approved dental position.

Colorado

The Colorado Health Service Corps offers up to $90,000 in loan forgiveness for dentists who qualify.

You must agree to practice for three years in a state-approved shortage area for a practice that accepts public insurance and offers discounted services to those with low incomes.

Delaware

The Delaware State Loan Repayment Program offers up to $70,000 for mid-level practitioners and up to $100,000 in loan forgiveness for advanced practitioners in dentistry.

Dentists must work full time for two years in a state-approved, high-need position.

Georgia

The Dentists for Rural Areas Assistance Program provides up to $25,000 in loan repayment assistance per year for dentists who work in high-need areas.

This program is available to dentists who agree to work in shortage areas in the state of Georgia.

Illinois

The Illinois National Health Service Corps State Loan Repayment Program offers up to $50,000 in loan repayment assistance.

Applicants must be licensed dentists or health care practitioners who commit to at least two years of service.

Iowa

The Iowa Loan Repayment Program offers up to $50,000 in loan repayment
assistance for individuals who agree to a full-time commitment and less for a part-time commitment.

This program requires a two-year commitment in a state-approved shortage area.

Kansas

The Kansas State Loan Repayment Program offers up to $25,000 in assistance per year.

Applicants must agree to a two-year commitment in an eligible position.

Kentucky

The Kentucky State Loan Repayment
Program
awards up to $300,000 in loan repayment assistance to up to 13 applicants.

Applicants must agree to a two-year commitment to work in a shortage area where dentists are in demand.

Louisiana

The Louisiana State Loan Repayment
Program
offers up to $30,000 in annual loan repayment assistance for up to three years.

Applicants need to work for three years full time in a designated high-need area approved by the state.

Maine

The Maine Dental Education Loan Repayment Program offers up to $20,000 per year in loan repayment assistance for up to four years.

Applicants must agree to at least a two-year commitment in an underserved area.

Maryland

The Maryland Dent-Care Loan Repayment Assistance Program for Dentists offers up to $23,740 per year in repayment assistance.

Dentists must agree to work in an underserved area for a minimum of three years.

Michigan

Dentists who qualify for the Michigan
Loan Repayment Program
can receive up to $200,000 in loan repayment assistance.

Applicants must work full time in a high-need area for at least two years.

Minnesota

The Minnesota State Loan Repayment Program offers up to $20,000 in loan assistance per year.

Dentists must agree to work in a shortage area for at least two years to qualify.

Missouri

Dentists who qualify for the Missouri
Health Professional State Loan
Repayment Program
can receive up to $50,000 in loan repayment assistance.

Dentists must agree to a two-year commitment in a shortage area.

Montana

The Montana NHSC Student Loan
Repayment Program
provides up to $15,000 in loan repayment assistance for up to two years.

Dentists must agree to a two-year commitment in a shortage area.

Nebraska

This state program offers up to $20,000
per year in loan repayment assistance for up to three years.

Applicants must agree to a three-year commitment to employment in a designated shortage area and accept Medicaid patients.

New Hampshire

New Hampshire’s state program offers up to $75,000 in loan repayment for a full-time commitment.

Dentists must agree to work in a designated shortage area for at least three years.

New Jersey

The Primary Care Practitioner Loan Redemption Program of New Jersey helps certain health care practitioners earn up to $120,000 in loan repayment assistance.

Eligible candidates must agree to at least a two-year service commitment, and up
to four years for higher levels of loan repayment.

New Mexico

New Mexico’s Health Professional Loan Repayment Program offers up to $25,000 in assistance per year.

Applicants must agree to a two-year service agreement in a state-approved position.

North Carolina

The state of North Carolina offers up to $100,000 in loan repayment assistance for dentists.

Dentists must agree to a four-year commitment in a shortage area.

Ohio

The Ohio Dentist and Dental Hygienist
Loan Repayment Program
doles out up to $50,000 in exchange for a two-year commitment.

Dentists must agree to work full time for two years in a high-need area.

Oklahoma

The Oklahoma Dental Loan Repayment Program can help you qualify for up to $25,000 per year in loan repayment assistance.

This program is available to dentists who serve in rural or underserved areas.

Oregon

Oregon Partnership State Loan Repayment offers tiered levels of
assistance based on candidate and site eligibility.

Dentists must agree to a two-year service commitment.

Pennsylvania

The Pennsylvania Primary Health Care
Loan Repayment Program
provides dentists with up to $100,000 in loan repayment assistance in exchange for a
full-time commitment.

Dentists need to agree to a two-year
service agreement.

Rhode Island

The Health Professionals Loan Repayment
Program
provides varying levels of assistance for dentists who qualify.

Dentists must agree to at least a two-year commitment in an underserved community.

South Carolina

The Rural Dentist Loan Repayment Program offers loan repayment
assistance to dentists who agree to work in underserved areas.

Eligible dentists will agree to work full time in a qualifying position. Priority is given to those who can demonstrate financial need.

South Dakota

The Recruitment Assistance Program
offers up to $208,754 in repayment assistance currently, but the amount changes annually with the price of college admission at the University of South Dakota School of Medicine.

Dentists must agree to practice full time in a shortage area for at least three years.

Tennessee

Dentists who apply for the Tennessee
State Loan Repayment Program
may qualify for up to $50,000 in assistance for a two-year commitment.

Dentists must agree to work for two years in a designated shortage area.

Vermont

The Educational Loan Repayment for
Health Care Professionals
gives out $20,000 in loan repayment assistance per year.

Dentists must agree to work at a qualified site. Eligibility requirements change annually.

Virginia

The Virginia Department of Health offers
loan repayment of up to $140,000 for a four-year commitment or up to $100,000 for a two-year commitment.

Dentists must work in a shortage area orqualified site approved by the state.

Washington

Dentists in Washington can apply for a
Health Professionals Loan Repayment Program with a maximum award of $75,000

Dentist must work in an approved site for at least 24 hours per week for at least three years.

Wisconsin

Wisconsin offers a Health Professions Loan Assistance Program with a maximum award of $50,000 for dentists.

Dentists must work at least three years in a designated shortage area.

5 tips to pay off your student loans faster

While loan repayment programs can help you whittle away your student loans, there are several strategies that can help you reduce the amounts you owe whether you sign up for special programs or not. Here are five tips to pay your loans off faster no matter your situation or how much you owe:

#1: Start paying right away.

According to the U.S. Department of Education’s blog, paying your loans right away – whether you have to or not – can be a smart move. While student loan payments may not be required until you graduate, you can reduce the amount of interest you’ll pay over time by paying any amounts you can toward your loans as you can.

#2: Refinance your loans to a lower rate.

Refinancing student loans into a new loan product with a lower interest rate and better terms can help you save money on interest over the long haul. This is especially true with private student loans since rates tend to be competitive and can change over time. Keep in mind, however, that refinancing federal student loans with a private lender can cause you to miss out on certain federal perks and protections including income-driven repayment, deferment, or forbearance.

Signing up for automatically debited payments can take the stress out of repaying your student loans. By setting up automatic bank drafts, you can rest assured your loan payment is taken care of and you won’t face late fees or penalties. Some lenders also offer an interest rate reduction for enrolling in their automatic payment plan. This is where savings come into play since a lower interest rate means less of your payment goes toward interest over time.

Our top picks for refinancing dental school debt

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.40% - 7.75%


Fixed Rate*

2.63% - 7.70%


Variable Rate*

No Max


Undergrad/Grad
Max Loan
Learn more Secured
earnestA+

20


Years

3.25% - 6.32%


Fixed Rate

2.57% - 5.87%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured
commonbondA+

20


Years

3.20% - 7.25%


Fixed Rate

2.57% - 7.25%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured
lendkeyA+

20


Years

3.15% - 8.79%


Fixed Rate

2.68% - 8.06%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
Learn more Secured
A+

20


Years

3.37% - 7.02%


Fixed Rate

2.80% - 5.90%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured
A+

20


Years

3.50% - 8.69%


Fixed Rate

2.62% - 8.07%


Variable Rate

$90k / $350k


Undergraduate /
Graduate
Learn more Secured
A+

20


Years

5.24% - 8.24%


Fixed Rate

4.74% - 7.99%


Variable Rate

$150k


Undergraduate /
Graduate
Learn more Secured

#3: Sign up for automatic payments.

Signing up for automatically debited payments can take the stress out of repaying your student loans. By setting up automatic bank drafts, you can rest assured your loan payment is taken care of and you won’t face late fees or penalties. Some lenders also offer an interest rate reduction for enrolling in their automatic payment plan. This is where savings come into play since a lower interest rate means less of your payment goes toward interest over time.

#4: Pay more than the minimum payment.

This tip might seem obvious, but it’s extremely important. Whether you start paying your loans off right away or wait until you graduate and have to start making payments, paying more than the minimum will let you pay off your loans faster. The more you can pay toward the principal of your loan balance, the more you save on interest and the faster your loans will disappear.

#5: Consider a loan repayment program.

Some of the programs we listed above (such as the PSLF Plan or state loan repayment assistance programs) can help you get out of debt faster while gaining valuable work experience. These programs typically require you to work in a specific shortage area for a predetermined length of time, so they’re not for everyone. If you do qualify and apply, however, you could have your loans forgiven completely or earn tens of thousands of dollars in loan repayment assistance.

Frequently Asked Questions: Paying for Dental School

Determine your current interest rate and compare it to the new rate you could qualify for. If the difference is substantial, refinancing can make a lot of financial sense. With a lower interest rate, you could save money and pay off your debts faster. However, it’s important to remember that you’ll lose federal student loan benefits if you refinance federal loans with a private lender.

The amount you’ll save depends on the amount you owe, your old interest rate, and your new rate and loan terms. A student loan calculator can give you a general idea of your savings.

One of the best ways to reduce the amount of money you owe for dental school is to spend less on your education to begin with. As you consider dental schools, make sure to compare program details such as the price of tuition, room, and board. How much you pay for school has a direct correlation to how much you’ll need to borrow.

Start by filling out a FAFSA form, or Free Application for Federal Student Aid. This form helps schools determine how much federal aid you might qualify for. You should also contact the financial aid office at your dental school. They can point you toward applicable school-based scholarships and grants you may not even know about.

While the amount of time it takes dental students to find employment varies, the ADEA reports that dental school graduates typically enter the workforce much faster than colleagues in many other health professions.

According to the ADEA, any college major that offers a well-rounded education or fosters a foundation in science is appropriate for future dental students. This goes against the common wisdom that a major in biology or a similar subject is required.

The ADEA reports that both designations mean the same thing – that the dentist graduated from an accredited dental school. Universities determine which degree they award, and it has no bearing on employment opportunity or earnings.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Holly Johnson
Holly Johnson |

Holly Johnson is a writer at MagnifyMoney. You can email Holly here

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College Students and Recent Grads

Guide to Free Community College in the U.S.

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Free community college in the U.S. is starting to become a reality. Since 2014, four states have signed into law “College Promise” programs aimed at delivering subsidized higher education to their residents. Numerous cities across the U.S. have also taken notice, enacting localized scholarships that cover the costs of two-year college programs.

While the past few years have proven to be monumental for the College Promise cause, this is a movement that has been long in the making:

The history of the free college movement in the United States

Where you can go to community college for free

There are currently 10 statewide free community college programs enacted across the U.S.:

The fight for free community college tuition is growing rapidly at the local level as well. There are notable free community college programs in:

  • San Francisco
  • Chicago
  • Long Beach, Calf.
  • Kalamazoo, Mich.

For this article, we’ll be focusing on New York, Oregon, Rhode Island and Tennessee due to the level of funding and reach of the state programs.

What you need to know

The free community college movement

Over the past four years, there has been a significant push to make America’s public colleges tuition-free.

The Campaign for Free College Tuition was established in 2014 as 501(c)(3) nonprofit. They are a bipartisan group that works with elected officials, leaders and policy experts to make public colleges tuition-free.

In addition, former President Barack Obama proposed the College Promise National Advisory board in 2015, which pushed for offering two years of community college tuition-free. This proposal was expanded with the America’s College Promise Act of 2015, which would award federal-state partnership grants to states who waive tuition and fees for students wanting to attend community college.

While every state program is different, they are helping students ease the burden of college debt and gain access to higher education.

Free college in New York

New York made history in April 2017, when the Excelsior Scholarship was signed into law. The program, which was originally proposed by Gov. Andrew Cuomo in January 2017, promises free tuition for in-state students attending two- or four-year colleges within the State University of New York (SUNY) and City University of New York (CUNY) campuses. This is the first college promise program in the U.S. to encompass both four-year universities and community colleges within the state.

Who qualifies

To qualify for the Excelsior Scholarship in New York, applicants must:

  • Reside in New York state for 12 months prior to application submission
  • Be a U.S. citizen or an eligible non-citizen
  • Have graduated high school within the U.S., earned a high school equivalency diploma or passed an “Ability to Benefit” test
  • Plan to attend a SUNY or CUNY campus for a two- or four-year degree
  • Complete 30 credits a year (minimum of 12 a semester)
  • Maintain good academic standing
  • Be on track to earn an associate’s degree in two years or bachelor’s degree in four years
  • Applicant’s household income must not exceed:
    • $100,000 for the 2017-2018 school year
    • $110,000 for the 2018-2019 school year
    • $125,000 for the 2019-2020 school year

What it covers

The Excelsior Scholarship is a last-dollar program, meaning students must first exhaust federal and state resources, scholarships and grants before the program kicks in. Students are awarded up to $5,500 for tuition and fees, minus any dollars received from Pell Grants, New York’s Tuition Assistance Program (TAP) or other scholarship awards.

Students who qualify for the Excelsior Scholarship will have their tuition covered at SUNY and CUNY schools via a credit, which goes directly to the institution and covers any remaining costs. It does not provide financial assistance for books, housing or transportation.

Fine print

  1. Must live and work in New York for as many years as enrolled in the program: If a student fails to do so, the award converts over to a loan.
  2. Students must apply for all applicable financial aid: This includes Pell Grants, TAP and other financial awards before applying to the program.

Free community college in Rhode Island

Gov. Gina Raimondo signed the “Rhode Island Promise” into law in January 2017. It provides recent graduates in Rhode Island a path toward higher education, no matter their family’s income level.

Who qualifies

To qualify for the Rhode Island Promise, potential applicants must:

  • Be Rhode Island resident
  • Be younger than 19 years old when you completed high school or GED program
  • Have recently graduated high school (public, private or home schooled) or recently received a GED
  • Apply to the Community College of Rhode Island
  • Enroll the following semester after high-school graduation as a full-time student
  • Fill out a FAFSA
  • Fill out the Rhode Island Promise Attestation form

What it covers

The Rhode Island Promise covers two years of tuition and fees for applicants. Students who receive the Promise are entitled to tuition and fees for two years at the Community College of Rhode Island to complete an associate’s degree.

Like New York, the Rhode Island Promise is a last-dollar scholarship. Students may also apply for other financial awards such as Pell Grants, Supplemental Education Opportunity Grants (SEOG) or individual institution scholarships. The grant covers any remaining balance.

A key distinction of the Rhode Island Promise is that there is no household income limit for applicants. So long as students adhere to the requirements above, they are eligible. Once they complete the program, students are not required to stay in the state, though they are encouraged.

Fine print

While the Rhode Island Promise is a very generous grant, there are a few things to consider.

  1. Students must take a full course load every semester: Students who are considered part-time (less than 12 credits) during the add/drop period will not receive the scholarship, nor will they be eligible for future semesters.
  2. Students must maintain a cumulative GPA of 2.5: If a GPA falls below 2.5, students have the ability to take summer classes; however the Rhode Island promise does not cover summer courses.
  3. Students must complete 30 credits in the first year to renew the scholarship: To be eligible for a second year of the scholarship, students must have 30 credits. AP classes taken in high school can count towards this.

Free community college in Tennessee

Tennessee became the first state to offer free community college to all residents in May 2014, when the Tennessee Promise was signed into law. Championed by Gov. Bill Haslam, the Tennessee Promise has paved the way for many of the other states to create similar free college programs. As of February 2017, over 33,000 students had enrolled in the program.

Who qualifies

To qualify for the Tennessee Promise, applicants must:

  • Be a Tennessee resident
  • U.S. citizen or eligible noncitizen
  • Apply for the Tennessee Promise scholarship
  • Complete a FAFSA
  • Be under the age of 19, after graduating high school or GED program
  • Have recently graduated from high school (public, private, home school) or recently received their GED
  • Enroll as a full-time student for the fall semester following graduation
  • Attend a mandatory meeting in applicant’s local area
  • Complete eight hours of community service every semester prior to the start of the semester

What it covers

The Tennessee Promise Scholarship is a last-dollar scholarship that covers tuition and fees for any of the state’s colleges of applied technology (TCATs), community colleges or in-state public four-year colleges that offer a two-year program. It does not cover the cost of books, transportation or room and board. The scholarship is applied after all other forms of financial aid have been exhausted.

While the scholarship has no household income requirements, the program does focus on attracting low income, at-risk students by working with high school guidance counselors across the state. According to the TN Achieves report, the average award for the 2016-2017 year was $1,090 per student.

A unique aspect of the Tennessee Promise Scholarship is the program’s emphasis on mentor guidance. In addition to the money eligible students receive, the state has recruited over 32,000 volunteers since the programs start in 2009. The goal of a mentor, who is given a maximum of 10 students, is to make the road to college as clear as possible for students. Training is provided to mentors, and students must meet with their mentors at two mandatory meetings held in each county before the start of fall semester.

Fine print

There are a few things to keep in mind when applying for the Tennessee Promise Scholarship:

  1. Students must attend for consecutive semesters as a full-time student: A gap in enrollment or a drop down to part-time student results in ineligibility for the program.
  2. Students must maintain a 2.0 GPA.
  3. Missing a mandatory meeting results in permanent ineligibility.
  4. Students must complete eight hours of community service every semester.

How to leverage your community college degree

Students who obtain an associate’s degree save over 60% in the cost of tuition and fees when compared with the same costs at a four-year college. The American Association of Community Colleges reported that for the 2016-2017 school year, the average cost of tuition and fees for a four-year public in-state college was $9,650, compared with community colleges that charged $3,520.

One way to minimize the cost of college is to take core classes and electives at a community college before transferring to a four-year school. This strategy allows students to take the same classes a student would be taking at a four-year college, without the price tag of a four-year college. Once completed, students can transfer to a four-year college to complete their bachelor’s degree.

Students already enrolled in a four-year school can still take advantage of these savings by taking approved electives and core classes over the summer at a community college. This strategy can help students graduate on time and save money.

Pros and cons of transferring to a four-year school

The main benefit of attending a community college prior to a four-year school is the cost savings. Depending on a student’s living situation, many can live at home and commute to community college. This eliminates room and board costs, which are an average of $10,800 for the 2017-2018 school year, according to the College Board.

Students transferring from a community college to a four-year school generally have a clear pathway, so long as they are in good academic standing; however it’s important to make sure credits will transfer. This is especially true if a student changes majors upon transferring. For example, a student who took core classes for a history major at community college but switches to a biology major at a four-year college may have to retake certain core classes.

Alternatives to community college

Community college is not the only way to learn new skills and increase your earning potential. While traditional two- and four-year college programs can open up job opportunities, it’s important to note there are other pathways to career success.

Apprenticeships

Apprenticeships offer students a way to learn a specific skill or trade without the burden of student debt, while also earning a wage. According to the U.S. Department of Labor, “87 percent of apprentices are employed after completing their programs, with an average starting wage above $50,000 per year.” The recent rise in the popularity of registered apprenticeships is thanks to a labor department initiative, ApprenticeshipUSA, which received $10.4 million in accelerator grants at the start of 2017.

While many apprenticeships apply to certain trade skills like electrical or construction work, there are apprenticeships in the health care, business, hospitality, energy industries, as well as others. The labor department lists a variety of resources for finding and learning more about apprenticeships.

Certificate programs

Certificate programs allow students to become experts in certain skills and industries without committing to a full undergraduate or graduate degree. Intensive programs can be a short as 10 to 12 weeks, while others may take up to three years to complete, depending on education level and area of interest.

Certificate programs are becoming widely popular within the IT industry due to the salary boost that comes with them. The Global Knowledge 2017 IT Skills and Salary report found that the difference between salaries of certified vs. noncertified IT employees was 11.7 percent, or $8,400 a year.

Certificate programs can be found at community colleges, graduate schools and online schools across the globe. Popular programs vary for different levels of education. For example, getting certified as a yoga or pilates instructor requires less prior education requirements than someone looking to become a certified financial planner.

Trade school

Designed to teach students skills related to a specific career, trade schools give students hands-on learning that directly applies to specific careers. One of the major benefits of attending a trade school, also known as vocational schools, are the job placement programs that come along with them. Many vocational schools have strong ties to certain industries giving students a clear pathway toward earning their first paycheck.

Popular trade school programs include automotive, plumbing, electrical and HVAC, among others, and can be found in high schools, community colleges and for-profit industry trade schools across the country.
If you’re seriously considering trade school, be sure to do your due diligence on the school. The FTC warns that some for-profit trade schools misrepresent what they can offer students. To avoid losing out on a quality education, prospective students should look for schools that are licensed by state agencies (like the Department of Education), or accredited by a legitimate organization. Other good information to find out would be: “What percentage of graduates found work after graduation?” and “What are the average starting salaries of graduates?”

Whatever higher education path you take, be sure to look into local and state-run scholarships and grant programs. Research all your options, and plan your finances ahead of time.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Jackson Wise
Jackson Wise |

Jackson Wise is a writer at MagnifyMoney. You can email Jackson here

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