<p>Uh, yeah, I was confused when dental school was mentioned.</p>
<p>My parents had nothing to do with my graduate school payment, married or not.</p>
<p>As for paying someone else’s tuition, correct me if I’m wrong, but I believe if you pay part or all of someone’s tuition, no matter whose, it is considered an “untaxed gift” regardless of amount.</p>
<p>kgos16- If my math is correct, we’re looking at roughly $4,000 per year in interest. Am I right? (I took the $669 per year on $10,000 and multiplied that by 6 (for a $60,000 loan). It doesn’t seem like much, but of course, that’s only one year.</p>
<p>My D will actually be attending dental school (4 years). I’m not sure if that makes any kind of difference in terms of a loan.</p>
<p>If we can help out in this manner and save them a lot in interest payments, we’re glad to.</p>
<p>When our kid goes to grad school, we will also be helping with living expenses…rent and the like.</p>
<p>What is the future husband going to be doing for work? This could make a difference in terms of what you choose to contribute, for example, if he is also a student, rent might be something you could pay.</p>
<p>klfrech - the $4,000 figure seems correct for a $60,000 loan. If you can pay that interest down while your D is in school, that will be more helpful in the long run, as that will prevent that interest from automatically capitalizing when your D is finished with school. </p>
<p>Future husband is a computer and electrical engineering student at Carnegie Mellon. He did a 5 year master’s program in 4 years. The future is very promising for him!</p>
<p>Hopefully that future husband will find himself a great job where your daughter is attending dental school. That will take the edge off of living expenses anyway!</p>
<p>I agree…pay the interest on those dental school loans. That is a wonderful gift.</p>
<p>The $4000 figure would be right for the 4th year, but the first year she has only borrowed $15k, the second year $30k, etc. Interest only begins to accrue once the loan is disbursed, so there would be an initial rate on the $7500 amount for fall, then on a total of $15k for spring, then $22.5K fall second year, etc.</p>
<p>OP here - I’m confused by the last post. I’m thinking she is going to have to borrow $60K each year for 4 years. I’m not sure what the previous posts’ figures represent. </p>
<p>It will most likely be $60k each year. I’m clear on the roughly 4k interest for the first year, but the following year, the balance will be 120k, 3rd year will be $180k and 4th year will be 240k. Since no payments will be made until 6 months after graduation, I’d love to knock out as much interest as possible. I’m at a loss though as to how to figure it out! Are the 4 years separate, (as in 4 separate loans), or do the balances stack one on top of the other?</p>
<p>Your daughter should be able to contact her loan Servicer to find out the interest amounts. When our kids got direct loans in undergrad, they got a quarterly statement with an option to pay anything…including interest.</p>
<p>I’ll try to give an understandable breakdown - all of this can definitely be confusing! </p>
<p>While your D is enrolled in school, the interest on the loans will not capitalize so you won’t need to worry about the balances stacking. So, this means that the lender should actually give you a breakdown of the loan disbursed by year. So essentially, 4 separate loans. Since the loans have different disbursement dates (Year 1, Year 2, etc.) they will be listed as such - since the loan for year 1 will have been accruing interest for a longer period of time than the loan for year 2. If you log-in to the lender’s site, (since there are multiple lenders, not sure if they all look the same) I would hope they would show the amounts broken down by when the loan was disbursed. Even so, the interest will accrue separately for each loan - even if you are given an entire amount of interest accrued to date. </p>
<p>Fun fact: if the loan has been disbursed and interest has accrued, lets just say after one month of school - any payment you make up to 120 days after disbursement - you are given the choice to have the payment applied to the principle vs. the interest (which will reduce the amount in interest accrued overall). </p>
<p>I hope all of this makes sense! Let me know if I can clarify better. </p>
<p>If I am understanding this correctly, you should avoid the interest on the loans capitalizing so that the principal does not increase. Is it as simple as paying the interest each month?</p>
<p>I guess I’m trying to get an estimate of what this will cost in interest each year. </p>
<p>kgos16 - Thanks for all of your help and patience. I’m trying to make sure we do this the right way.</p>
<p>“you should avoid the interest on the loans capitalizing so that the principal does not increase. Is it as simple as paying the interest each month?”</p>
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<p>This statement is definitely correct. As soon as your D is finished with school and grace period is up, any unpaid interest is going to be added to the principle, and any further accruing interest will capitalize. </p>
It’s been a while since I posted, but I’m wondering if you can help me once again. I am trying to get a more accurate picture on our monthly payments (we will be making interest payments on our daughter’s dental school loans before she has to begin repayment).
Most likely, she will be borrowing 60K each year. If my understanding is correct, we will be paying interest on Year 1 Loan for 4 years, Year 2 Loan for 3 years, Year 3 Loan for 2 years, and Year 4 Loan for 1 (since repayment will not begin until 6 months after she graduates). I understand that the loans will not “stack” as long as interest payments are made. Essentially, we will be making payments for 4 years. Those payments will increase each year, however, not because the loans are being stacked, but because a new loan is being taken out each year.
Yes, I believe that is correct - based on my understanding of the program. I’m not at my computer, so I can’t double check the regs for you in writing, but that should be right.
You can figure out (or ask) what interest is accruing on each loan each month. Most likely, the loan will disburse twice a year, so some interest will accrue from Sept to Jan, and then on the next disbursement in Jan/Fed, the interest on that loan will go up more. Once the loan is fully disbursed, the interest each month should stay the same (unless you pay some principal).