I have had the wonderful opportunity over the last 3 years to be a student ambassador at Southern College of Optometry. As a student ambassador at SCO I’ve had the opportunity give tours to students that are interviewed at the school. During these tours all prospective students get a presentation by our Director of Financial Aid, Cindy Garner.  She does a great job of conveying the importance of not living beyond your means while in optometry school with a simple example about pizza and student loan interest rates (I get heart palpitations just thinking of it). After hearing this presentation for years, I understand the anxiety that student loans and their interest rates can create for students.

Currently the AOA has partnered with Wells Fargo to offer optometry student private student loans. The AOA’s partnership with Wells Fargo allows its member to get certain perks and deals that that they otherwise wouldn’t get without their membership in the AOA or AOSA. This wonderful partnership also connects students that are in need of financial guidance and advice with the experts at Wells Fargo. I had the opportunity to talk with Ryan Olsen of Wells Fargo about private student loans and how they may be a great option for students in the right situation.

In my discussions with Mr. Olsen, he outlined the differences between private and federal student loans. Here is a quick table that I was able to put together from my discussion with Mr. Olsen:

	Unsubsidized Loan	Grad Plus	HPSL	Perkins	Private Student Loans
Rates	5.41% Fixed	6.41% Fixed	5.0% Fixed	5.0% Fixed	As low as 5.75% Fixed or 2.88% Variable
Fees	4%	4%	0%	3%	0%
Grace Period	6 months	None	12 months	9 months	6 months
Accruing Interest	During & After School	During & After School	After Grace Period	After Grace Period	During & After School
Limit per year	$20,500	Cost to Attend School  Minus Other Federal Loans	Determined by Need**	$8,000	Cost of Attendance minus other aid, determined by school
Based on Credit	No	No	No	No	Yes
Consolidation	Yes	Yes	Yes	Yes	Only with other private student loans

**qualification for HPSL based on income of parents and student

Mr. Olsen said that the loans that are most comparable to private student loans are the Grad Plus loans. Generally, most financial aid personnel will tell students to avoid Grad Plus loans but there are situations in which the circumstances of going to school and trying to live require students to use Grad Plus loans.  If that is the case, it may be to the student’s advantage to look into using a private student loan. However, keep in mind private student loans are not able to be consolidated with your federal loans. The student must have  strong credit to qualify for the best rate, and repayment plans for federal loans are more flexible than private student loans.

Also due to recent changes in legislation, here are some things to know about federal student loans:

• Federal Student Loan interest rates can  now change every year in July.
• Federal Student Loans will be determined by the Treasury’s 10 year T note rates plus a margin
• Stafford Unsubsidized Loan interest rates can only go as high as 9.25%
• Grad PLUS Loan interest rate can only go as high as 10.5%
• Private Student Loans may not be as competitive now based on current Federal loan rates, but that can change annually depending on new Federal loan rates .

Overall, it is very important that all optometry students do their homework about their student loans. Know what loans you are using and why they are the best option, and always have the long-term goal of being a successful debt-free OD in mind.

For more information about Wells Fargo and their partnership with the AOA click here.

If you’re interested in learning about the different loans available to optometry students check out this article by Antonio Chirumbolo.

 

References

Federal Student Aid. (2013). Federal student loans for college or career school are an investment in your future. Retrieved August 19, 2013, from FederalStudentLoans.ed.gov: http://studentaid.ed.gov/types/loans

FederalStudentLoans.gov. (2013). FederalStudentLoans.gov. Retrieved August 19, 2013, from FederalStudentLoans.gov: https://studentloans.gov/myDirectLoan/index.action

O’Shaughnessy, L. (2013, August 9). 6 things to know about the new student loan rates. Retrieved August 19, 2013, from CBSNews.com: http://www.cbsnews.com/8301-500395_162-57597680/6-things-to-know-about-the-new-student-loan-rates/

Wells Fargo. (2013). Wells Fargo MedCAP Loan. Retrieved August 19, 2013, from WellsFargo.com: https://www.wellsfargo.com/jump/EFS/aoa?mplx=6878-38914-3408-401