For Pre-Health Students:
From explorehealthcareers.org – 24 January 2011
You have many things going for you with a future career in the health
sciences. One you may not be aware of involves changes in financial aid
designed to not only help you pay for your health sciences education,
but also to help you effectively manage any student loans you borrow to
pay for school.
Your Financial Aid Office is the best source of information on these
changes and should always be your first point of contact when you apply
for financial aid. Here are some recent changes you should be aware of:
Changes in How You Apply for Financial Aid
The Free Application for Federal Student Aid (FAFSA) is the key
document for anyone applying for federal financial aid. Recent changes
have simplified the form, making it easier to complete by allowing for
the transfer of IRS data onto the FAFSA, eliminating some questions for
low-income students, and making it easier for students who are married
or over 23 to complete the form. See www.FAFSA.ed.gov for more details.
Where Your Student Loans Come From
One major change involves where you get your student loans. Federal
Stafford Loans (both Subsidized and Unsubsidized), Parent PLUS and Grad
PLUS Loans, and Federal Consolidation Loans are now originated by the
federal government through their Direct Loan Program. Private lenders
such as banks and credit unions are no longer making federal loans.
First-time borrowers may find it easier to keep track of their borrowing
since any loans they take out in these programs will be with one
lender: the federal government.
Lower Interest Rates and Lower Fees
Interest rates on Subsidized Stafford Loans for undergraduate
students have been dropping over the past few years, helping to reduce
the cost of borrowing, and rates are changing again. The rate on new Subsidized Stafford Loans for undergraduates
during 2011-12 academic year will be fixed at 3.4%, down from 4.5% the
previous year. In addition, the origination fee (taken as a percentage
of the loan) on all Federal Stafford Loans is currently only 1.0% for
loans borrowed on or after July 1, 2010, down from 1.5% the previous
The majority of borrowers from health sciences programs are able to
effectively manage their student loans when they graduate and move into
their careers. While no doubt due to responsible borrowing and effective
debt management and budgeting skills, it is also due to a variety of
programs designed to help all borrowers manage their loans when they
enter repayment and improvements in these programs:
· Changes in online debt management tools for your Direct Loans
· Increased repayment amounts in the National Health Service Corps (NHSC) Loan Repayment Program
· Changes designed to improve access to the Primary Care Loans for eligible medical school borrowers
· Upcoming changes in the new Income Based Repayment (IBR) plan designed to lower payments for eligible borrowers
See your Financial Aid Office for more information on these and other changes.
Students should always exhaust their eligibility for federal student
loans before applying for a private education loan. Federal loans have
more flexibility with options for repayment and postponing payments
(when needed) than private loans, plus opportunities for loan
forgiveness that do not apply to private loans.
There have been recent changes with private education loans that should help:
- New requirements for private loan lenders to provide more
information to borrowers about the terms and conditions of their loans
through what are called Disclosure Statements.
- New Consumer Financial Protection Bureau that has oversight of
private education loans and that should help ensure borrowers are always
in the know regarding how their private loans work.
While it is ultimately your responsibility to know how your financial
aid works, especially your student loans, you should take comfort in
knowing that you have help.
This article was written by Paul S. Garrard, President and
Founder of PGPresents, LLC; a 27 year veteran of student financial aid
and higher education.