snopes.com  

Go Back   snopes.com > SLC Central > SLC

Reply
 
Thread Tools Display Modes
  #1  
Old 21 December 2018, 06:33 PM
Plurabelle's Avatar
Plurabelle Plurabelle is offline
 
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default Student vs Personal Debt

Thanks to the help of many snopesters, I am turning a new leaf in my life and heading to medical school!

It is obviously very expensive, but I can afford to pay out of pocket thanks to a generous inheritance. However, my financial adviser recommended I get a student loan rather than tapping the inheritance.

Do you guys have any opinions? Interest-rate wise it makes way more sense to take out a loan as the interest earned is about 3-4 pts north of what I'd be charged. Based on what we've made on average over the last 24 years.

But my credit score keeps getting dinged because I don't have sufficient "diversity" of debt types. Would it be better for my overall credit health to take on and pay off a student loan?

I'm also a bit of a snob re: schools; all my degrees so far are ivy league. I know U of M is a great school, please help me believe an MD from here is something to be proud of.
Reply With Quote
  #2  
Old 21 December 2018, 07:00 PM
Morrigan's Avatar
Morrigan Morrigan is offline
 
Join Date: 26 March 2001
Location: Vassar, MI
Posts: 5,459
Default

Quote:
Originally Posted by Plurabelle View Post
Thanks to the help of many snopesters, I am turning a new leaf in my life and heading to medical school!

It is obviously very expensive, but I can afford to pay out of pocket thanks to a generous inheritance. However, my financial adviser recommended I get a student loan rather than tapping the inheritance.

Do you guys have any opinions? Interest-rate wise it makes way more sense to take out a loan as the interest earned is about 3-4 pts north of what I'd be charged. Based on what we've made on average over the last 24 years.

But my credit score keeps getting dinged because I don't have sufficient "diversity" of debt types. Would it be better for my overall credit health to take on and pay off a student loan?

I'm also a bit of a snob re: schools; all my degrees so far are ivy league. I know U of M is a great school, please help me believe an MD from here is something to be proud of.
It wasn't the med school, but I have a friend who went to vet school at U of M and she's doing awesome.

Go with what you can afford and what will be the best school to get you where you want to be. I haven't gone to med school, but I did choose one of the cheapest in-state schools for my Master's and I don't regret it one bit. I'm exactly where I want to be.

It would help your credit to take on a student loan. It does suck paying them off, but there are also loan forgiveness programs that you can qualify for.
Reply With Quote
  #3  
Old 21 December 2018, 07:19 PM
Errata's Avatar
Errata Errata is offline
 
Join Date: 02 August 2005
Location: Santa Barbara, CA
Posts: 13,201
Default

Ivy League is just a bunch of old schools in a sports league. They are all well regarded, but not exclusively so, particularly when it comes to graduate and professional schools, which have to be judged on their own merits. University of Michigan Ann Arbor is a top 10 medical school for medical care (as opposed to medical research). Only a single Ivy League school can say the same. And it's a top 20 school for research, which only 3 or 4 Ivy League medical schools are. It may not have as much name recognition outside the medical profession, but medical professionals should recognize that it's an excellent program.

If you can get a lower interest subsidized loan or you'd be able to get a tax deduction, then that's a no brainer, but if you have an inheritance, it would probably be just a regular loan and between the new standard deduction and income limits, few people can deduct for student loans anymore.

If it's just a regular loan, I'm skeptical that you could reliably get returns high enough to justify taking out an ordinary higher interest loan with no special rate or tax status.

Looking back on rates of returns over certain windows of time, right now, you may see 10%+ annual returns, which would beat a loan. But P/E ratios right now are really high, and the prognosis for the economy over the next few years is shaky. I'd bet on the next few years underperforming previous rates of returns for a while before recovering. If the plan is to take out a 7% loan in order to keep money in publicly traded stocks, because some funds got 12% returns over the past 10 years, I'd be wary of that plan. If you have some kind of private equity that you are loathe to sell, that's a different story.
Reply With Quote
  #4  
Old 21 December 2018, 08:04 PM
Plurabelle's Avatar
Plurabelle Plurabelle is offline
 
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default

Thank you both for giving me the reinforcement I needed to be excited about getting into U of M. It is silly and stupid and I needed to somehow feel good about what I did but my east coast family was not interested. I knew it was a good school, but had no idea it was top 10 anything. I feel like I should be bragging!

And for the record, U of M was the only place I applied as we have built our life right here -- I didn't care to apply to the east/west coast higher institutions.

I'm thinking the loan would be a 10-12 year situation -- I know med school is only 4 years, but I don't like the terms they're barking at me.

Could I take a student loan for a small amount and pay it off to diversify myself? Or would that be required to be tied to my student status? I'm fortunate enough to never had student loans before.

I feel like a med school loan at U of M (based on your feedback) would be a no brainer even though I am beginning mid year.

Last edited by Plurabelle; 21 December 2018 at 08:19 PM.
Reply With Quote
  #5  
Old 21 December 2018, 08:16 PM
crocoduck_hunter's Avatar
crocoduck_hunter crocoduck_hunter is offline
 
Join Date: 27 May 2009
Location: Roseburg, OR
Posts: 13,148
Default

I've heard that it's possible to do so, though I've got no personal experience with student loans: I paid for my education with money I'd saved.
Reply With Quote
  #6  
Old 21 December 2018, 08:47 PM
Plurabelle's Avatar
Plurabelle Plurabelle is offline
 
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default

I've queued up my initial tuition payment (apparently it's super weird that I asked about paying off all 4 years of tuition in one go. I think I'm being added to an adult medical class that is not the same straight out of school thing). Good for them-- I did do a lot of undergrad prep courses and know how to deal with corpses. Not sexy but useful.
Reply With Quote
  #7  
Old 21 December 2018, 09:01 PM
Lainie's Avatar
Lainie Lainie is offline
 
Join Date: 29 August 2005
Location: Suburban Columbus, OH
Posts: 74,585
Default

I noticed you'e saying "we." Did you and your husband reconcile?
Reply With Quote
  #8  
Old 21 December 2018, 09:36 PM
Errata's Avatar
Errata Errata is offline
 
Join Date: 02 August 2005
Location: Santa Barbara, CA
Posts: 13,201
Default

Quote:
Originally Posted by Plurabelle View Post
apparently it's super weird that I asked about paying off all 4 years of tuition in one go.
That would be 3.5 years of lost investment returns or additional student loan interest on the final semester's payment. Plus some people don't make it all 4 years. Things happen. You don't want to let someone else reap the benefits of holding on to your capital for years longer than necessary, so even people who could afford to pay up front still pay at they go.
Reply With Quote
  #9  
Old 22 December 2018, 01:13 AM
Plurabelle's Avatar
Plurabelle Plurabelle is offline
 
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default

Quote:
Originally Posted by Lainie View Post
I noticed you'e saying "we." Did you and your husband reconcile?

Lainie, right now I'm using the royal "we."

I'm going to pay as I go per Errata's last post.
Reply With Quote
  #10  
Old 22 December 2018, 03:57 AM
UrbanLegends101 UrbanLegends101 is offline
 
Join Date: 24 November 2010
Location: Florida
Posts: 1,385
Default

Without knowing a lot more about the exact details and please don't misunderstand, I am not asking for any additional information, but I would think I'd take the inheritance and bank it, invest it, whatever.

I'd take out the student loans and repay that, as you go, helping to build a good credit score.

As Morrigan points out, you might be able to take advantage of some loan forgiveness programs and still have your cash assets intact.

Last edited by UrbanLegends101; 22 December 2018 at 03:59 AM. Reason: adding
Reply With Quote
  #11  
Old 22 December 2018, 09:37 PM
Plurabelle's Avatar
Plurabelle Plurabelle is offline
 
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default

Quote:
Originally Posted by Errata View Post
That would be 3.5 years of lost investment returns or additional student loan interest on the final semester's payment. Plus some people don't make it all 4 years. Things happen. You don't want to let someone else reap the benefits of holding on to your capital for years longer than necessary, so even people who could afford to pay up front still pay at they go.
I got into UC Berkeley, U of Chicago and Brown as well on a later app period, but my family is here so I wanted to stay close. My mother is based in Detroit and she is not doing well. I really had no idea u of M was a good school until you guys told me.
Reply With Quote
  #12  
Old 23 December 2018, 01:43 AM
ASL's Avatar
ASL ASL is offline
 
Join Date: 04 July 2003
Location: Norfolk, VA
Posts: 5,979
Default

Quote:
Originally Posted by Errata View Post
That would be 3.5 years of lost investment returns or additional student loan interest on the final semester's payment. Plus some people don't make it all 4 years. Things happen. You don't want to let someone else reap the benefits of holding on to your capital for years longer than necessary, so even people who could afford to pay up front still pay at they go.
Plus, donít most schools charge by the credit hour, rather than a flat rate for the semester? Itís hard to predict, even with a degree plan, how many credit hours youíll end up needing, or what those credit hours will cost, four-ish years down the line.
Reply With Quote
  #13  
Old 23 December 2018, 02:01 AM
Errata's Avatar
Errata Errata is offline
 
Join Date: 02 August 2005
Location: Santa Barbara, CA
Posts: 13,201
Default

Quote:
Originally Posted by ASL View Post
Plus, don’t most schools charge by the credit hour, rather than a flat rate for the semester?
Haven't heard of that at a medical school. It's something that I associate more with community colleges, though I've heard of 4 year universities that do it. It's a fair point that the tuition is subject to change from year to year though.
Reply With Quote
  #14  
Old 23 December 2018, 11:14 AM
Esprise Me's Avatar
Esprise Me Esprise Me is offline
 
Join Date: 02 October 2005
Location: Los Angeles, CA
Posts: 6,946
Default

Quote:
Originally Posted by Plurabelle View Post
And for the record, U of M was the only place I applied as we have built our life right here -- I didn't care to apply to the east/west coast higher institutions.
Quote:
Originally Posted by Plurabelle View Post
I got into UC Berkeley, U of Chicago and Brown as well on a later app period, but my family is here so I wanted to stay close. My mother is based in Detroit and she is not doing well. I really had no idea u of M was a good school until you guys told me.
I'm having trouble reconciling these two posts; can you explain?
Reply With Quote
  #15  
Old 23 December 2018, 05:17 PM
Plurabelle's Avatar
Plurabelle Plurabelle is offline
 
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default

Quote:
Originally Posted by Esprise Me View Post
I'm having trouble reconciling these two posts; can you explain?
I didn't think I'd get into U of Chicago, Brown or UC Berkeley.
Reply With Quote
  #16  
Old 23 December 2018, 11:42 PM
erwins's Avatar
erwins erwins is offline
 
Join Date: 04 April 2006
Location: Portland, OR
Posts: 12,367
Default

I'm having trouble with the same two statements, even after your response. Also, did you apply to medical school without having researched anything about medical school?

ETA: I'm curious about the midyear admission and adult med-student class. Can you tell me more about those programs?

Last edited by erwins; 23 December 2018 at 11:50 PM.
Reply With Quote
  #17  
Old 24 December 2018, 04:56 AM
Plurabelle's Avatar
Plurabelle Plurabelle is offline
 
Join Date: 29 September 2003
Location: Brussels, Belgium (home base: Ann Arbor, MI)
Posts: 1,056
Default

I realize I'm not making much sense ---I really half-assed it and did basically no research, because I didn't think I'd get in and didn't want to get my hopes up. Basically I wanted to go to u of m, but felt guilty enough to apply to the other 3 schools. My parents loaded a lot of guilt on me. I didn't think I'd get in at all.

Midyear admission is similar to undergrad; a certain percentage drop out so there's room in the class. Adult admission isn't a formal thing but admission committees look favorably on adult applicants because they're more likely to stick it out since it takes a lot more to take a "break" in your adult life, so it's more of a commitment.
Reply With Quote
  #18  
Old 24 December 2018, 07:00 AM
Beachlife!'s Avatar
Beachlife! Beachlife! is offline
 
Join Date: 22 June 2001
Location: Lansing, MI
Posts: 28,668
Default

How did you get through the entire application process without knowing even the basics about Michigan Medical school/s reputation? Isn't there something like a day long interview process?
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
IRS Just Hired Private Debt Collection Agencies to Chase Down Your Debt Psihala Soapbox Derby 6 18 April 2017 07:04 PM
The Only Three Purchases That Are Worthy of Debt snopes Business Bytes 0 17 June 2014 10:01 PM
Warren Buffett on the debt ceiling snopes Questionable Quotes 2 28 July 2011 05:05 AM
What a Nasty Letter for a $16.96 Debt! snopes Business 6 02 February 2008 03:39 PM


All times are GMT. The time now is 11:17 AM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2019, vBulletin Solutions, Inc.