Andrew Kimball

Northwestern University School of Law, J.D.
Kellogg School of Management, M.B.A.
University of Virginia, B.A.

 

 

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Financing Graduate Education
December 7, 2013

Federal student loans for graduate students are expensive. Changes in eligibility for graduate students for subsidized student loans made my graduate education more expensive. I became increasingly dependent on Federal Grad Plus loans which carry a 1% origination fee and charge an annual interest rate of 7.9% (when I applied, now 6.41%). While in school, many students, like myself, did not have competitive third party options available. Although that did change upon graduation and I was very fortunate to look into a number of providers including Social Finance ("SOFI"), with which I originated a loan during school at a rate much lower than the Federal Grad Plus loan rate.

As an example, let's assume that a student has $100 thousand in student debt. Generally speaking, reducing the interest rate on loans by 100 basis points translates into a post-tax savings of $1000 per year. That is a lot of money which could be applied towards principal.

I encourage friends to consider all their options and to not be complacent about maintaining government loans. While government loans do have many benefits, including loan forgiveness and income based payments, those benefits were not valuable to me, given my career objectives and alternative loan offerings.

For more information on SOFI, please click here. Please note that SOFI has traditionally offered both the referrer and referral a monetary bonus for new accounts created using such referral links.

 

 

 

 

 

 

 

 

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