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Matt_A
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Posted: Wed Oct 29th, 2008 03:05 am |
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| According to http://www.aia.org/idp_faq#loans payment of student loans may be deferred at the lenders option if you are in an internship. This was a surprise to me and I was wondering if it is common.
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jay boogs
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Posted: Wed Oct 29th, 2008 03:53 am |
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Matt_A wrote: According to http://www.aia.org/idp_faq#loans payment of student loans may be deferred at the lenders option if you are in an internship. This was a surprise to me and I was wondering if it is common.
I'm not understanding the question/statement. If your still in school full-time then your loans are deferred already and if your not then your work isn't considered an "internship" anymore. I'm thinking your talking about a part-time student and full-time employee?? but then what does that say about the full-time work. The ultimate question is, "what is their definition of an internship"? Because technically would our entire time of IDP going toward licensure be considered as an "internship" then?
OK it says, HOW CAN I DEFER MY STUDENT LOANS
NOTE: Be certain that the state in which you want to obtain your license will accept your combination of education and experience. State requirements may differ from NCARB's education and training standards.
Deferring a loan is at the discretion of the lender.
Don't assume that your loan may be deferred if it was granted after July 1, 1993. Your loan may be deferred, but you need to contact the lender.
If you can defer the loan, you'll need two certifications. The certifications CANNOT come from either the AIA or NCARB. One must come from your supervisor and certify that you are employed in an acceptable training setting. The other must come from the registration board and certify (1) that the internship is required, (2) the length of the internship, and (3) that a baccalaureate degree was required before entering the internship.
CHECK OUT: The latest version of the IDP Guidelines. Be certain to check with your lending institution first.
REMEMBER: Under current federal tax law, a portion of the interest on your student loan may be a deductible expense. Consult a tax specialist or http://www.irs.gov for more information."
After reading that I don't know. Has anyone done this?? Point ONE says "..required..", Required for what? Required for licensure is what I'd except it to say. Wouldn't most people who have a B. degree and are enrolled in IDP be eligible for this, then?? Will the registration board (NY) actually do this?
I'd like some more info on this if anyone has done this or knows of any stipulations.
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BlewBe
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Posted: Wed Oct 29th, 2008 02:10 pm |
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You need to contact your lender (every lender has a different policy). I did not qualify for this option *with my lender* because my lender considers an internship to be work/training *without* payment. I had an income, thus payments began.
The information you found on the website (I believe) are the steps to take if your lender does allow deferred payment.
As a note... if you have multiple loans, you *should* consider consolidating and obtaining a better interest rate if possible. Be warned however that many consolidations will not allow you to differ payment.
Hope this helps.
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jay boogs
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Posted: Wed Oct 29th, 2008 02:18 pm |
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BlewBe wrote: "..my lender considers an internship to be work/training *without* payment. I had an income, thus payments began."
This is exactly what I would have figured. The typical view of an "internship" is "unpaid".
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FinitoCompleto
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Posted: Wed Oct 29th, 2008 04:01 pm |
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I deferred my loans for my first two years of full time internship after graduation.
Anybody who took out their first federal loan prior to July 1, 1993 still falls under an old law that allowed us to defer student loan payments for a maximum of 2 years while we were employed in an architecture internship (paid or not) that is required for licensing in the state in which we live.
That's a federal law, so if you did happen to take out at least one of your federal loans that long ago then your lender does not have a choice about complying.
You can defer your loan payments on your federal loans during those two years, though interest still accrues on unsubsidized loans. Of course private loans aren't covered by that law.
I took out my first federal loans for undergrad study in 1990, so I fell under that old law - even though my loans for grad school came many years later. The faq above is a little misleading, as it is not the case that all of the loans that you want to defer have to have been from before 1993 - just the first one must be.
In order to get that deferment I had to submit to my loan company a letter from my state board stating that IDP is mandatory for licensing in that state and that I had a degree that met the state's education requirements, and a letter from my employer stating that I was employed full time and participating in IDP.
What matters for purposes of loan deferment is the requirements of the state in which you actually reside.
If you did not take out a first federal loan prior to July 1993 then it is entirely up to your lender as to whether to allow a deferment, and in most cases they tend not to allow it for paid internships.
But you may still qualify for other of your lender's options such as income-sensitive or graduated payments for your first couple years of internship.
This loan deferment situation is an example of a lack of advocacy on the part of the AIA. In the early 1990s the government tried to eliminate all student loan deferments for internships in all professions. The AMA lobbied hard to protect this deferment for medical school grads, and they were successful in protecting this option for them. The AIA did nothing to try to protect the deferment for architecture school grads, which is why it expired in 1993.Last edited on Wed Oct 29th, 2008 05:57 pm by FinitoCompleto
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brudgers
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Posted: Wed Oct 29th, 2008 05:41 pm |
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| Thanks to the miracle of compound interest and the high cost of college education, I wouldn't recommend deferrment for a typical graduate once they are employed.
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FinitoCompleto
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Posted: Wed Oct 29th, 2008 05:59 pm |
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| Depends on the type of loans. If you fall under the old law (have at least one pre-1993 loan) then you can defer subsidized Stafford loans, Perkins loans, and other subsidized federal loans and interest won't accrue. Interest does accrue during the two years on unsubsidized Staffords, PLUS, SLS, and other unsubsidized loans. You can choose to pay the interest each month, or to have the total accrued interest financed into your future payments (which isn't a great financial decision in the long run...)
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BetterMousetrap
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Posted: Wed Oct 29th, 2008 06:48 pm |
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If I can defer loans without interest accruing for two years that's a pretty good deal. That's basically like an interest free loan to me for two years. Plus it pushes all the years of payments two years further into my earning power and two years further into inflation (why pay in today's dollars if I can pay in further devalued future dollars? )
Unfortunately I came after that 1993 thing so I couldn't do that.
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Matt_A
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Posted: Wed Oct 29th, 2008 06:54 pm |
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If I can defer loans without interest accruing for two years that's a pretty good deal. That's basically like an interest free loan to me for two years. Plus it pushes all the years of payments two years further into my earning power and two years further into inflation (why pay in today's dollars if I can pay in further devalued future dollars? )
Unfortunately I came after that 1993 thing so I couldn't do that.
Sometimes that is good thinking, but there is a flaw in the reasoning, the assumption about inflation, that can bite you. But the needs of today often outweigh the needs of tomorrow, sadly. It's important to know your options, even more important to be careful when you evaluate them.
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BetterMousetrap
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Posted: Wed Oct 29th, 2008 07:00 pm |
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It's always good to know your options.
But if I can hold on to the two years worth of loan payments for two extra years, even if I'm getting today's interest rates on that money and even if there's no inflation at all then I'm still ahead.
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Matt_A
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Posted: Wed Oct 29th, 2008 07:02 pm |
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you're correct... but I think it's a good idea to keep in mind that you really want to cross the finish line.
Also, your earning power might not increase, a lot of people are in a lot of trouble these days because their planning was based on the assumption that the value of their homes would only rise. We're looking at tough times coming (otherwise this subject wouldn't even be of interest)... Last edited on Wed Oct 29th, 2008 07:05 pm by Matt_A
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FinitoCompleto
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Posted: Wed Oct 29th, 2008 07:50 pm |
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When I got out of architecture school in the mid 1990s my loan payments would have been close to $900 per month. I was making $27,500 per year. It was an unaffordable situation.
I deferred for two years.
Two years later interest rates were much lower and consolidating most of my loans resulted in cutting the payments to about half the original amount, and I was making more than 60% more than when I started, so starting repayment wasn't nearly as much of a struggle.
For me it was good that I had the deferment option. I don't know how people who get out school today sometimes with over $100,000 in loans can make the monthly payments on an intern's salary.
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Matt_A
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Posted: Wed Oct 29th, 2008 07:53 pm |
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| It's a shame more attention isn't being paid to the value of the investment in comparison to the return. If school isn't overpriced then interns are underpaid. or both.
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BetterMousetrap
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Posted: Wed Oct 29th, 2008 08:04 pm |
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Two years later interest rates were much lower and consolidating most of my loans resulted in cutting the payments to about half the original amount
I bet that's a reason why the deferment option got eliminated. It let you sit back and wait to pick an optimal time to consolidate your variable-rate loans. I'm sure lenders don't like that.
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Nomadica
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Posted: Thu Oct 30th, 2008 05:09 pm |
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I did the 2-yr deferment. I qualified by having undergrad loans from pre-1993. They were subsidized loans so the interest clock stopped while the deferment was in effect. It helped so much with starting out as an intern to not have loan payments to worry about and I was actually able to put some money in a savings account for unforeseen events. I worry that interns can't do that these days. What do they do about car repairs, dental bills, and what if they get laid off and don't find a job for a couple months?
When I did start repaying I tried whenever possible to pay more than the minimum and I ended up paying off the loans a couple years early anyway. I think an internship deferment was a great option when it was available.
But in thinking about today's intern vs. us "old guys" you shouldn't just look at the amount of money that architecture students are borrowing today - you have to look at the interest rates too. They are borrowing a lot more now than I did in the 90s, but their interest rates are very low compared to ours then. Some of my subsidized federal loans had variable rates that got as high as 10.5% in the mid 90s (and were capped at 12% though thankfully they never reached that.) Compare that with today's 3% to 6% Stafford loans and the reality is that students can borrow a lot more these days without their monthly payments being much higher than ours were back then, because of the difference in interest.
Plus, average intern salaries have gone up dramatically (in most regions they nearly doubled between 1990 and 2005), even though they're still much too low. I realize expenses have all gone up too, but paying several hundred dollars per month still seems much more possible today on a 30k to 40k salary than it did when I graduated from college in 1993 and was making 19k per year.Last edited on Thu Oct 30th, 2008 05:28 pm by Nomadica
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BetterMousetrap
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Posted: Thu Oct 30th, 2008 06:37 pm |
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| That's true. I applied to grad schools in 1994 and I was going to borrow 50k to go then. I decided not to go at that time. Then I applied again a few years ago and I had to borrow 70k because of higher tuition, but the monthly payments are just about exactly the same now to pay back 70k in 10 years as what they were a decade ago to pay back 50k because the interest is so much lower now.
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jay boogs
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Posted: Thu Oct 30th, 2008 08:25 pm |
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..in just reading through the others in this topic, I am one of those recent grads dealing with what you are mentioning. Only thing is I have had the blessing of having some help and a different combination of circumstances. Alot of it wasn't by mistake but hard work on my own to plan for the future. I know nothing is guaranteed in the future, anything is possible but I will do my best.
I graduated with my BArch this past May, 08'. I'm 23 and my total loans are a lil over $100k but only about $21k is under me. The other amount is under my mother (Parent Plus Loan) which is deferred because of her income. I will make payments on the $21k as I save and help my parents out. As mentioned above by others our interest rates are really low. Finance wise there isn't a rush to pay off student loans when they are the lowest interest that you can have (eg. Credit Card debt, car, home, and other loans). Eventually I will transfer/incure the payments of the plus-or-minus $90k but I will manage that when it comes. I have a small amount in CC debt which I will much more rather focus on paying off at the 15-18% interest they have.
Circumstances:
I was fortunate to make a good amount of money part-time at an internship while in school and landed a great full-time job after school. I make 45+/yr (w/ full benefits) at my current job that is 1 block from my parents house. A definite blessings since I don't have to incure any travel expenses which can add up month to month. I saved heavily to this point allowing me to have ~10k in savings. I try not spend much on unnecessary things. I will be buying a condo/loft with my fiance in the coming year which will add to my monthly cost but other wise I have a fully paid off car for weekends/nights and feel pretty comfortable. With the progression I will continue to save as my salary increases and pay loans from my paycheck/savings.
The interest that I make on my savings now and in the future as it grows would mean I'd be using less of my own money toward loans. I would be using "interest" money paid to me instead of from all "work" money. ..just my situation and my 2 cents..
jws
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