All about the Current loan crisis: a students guide

[johndoe456732]

This comes straight from my blogs. I hope that it helps.
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I want to make it clear to everyone that there is a huge loan crisis currently in the Caribbean Medical School World. I've read much about this -- students wondering what to do, what can be done, why this happened, ect.. I've decided to write a little guide to help the prospective Caribbean Medical Student get through this.

FAQ's

1. Why does the Teri loan suck so much?

You have to understand the mentality of how each loan was setup. The Medachiever loan made no distinguishment between a Caribbean Medical Student and US Medical Student. That was just stupid. Caribbean Medical School's are known for abusing the financial aid process, and that is what happened. I mean come on -- don't you think something was wrong when students had $30,000 sitting in their checking accounts. Or even more so, what about the high dropout rate in many schools. Or better yet, what about the average Caribbean Medical School Graduate carrying more debt than a Harvard Medical School Graduate -- obviously without the same residency opportunities. Keybank got burned for it.

The Teri loan, on the other hand, was set up with all these things in mind. It limited the amount of a loan that it would give to the individual student, installed specific guidelines for each Caribbean Medical School to deter risks, and carried a much tougher auditing process. In essence, where medachiever treated you like a medical student, the Teri loan will treat you like a IMG -- making you feel like trash.

2. Wait, I want to know more about the Teri. Why is it so bad?

I could go on and on about this, but let's make a start. First, you must not only have good credit to get your loans, but you must find a cosigner with good credit also (unless you go to Spartan or a Big 3 school).

Now, imagine how hard it is to walk up to someone and ask them to cosign a $100,000 unsecured loan for you. Because you will have to do this regardless of your credit with the current tuitions at many of these schools. The Teri loan is not enough.

So, here are the three disadvantages:

A. You must have a cosigner -- because the schools tuitions are still based on medachiever amounts.

B. The total aggregate amount is less than the Medachiever -- yes, even with a cosigner, you could run out of money by fourth year!

C. You must have good Credit regardless and a score of at least 650 on Transunion -- unlike medachiever, those with no credit score or bad credit are ineligible for the loan.

Now, you see why this loan sucks.

3. But surely, my school will save me?

WARNING: ** ALERT, ** ALERT, ** ALERT. The first move by many schools was to issue a statement that they all found an alternative in Teri, and that everything will be fine.

Yeah right. Enron's CEO said that everything would be fine also before the company crashed. It's actually a quite common tactic in the business world. Here is why: if you tell people the truth, it will induce panic causing many people to pull their enrollments and sending the school to early financial disaster.

If the school's lie than they buy time.. Giving the administration time to find another option (fat chance) similar to Medachiever -- they still have about 4 months before the next class starts. Trust me, they are worried.

So, by people enrolling in the schools that were medachiever dependent, they are putting their trust in the administrations finding a solution. THIS IS DUMB. Caribbean Students: Get a backup plan quick!

And just to let you know, all of these schools already had the Teri loan with the terms that they mentioned. Don't you think there was a reason that they did not use the Teri loan? So, why are they acting like they just discovered the Teri loan when it was always available? **, **, ** Alert!

4. Who will be least affected by this

The won't affect the Big 3 that much, any schools with Department of Education loans, or schools that have been around long enough to build their infastructure around the Teri loan.

It will affect the new schools who's growth was solely dependent on the Keynote Medachiever loan.

5. Why is this a financial crisis?

Schools such as St. Matthews, Saba, St. James, St. Christophers and many others just went through an unprecedented growth stage. More students went the Caribbean way than ever before. Many of the schools have built brand new facilities, hired new professors, ran extensive marketing campaigns, and expanded their clinical sites (which required heavy financing).

Now, these schools have undergone rapid expansion which requires financing and overall larger operating expenses -- bigger facilities, more professors, more clinical affiliations. All of this was dependent on growing income, which equals growing enrollment of students.

This just killed income. As many as 70% of the students, may not be able to attend these institutions after medachiever runs out. Don't believe me??

Then look at this number. Take a look at the schools that used Teri as a sole financer -- they had classes of no more than 25-30 students. Antigua got so desperate that they started illegally twinning to get federal loans.

The schools know this, and they are in panic right now. They have 4 months to work this out or all hell will break lose.

6. Who are the winners from this right now?

The Big 3 are all winners. They all have several loan carriers because of their department of education status. Many people were passing on the Big 3 to go to other schools. This won't be the case anymore. If people can't afford to go to a certain school, they will not go. Expect the Big 3 to even become more competitive -- as well as the Mexican, European, and Asian schools that are eligible for Department of Education Financing.

The hidden possbile winner in all of this is Spartan. Despite their many problems, they do only charge $3500 a semester. A person can live off them with just the Teri loan. Now, consider this: a student get to his/her third year of medical school, but cannot afford to go anymore. Which option does the student take? Does the student drop out and ruin their life with high loans. Or do they go to a school where they can at least get licensed in a few states. If I was a betting man, I would gamble on the student taking the MD with at least some prospect of work every time.

7. What can the schools do?

This will be the most interesting part of this all. The schools are in the battle of their lives right now.

A. Some schools will probably wait and see what enrollment looks like with Teri -- look for them to meet disaster pretty quick.

B. Other schools are trying to find any possible loophole to secure federal financing -- this means that some schools will couple the MD program with a graduate degree. Other schools are closely watching "Antigua loangate" to see if they get away with what they are doing. If they do, expect other schools to follow. And chances are that we will see more innovative federal loan securing techniques.

C. Cut costs.. Many schools will have to cut costs if they don't find a viable alternative. This means laying off staff and a decrease in overall quality.

D. Find another loan carrier.. This will prove to be extremely difficult. Many schools will tell you that this was nearly impossible without a Department of Education Number. Here is why? There is no security for the loan company. If someone defaults all they have to do is file bancruptcy, and the loan is gone. The loan companies know that. That is why the other schools (non-medachiever) don't have other carriers. It's not from lack of trying. They need that DOE number.

E. Cut tuition.. This is the last option, and this is the one that the schools certainly don't want to do. Many of the schools have built infastructure that depends on a certain tution and number of students. I venture to say that many of the schools may not be in position to cut the tuition.

8. What should I do as a student?

First, I like some of the personalities that I see on Valuemd associated with the various schools. But don't forget that what the schools tell you is in their best personal interest, which may not necessarily be yours. Their jobs depend on them telling you whatever is necessary to get you to stay.
Here is what I would do:

A. Make your backup plan. Find two schools where you have a good chance of transferring after your first year should you need to do so.

B. Save the surplus money. There is a good chance you will need this when you transfer.

C. If you had a chance to go to a school with DOE status than go. It's not worth the headache right now.

D. Panic if you must -- better now than a year from now. Handle your buisness.

E. Don't completely give up on the MD. There are still schools who will get you to the promised land. You just need to find them. Perhaps, your current school will do so.

F. If you go to a school with a DOE number, or have a cosigner than don't worry. You will probably make it.

[wolfvgang22]

Thanks *******! I appreciate your perspective. Good luck to you at AUC 8)

[johndoe456732]

Thank You Sir. I really appreciate it.

[Miklos]

Great post.

One small thing I would like to point out, however...

Originally Posted by AUCDOCTOBE

D. Find another loan carrier.. This will prove to be extremely difficult. Many schools will tell you that this was nearly impossible without a Department of Education Number. Here is why? There is no security for the loan company. If someone defaults all they have to do is file bancruptcy, and the loan is gone. The loan companies know that. That is why the other schools (non-medachiever) don't have other carriers. It's not from lack of trying. They need that DOE number.

The DOE number means that schools are eligible (unless suspended or withdrawn) for Stafford loans. These loans are guaranteed by the U.S. government. (NB For those that do not know, one will not be discharged from government loan obligations even if one declares bankruptcy.)

Private loans are not guaranteed by the government. If someone defaults or declares bankruptcy, the private lender eats the loan unless it is co-signed (e.g. guaranteed by a third party).

The reason that private lenders find it easier to lend to schools with DOE codes (e.g. approval) is that they must meet the DOE standards on such crucial items such as the cohort default rate, appropriate accounting, degrees that are marketable, etc...

Miklos

[wcb22]

what is the aggregate limit with TERI loans?

[wolfvgang22]

I think it's $130,000. I don't know if the schools individually are able to increase this amount.

Hopefully, this aggregate amount is only for Teri loans, not the total including previous stafford loans from undergrad?

[wcb22]

exactly, what about previous loans, i.e., stafford or medachiever? will that be added into the 130k number, or does teri limit their own loan amount to 130k only?

[swinginislanddoc]

I had the TERI loan for the first four semesters of medical school and never had a cosigner..... did something change?

[naeempothigara]

good info....what about personal loan without a cosigner?

[scoots]

wow nice info