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Is the MedCAP Loan Right for You?

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By Edited Nov 13, 2013 0 0

The MedCAP loan is one alternative for medical students struggling with college debt. Sponsored by Wells Fargo, the MedCAP loan pays up to $250,000 in educational expenses. This applies to graduates and undergraduates, both of whom are eligible for the loan. The only other criterion is your major. In order to get a MedCAP loan, you must be seeking a career in the healthcare field. Whether you are trying to become a Medical Doctor, pharmacist or nurse, you can still apply. The same is also true for those interested in becoming D.O.s., or Doctors of Osteopathic Medicine. Chiropractors, veterinarians and therapists are few common examples. Ultimately, if you are majoring in some aspect of healthcare, you can use the MedCAP loan to pay your expenses. It just becomes a matter of determining whether such a move is right for your situation.

To do this, you must first think about the loan's interest rate. Unfortunately, since the MedCAP loan uses variable APR, your payments can fluctuate with each term. To make matters worse, if your credit is not considered excellent, you may be charged at a higher interest rate. And even if an applicant has good credit, there is no way they can get fixed APR.

However, Wells Fargo will lower your interest under two conditions. The first requires you to pay your bill through an automated system. By doing this, you will reduce your rate by 0.25 percent. The second condition reflects applicants who are members of the Wells Fargo Student Graduation Benefit. If they can verify their college graduation, they get a 5 percent reduction.

So, under these two conditions you do get a little bit of leeway with your MedCAP loan. Still, if your loan is variable, it is only so much these discounts can do. For this reason, you need to think about how close your budget is. Can you handle paying $10, $20 or even more each payment term? If your budget cannot handle major fluctuations, the MedCAP loan may not be the best choice for your situation.

Another element of consideration is the loan term. While you are free to pay the MedCAP loan during your school year, there is also the option of delaying payment until graduation. Depending on your major, you have between 6 and 60 months before you must pay the loan. From there, you have 20 years to pay off your loan completely.

If you are becoming a doctor, paying $250,000 or less within 20 years shouldn't be too difficult. Things are different if you pursue healthcare careers paying less than $100,000 a year. Even if you make 50K, paying a loan that large could be quite challenging. The only exception is if you decide to live with your parents. In this situation, you would have no expenses, so theoretically you could put your whole paycheck towards your loan.

In conclusion, if you plan on making big money in the healthcare field, the MedCAP loan will allow you to handle your expenses right now. Otherwise, you need to be careful taking out this type of loan. Like any other student loan, if you fall behind, you can't get out with bankruptcy. Therefore, if you decide to sign up, make sure you can handle the payments for the next 20 years.


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