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OSM Loans Rival Federal Programs
Of the number of payment options at Oregon School of Massage, two are loan programs to cover tuition. The Low Interest Loan(LIL) and the No Interest Monthly Payment Plan (MPP) are affordable options for students paying for tuition in massage training. Currently, 43.2% of OSM students are using one of these payment options.
The MPP might not be called a loan as there is no interest charged. It is a straight forward payment plan dividing tuition into up to 24 monthly payments. The Low Interest Loan (LIL) offers terms up to six years with an interest rate of 5%. Currently, federal Stafford loans arranged through FAFSA (Free Application for Federal Student Aid) carry an interest rate between 4.45% and 7%(1).
The Monthly Payment Plan has a repayment period up to 24 months, with a standard payment amount of $490. The Low Interest Loan has a period up to 72 months or 6 years, this results in a monthly payment of $182(2). For both programs, the monthly payment may be reduced with a larger tuition deposit. The standard repayment period for federal student loans may be as much as 10 years, or longer with consolidation (20 years or more). The standard OSM loan for a full-time student has less than 5 years of payments remaining when they complete training.
Keeping Money Local
While federal student loans are backed by the US government, the actual lenders are usually large corporate banks who are based well outside the community. OSM loans stay right in the organization, benefiting OSM employees, students and the surrounding communities.
Federal student loans do allow for deferment while a student is in school. Payments and interest are waived until 6 months after the student has graduated. Oregon School of Massage does require payments for both the MPP and LIL to begin while the student is in training. We find that this builds a stronger relationship with the student resulting in greater commitment to training. Another result is that students leave school with much lower student loan debt. Federal student loans offer payment deferments for various reasons, generally interest continues to accrue. At Oregon School of Massage, we pride ourselves on communication and strive to make loans workable for students if they have life challenges that arise and affect their financial situation. It’s not uncommon for us to waive fees or re-write a loan for a student whose circumstances may have changed.
The MPP and LIL cover tuition only. This differs from federal loans, which often allow students to borrow for books, supplies, and even housing and living expenses. Students at Oregon School of Massage are responsible for purchasing their books and supplies, which is not usually a hardship(3). Students at Oregon School of Massage generally have their living arrangements in place. There is no housing at the school, and students are often working part or full time as they go through training. Again, by not borrowing for expenses, OSM students have less debt at the end of training(4).
Evolution of OSM Loan
Prior to 2009, OSM did offer loans through outside agencies like TFC and Sallie Mae. These were not part of federal programs and considered private education loans. Not subsidized by the federal government, these private loans were becoming more and more difficult for students to qualify, and interest rates were very high. At that time, they might be 12% or higher based on the creditworthiness of the applicant(5).
Finding the means to fund an education can be a challenge, particularly when pursuing vocational training like the program at OSM. Fortunately, Oregon School of Massage offers several good options for students to make paying for the education towards a rewarding career very affordable.
(1) Interest Rates 7/1/17-7/1/18, https://studentaid.ed.gov/sa/types/loans/interest-rates
(2) Standard OSM Loan $11,995 Tuition, $400 Down Payment ($250 Dep + $150 Loan Fee), 72 Months – $182 Monthly Payment, $7901.11 Remaining at Graduation
(3) Books, Supplies & Equipment – $1915
(4) Federal Student Loans Average Debt – $31,482 (Q2, 2017)
(5) Private Education Loans Interest Rates – 7.76-9.66%