Paying for College - Loans??

[Snowflakey]

My oldest will begin college this fall although she has received grants and scholarships we still owe a good chunk (private college).

For those of you who took out loans did anyone take one with SallieMae?

Her college outlines taking a Federal Direct PLUS loan (parent loan) but I just received something from SallieMae in the mail and was wondering if that is a better route to go.

Just wondering what others have done. If they are similar in nature I guess I will go with whichever gives us the better interest rate.

Thanks in advance for any help/guidance!

 

[shortbun]

I don't know it it's true but I've been hearing that interest on school loans is about to go up a lot. Could be that it's all about to change. Consult a financial expert immediately-in case there's a close deadline.

 

[Snowflakey]

I don't know it it's true but I've been hearing that interest on school loans is about to go up a lot. Could be that it's all about to change. Consult a financial expert immediately-in case there's a close deadline.

Oh it's true - July 1st it does. The note I received from college details the Parent Plus loan with the increased interest rate. My State Representative has been fighting this in congress - bringing it up every day and reading letters from people in his state. He only has one more week

Makes me so sad to know the debt we/my daughter will incur and the outlook on our economy isn't that bright.

 

[shortbun]

Ok, then maybe a home equity line of credit would be better IF it works for you.

 

[Christine]

Makes me so sad to know the debt we/my daughter will incur and the outlook on our economy isn't that bright.

Hopefully, she will be studying a major that will provide her some payout on the debt she will incur? More and more financial advisors are recommending against incurring this type of debt if not going into a field where salaries are high. It's just not worth saddling someone with $50,000 debt after 4 years for them to work in office admin.

 

[RitaE]

The interest rate that is scheduled to go up is the Subsidized Direct loans which isn't what this OP is talking about. All students are first offered either a Subsidized or Unsubsidized loan but the amount is quite limited and usually nowhere near the total cost of attendance.

Traditionally, the PLUS loan is considered to have a better rates and terms than the Private Market loans although many borrowers can find better terms just with an unsecured loan at their local bank if they can handle a shorter and immediate payoff term.

I recall seeing a couple of weeks ago an article that stated that advice has been turned around this year and Private Loan terms (which is probably what you have received from Sallie Mae) are now better for this year because the interest rates on them have dropped significantly and the PLUS loan rate really hasn't budged. I've googled a bit but can't seem to find that article right now - I'll post it later if I can find it.

A Home Equity loan (if you have one available) is an option but is really falling out of favor as a college financing tool for all the reasons that have brought us the "housing collapse" etc.

Also remember that nearly all schools now offer some sort of monthly tuition payoff plan that allows you to stretch the cost of the school over the entire year instead of all due right at the end of August. I highly recommend you try to put at least a part of the cost on that plan if at all possible instead of just financing.

Every bit you can do to keep those loans as small as possible will be extremely beneficial to your student upon graduation.

 

[FINFAN]

My oldest will begin college this fall although she has received grants and scholarships we still owe a good chunk (private college).

For those of you who took out loans did anyone take one with SallieMae?

Her college outlines taking a Federal Direct PLUS loan (parent loan) but I just received something from SallieMae in the mail and was wondering if that is a better route to go.

Just wondering what others have done. If they are similar in nature I guess I will go with whichever gives us the better interest rate.

Thanks in advance for any help/guidance!

we went w/a Parent Plus.We were able to secure a lower int rate due to our credit score...and DD would have needed a co-signor anyway for a student loan so were were gong to be on the hook one way or another. I am not a fan of SallieMae. Our DD has been making small payments to us since we started the loan..but we did have a seperate agreement made and notarized that she is responsible for making payments to us in the amount we will owe. One big thing we noticed on the PP (and heaven forbid) but if anything happens to us or her, she is not responsible for paying that loan, whereas in the Student loans even if anything happens to HER the loans must still be repaid. Not using it as a way out, but it was nice to know in case of a tragedy. You can defer the PP for 6 months after attending full time just like a Gov loan.

this may help:


http://www.studentloannetwork.com/

Fortunately, our DD got several job offers right out of school so she is currently ahead of the game on her payments, but that can change in a heartbeat. Make sure( if you are going to be co-signing or the PP) that future purchases (large) like cars, home repairs etc., anything you may need to do a loan for...will not be affected by the fact that you are already doing a student loan. I do not know of anyone who has successfully been able to drop ther co-signor from SallieMae, even when doing the auto pay..not missing a payment etc, not deferring...I know there must be some kids who have been able to drop their co-signor, but none that I know of have been successful.We chose to have it be in our name vs DD starting out. She will need a car, apartment etc, a loan was one thing we could help keep out of her name. Also have your DD start building a credit history by her Senior year..if she will be living away from home for work after she graduates, credit checks for housing are pretty standard and you may need to co-sign THAT agreement if she does not have a credit history of her own. The co-signor situations can add up.

Things may have changed in the last 2 years since we took out our loan, so defintiely read everything you can. CollegeConfidential.com has good info too.

 

[Snowflakey]

we went w/a Parent Plus.We were able to secure a lower int rate due to our credit score...and DD would have needed a co-signor anyway for a student loan so were were gong to be on the hook one way or another. I am not a fan of SallieMae. Our DD has been making small payments to us since we started the loan..but we did have a seperate agreement made and notarized that she is responsible for making payments to us in the amount we will owe. One big thing we noticed on the PP (and heaven forbid) but if anything happens to us or her, she is not responsible for paying that loan, whereas in the Student loans even if anything happens to HER the loans must still be repaid. Not using it as a way out, but it was nice to know in case of a tragedy. You can defer the PP for 6 months after attending full time just like a Gov loan.

this may help:


http://www.studentloannetwork.com/

Fortunately, our DD got several job offers right out of school so she is currently ahead of the game on her payments, but that can change in a heartbeat. Make sure( if you are going to be co-signing or the PP) that future purchases (large) like cars, home repairs etc., anything you may need to do a loan for...will not be affected by the fact that you are already doing a student loan. I do not know of anyone who has successfully been able to drop ther co-signor from SallieMae, even when doing the auto pay..not missing a payment etc, not deferring...I know there must be some kids who have been able to drop their co-signor, but none that I know of have been successful.We chose to have it be in our name vs DD starting out. She will need a car, apartment etc, a loan was one thing we could help keep out of her name. Also have your DD start building a credit history by her Senior year..if she will be living away from home for work after she graduates, credit checks for housing are pretty standard and you may need to co-sign THAT agreement if she does not have a credit history of her own. The co-signor situations can add up.

Things may have changed in the last 2 years since we took out our loan, so defintiely read everything you can. CollegeConfidential.com has good info too.

Thank you for your help!

DD does have a credit card (very low limit) to build her credit. She may use it for gas and pays it off every month. She also works 2 jobs. She's very motivated and hard working.

I like your advice about having the loan in your name. I may do that as well.

Home equity option isn't there for us due to the housing bust.

Thanks again!