Please help...student loan question

[weeluvdisney]

Who determines how much you can borrow, the school or the government. The school told me its the government and the Fafsa contact # told me it is the school. Is the school just required to follow a guideline or chart based on parents income?

 

[karliebug]

The government decides how much you get in federal subsidized and unsubsifized loans. For first year students the amount is 5500. Any other money you need over that will have to be a parent p,us loan or a private loan.

 

[danygirl]

There are subsidized and unsubsidized loans. There are private loans and federally backed loans. Which are you asking about?

 

[AuroraSheasMom]

Who determines how much you can borrow, the school or the government. The school told me its the government and the Fafsa contact # told me it is the school. Is the school just required to follow a guideline or chart based on parents income?

I'm not a financial aid officer but I am a recent college graduate so maybe I can help. When you fill out the FAFSA, you receive an Expected Family Contribution (EFC) amount which is the amount the student (or parent) is expected to be able to contribute toward tuition and college expenses. This amount is determined by a federal formula. From there, loan amounts ate determined based on the EFC and the student's status as a dependent or independent student. If the student (like my case) is independent, they are eligible for higher supplementary loan amounts. Pell Grants may also be available as well.

It is MY understanding that since the loans are federal loans, they are determined by the government. For example, a couple of years ago, Obama made changes to the loan amounts available that made it necessary for me to attend summer classes full time and I had to pay out of pocket for some of my tuition due to the changes in how and when the funds could be distributed.

Here in Georgia, academically outstanding students are eligible for a State funded HOPE grant, so that would be handled by the state. The only financial aid or tuition issue that would be controlled by the school would be scholarships , to the best of my knowledge. I hope my answer (while clear as mud) helped a little!

Maybe My Sister's Princess will see this and chime in since she's pretty familiar with this type of question.

 

[My sister's princess]

My ears were ringing

You are getting a good mix of answers that are sorta correct.

There are yearly limits for federal student loans. These limits are set by the feds. As a school, we have to follow rules about how we award those limits each year.

A great example is a dependent freshmen student. They are allowed $5500 in the Federal Direct (sometimes called Stafford) loans. UP TO $3500 of this can be Subsidized.

How the Stafford loans are allocated between the Subsidized (where the government is paying the interest for the student while they are in school) and the Unsubsidized is based on two different things. One is the estimated family contribution (EFC), the second is the cost of attendance at the school, also known as your student's budget.

A student can not be awarded over their need (Budget - EFC), so if your school's cost of attendance is $6000 and your EFC is $4000 you would be awarded $2000 in Subsidized loan and $3500 in Unsubsidized. This takes out all thought of Pell grants or other awards, I am talking about just loans!

Of course there are all sorts of weird exceptions to these rules (did the parent get denied a PLUS loan? Is the student Independent, what if you change grade levels in the middle of the year, or hit your lifetime limits...)

Private and PLUS loans are a whole other beast but if you have questions about them I would be happy to help.

(and yes, this is my day job that sends me to Disney )

 

[weeluvdisney]

There are subsidized and unsubsidized loans. There are private loans and federally backed loans. Which are you asking about?

Subsidized and unsubsidized. My daughter is not eligible for pell and can't do private loans because of the school. She had 4 years of college and then went to cosmetology school. They initially told her her she could borrow $11,000 and tuition was $13,700. She started last fall and its one year. After doing the 2013 FAFSA, they said she can no longer get $11,000...only $6600......most likely because I sold employment related stock. She is really stuck now and the owner of the school wants my husbands paystubs and the stock info to "see what he can do". I want her to get what she needs but this makes me a bit uncomfortable because of hearsay about the owner and problems other students have had with him getting the balance of Free money back after he gets his cut. I am really not in a position to help her because we help our kids with other things such as cars but I don't want her to have to quit when she is halfway done. This stinks!

 

[weeluvdisney]

I'm not a financial aid officer but I am a recent college graduate so maybe I can help. When you fill out the FAFSA, you receive an Expected Family Contribution (EFC) amount which is the amount the student (or parent) is expected to be able to contribute toward tuition and college expenses. This amount is determined by a federal formula. From there, loan amounts ate determined based on the EFC and the student's status as a dependent or independent student. If the student (like my case) is independent, they are eligible for higher supplementary loan amounts. Pell Grants may also be available as well.

It is MY understanding that since the loans are federal loans, they are determined by the government. For example, a couple of years ago, Obama made changes to the loan amounts available that made it necessary for me to attend summer classes full time and I had to pay out of pocket for some of my tuition due to the changes in how and when the funds could be distributed.

Here in Georgia, academically outstanding students are eligible for a State funded HOPE grant, so that would be handled by the state. The only financial aid or tuition issue that would be controlled by the school would be scholarships , to the best of my knowledge. I hope my answer (while clear as mud) helped a little!

Maybe My Sister's Princess will see this and chime in since she's pretty familiar with this type of question.

Thank you for your response and everyone else to. My daughter would be a dependent. I just don't understand how they can change halfway through a 1 year cosmetology program. She had 4 prior years in college. I understand their rules of the efc but we cannot help her right now. We have helped with cars and other things and have another kid starting school this fall. We had to help him with a car, we also provide my mother in laws car and all repairs and she lives with us. We can only do so much.

 

[weeluvdisney]

My ears were ringing

You are getting a good mix of answers that are sorta correct.

There are yearly limits for federal student loans. These limits are set by the feds. As a school, we have to follow rules about how we award those limits each year.

A great example is a dependent freshmen student. They are allowed $5500 in the Federal Direct (sometimes called Stafford) loans. UP TO $3500 of this can be Subsidized.

How the Stafford loans are allocated between the Subsidized (where the government is paying the interest for the student while they are in school) and the Unsubsidized is based on two different things. One is the estimated family contribution (EFC), the second is the cost of attendance at the school, also known as your student's budget.

A student can not be awarded over their need (Budget - EFC), so if your school's cost of attendance is $6000 and your EFC is $4000 you would be awarded $2000 in Subsidized loan and $3500 in Unsubsidized. This takes out all thought of Pell grants or other awards, I am talking about just loans!

Of course there are all sorts of weird exceptions to these rules (did the parent get denied a PLUS loan? Is the student Independent, what if you change grade levels in the middle of the year, or hit your lifetime limits...)

Private and PLUS loans are a whole other beast but if you have questions about them I would be happy to help.

(and yes, this is my day job that sends me to Disney )

I appreciate the help and glad I put this on the budget board because I started with the Community Board.
She went to college for 4 years prior to cosmetology school. She borrowed her limit each year with no problems with both my husband and I working.
She is not eligible for pell and the school does not participate in private loans. We have not helped with school because we have 3 children and my inlaws her for 13 years. We have helped them all (including inlaws) with cars, getting them in our name and all maintenance. My husbands incomes looks good on paper but the are other circumstances sucking up all that income. I haven't worked in 3 years and even though his income looks good it seems odd to me that she got what she needed all the other years but can't now with us having one income instead of 2. I sold employment related stock at the end of last year and I think that is what did her in but it was a one time thing, not on going income. She is halfway done with school and possibly can't finish because of this. The owner of the school asked for my husbands paystubs and the stock info to "see what he could do" but anyone that knows him said he isn't really trust worthy and the lady that works in the office told my daughter that he doesn't usually know what he is talking about. Any advice would be greatly appreciated as I want her to succeed but don't know what to do.

Thank you everyone for all responses!

 

[ktate82]

If she completed 4 years of college, did she earn a bachelors degree? If so, she is now an independent student.

 

[4HppyCamprs]

If she took the max out on her loans she likely reached the caps on her loans.

Sent from my iPhone using DISBoards

 

[weeluvdisney]

If she took the max out on her loans she likely reached the caps on her loans.

Sent from my iPhone using DISBoards

She did take money all 4 years of college but at the beginning of the cosmetology school year they told her she should be eligible for $11,000. It's a 1 yr program but considered 2 because it started Oct 2012 and ends Oct 2013 so they said she would get $5500 each term. Then, this spring they said she can't get that amount. First he told me they changed the maximum amount and when I went to talk to him in person he told me it was probably because of my stock.

 

[martikus]

Your stocks should have nothing to do with loan eligibility and seems like a very fishy answer. There is a reason private loans aren't offerred at that type of school. Their graduates have a high default rate on loans b/c it is hard to get jobs.

If your child is under the age of 24, she is "dependent" for FAFSA and can borrow a maximum of $31,000 in student loans for undergrad degree. After she is 24, the maximum increases to $57,500 for all undergrad programs.

It is possible the school did not check her loan history so awarded a large loan up front and now has to retract it because she was getting close to the $31,000 limit?

Does the school participate in Parent PLUS loans? That might be a choice? If parent is denied based on credit, then student can use the $57,500 limit.

There is also a yearly limit of $5,500 for freshmen, $6,500 for sophomores, and $7,500 for junior/senior.

I would be pushing for more answers from the financial aid office. Perhaps trying to see if there are scholarships? The fact you have helped other family buy cars, be supported, etc would have no bearing at my school as those are personal choices. But I'm bothered that the school is changing their tune of how much she can borrow without concrete reasons why.

 

[weeluvdisney]

Your stocks should have nothing to do with loan eligibility and seems like a very fishy answer. There is a reason private loans aren't offerred at that type of school. Their graduates have a high default rate on loans b/c it is hard to get jobs.

If your child is under the age of 24, she is "dependent" for FAFSA and can borrow a maximum of $31,000 in student loans for undergrad degree. After she is 24, the maximum increases to $57,500 for all undergrad programs.

It is possible the school did not check her loan history so awarded a large loan up front and now has to retract it because she was getting close to the $31,000 limit?

Does the school participate in Parent PLUS loans? That might be a choice? If parent is denied based on credit, then student can use the $57,500 limit.

There is also a yearly limit of $5,500 for freshmen, $6,500 for sophomores, and $7,500 for junior/senior.

I would be pushing for more answers from the financial aid office. Perhaps trying to see if there are scholarships? The fact you have helped other family buy cars, be supported, etc would have no bearing at my school as those are personal choices. But I'm bothered that the school is changing their tune of how much she can borrow without concrete reasons why.

After a lot of research last night and this morning and talking to my daughter, he told us wrong in the beginning and is now retracting the amount just as you said. Had we not been told wrong she would of had to wait to go to school to save up more money but now he screwed her over because HE told us wrong and then tried to cover it up by saying the max changed this year which is not true. I read that she can appeal it but she would be appealing to him. Also, I don't trust him and not sure what he is trying to accomplish asking for our paystubs and stock info and as far as I can tell the only way she can get more money is if we appeal and the school (owner) approves it or if we apply for a plus loan and get denied. I guess you can scew up and be as wrong as you want when you own the place! What a disaster!

 

[TLuvsD]

See what you can work out with the school. Start with the position that you are sure he will work hard to solve the problem he created. Submit the FASFA data to him...nothing more. Just keep asking him how he plans to solve his problem.

Do some research about who in your state oversees this type of school. Just in case you need to make some calls.

 

[disney1990]

I appreciate the help and glad I put this on the budget board because I started with the Community Board.
She went to college for 4 years prior to cosmetology school. She borrowed her limit each year with no problems with both my husband and I working.
She is not eligible for pell and the school does not participate in private loans. We have not helped with school because we have 3 children and my inlaws her for 13 years. We have helped them all (including inlaws) with cars, getting them in our name and all maintenance. My husbands incomes looks good on paper but the are other circumstances sucking up all that income. I haven't worked in 3 years and even though his income looks good it seems odd to me that she got what she needed all the other years but can't now with us having one income instead of 2. I sold employment related stock at the end of last year and I think that is what did her in but it was a one time thing, not on going income. She is halfway done with school and possibly can't finish because of this. The owner of the school asked for my husbands paystubs and the stock info to "see what he could do" but anyone that knows him said he isn't really trust worthy and the lady that works in the office told my daughter that he doesn't usually know what he is talking about. Any advice would be greatly appreciated as I want her to succeed but don't know what to do.

Thank you everyone for all responses!

School does not have to participate in private loans. That is between you and the bank. My daughter had private loans along with her federal loans.