Researching student loans, wow my head is spinning. Any info?

[limpy]

For the sake of argument - college tuition is sort of like airfare. The full fare price is what it is, but not everyone pays that - and its complicated on who pays what. Especially with private schools who have more discretionary endowments. A local student might get a local student scholarship - one of my husband's discretionary grants was specifically for students from within a ten mile range of the inner city campus who did not do great academically, but had shown potential - which was my husband - lousy grades his freshman and have his sophomore year, then he figured it out and his grades improved - topped off with excellent test scores. It was a grant specifically for under achieving local low income students. Someone else without all three of those attributes wouldn't have gotten the money.

Now, was it fair that another kid who had a better GPA might not have even gotten into the school, much less gotten aid? Maybe not, but it wasn't fair that my husband was raised by a single mom in poverty and got stuck in a public high school that was underfunded and performed poorly, where graduation wasn't necessarily a goal. Life isn't fair.

I agree that it is possible to qualify for grants, scholarships, etc, but everyone should go into the process planning to pay the full amount, unless you are at the poverty line with a 4.0, in which case grants and scholarships are a much safer bet. I don't have a problem with applying to unaffordable schools even, if the student is fully aware that actually attending is dependent on what's in financial package (not loans).

 

[limpy]

If you don't think it's a big question or have anything to offer byway of "x sort of loan was great because of y" then I don't see how you can help

Subsidized federal loans are the best-case loan scenario, for many reason including interest not accruing until after the grace period and being subject to government benefits (eligible for forbearance, income-based repayment, forgiveness, etc). After that would probably be unsubsidized federal loans. Avoid private loans like the plague.

 

[LuvOrlando]

For the sake of argument - college tuition is sort of like airfare. The full fare price is what it is, but not everyone pays that - and its complicated on who pays what. Especially with private schools who have more discretionary endowments. A local student might get a local student scholarship - one of my husband's discretionary grants was specifically for students from within a ten mile range of the inner city campus who did not do great academically, but had shown potential - which was my husband - lousy grades his freshman and have his sophomore year, then he figured it out and his grades improved - topped off with excellent test scores. It was a grant specifically for under achieving local low income students. Someone else without all three of those attributes wouldn't have gotten the money.

Now, was it fair that another kid who had a better GPA might not have even gotten into the school, much less gotten aid? Maybe not, but it wasn't fair that my husband was raised by a single mom in poverty and got stuck in a public high school that was underfunded and performed poorly, where graduation wasn't necessarily a goal. Life isn't fair.

Part one could not be more true there is a ridiculous amount of play in how much you pay to go to any given school. On paper Penn State and UMass Amherst look the same however UMass Amherst was willing to give my son $8k for his academic achievements. Other schools we hadn't even applied to were willing to give us varying amounts of money, even making application free, because of his grades athleticism and community participation. Now once your kids hit high school and you start hearing all this from other parents things get very very murky because you hear about this kid getting $20,000 or that kid getting $10,000 and suddenly you're not really sure what to think about how much you gonna pay for any given school. Throw in the stories about kids who go for free due to financial reasons when the parents don't necessarily volunteer that they are in dire straits financially and you have a very confusing mess.

Second part about socioeconomic situation and education I absolutely do agree. There is a big problem with the worst situations teachers/exploitation/programs being dumped in the laps of impoverished communities. I'm not saying the kids from those community shouldn't be given more help of course they should. I'm simply suggesting that if all things are equal there should be some extra assistance given to a kid who managed to pull out straight A's in that same exact environment. Not saying the kid who is getting C's and B's does not deserve a chance. However all things equal that kid who is getting straight A's might be a successful businessperson or politician who could come back to the community knowing full well the problems inherent in it and raise everybody up because he or she cares. That's what the whole "The talented tenth" essay was about & I can't say I disagree. As an aside I don't think this only applies to the minority group cited within the essay, I think this is true for every group that doesn't have a voice. You have to have a handful of individuals that are louder & more visible than everybody else to be heard

 

[crisi]

I agree that it is possible to qualify for grants, scholarships, etc, but everyone should go into the process planning to pay the full amount, unless you are at the poverty line with a 4.0, in which case grants and scholarships are a much safer bet. I don't have a problem with applying to unaffordable schools even, if the student is fully aware that actually attending is dependent on what's in financial package (not loans).

Absolutely

.....
Second part about socioeconomic situation and education I absolutely do agree. There is a big problem with the worst situations teachers/exploitation/programs being dumped in the laps of impoverished communities. I'm not saying the kids from those community shouldn't be given more help of course they should. I'm simply suggesting that if all things are equal there should be some extra assistance given to a kid who managed to pull out straight A's in that same exact environment. Not saying the kid who is getting C's and B's does not deserve a chance. However all things equal that kid who is getting straight A's might be a successful businessperson or politician who could come back to the community knowing full well the problems inherent in it and raise everybody up because he or she cares. That's what the whole "The talented tenth" speech was about & I can't say I disagree.

That's funny. My husband has been a very successful businessperson. He is responsible for hundreds of jobs - in the community he grew up in and went to college in. He is responsible for billions of dollars in revenue for the companies he's worked for. He now consults.

There are programs for kids who get straight As in the same environment. There aren't a lot of programs for students who don't. And in my experience, grades in high school are not a good measure of business success. That straight A kid might end up with a PhD in Anthropology unable to find a job.

 

[LuvOrlando]

So Crisi, because of your own personal experience with your husband you think that straight A kids have no value? The fact that a kid who has all of those problems and still manages to get straight A's means nothing, it's not an accomplishment? So basically the fact that I'm helping my sons African-American best friend Who is brilliant but comes from rough circumstances get ahead is a waste of my time and I should, instead find a kid who for all intents and purposes looks like he's going to fail out and help him instead? Because that is what is coming across- according to you I'm wasting my time- this kid doesn't need my support because he has enough.

Mind you I am also helping a friend of his that is an underachiever with poor grades but I think it would be a mistake to ignore the better student in favor of a second struggling student

 

[crisi]

Because of your own personal experience with your husband you think that straight a kids have no value? So basically the fact that I'm helping my sons African-American best friend get ahead is a waste of my time and I should, instead find a kid who for all intents and purposes looks like he's going to fail out and help him instead? Because that is what is coming across- according to you I'm wasting my time

No, but you seem to think that kids that don't get straight As have less value. I think that they all have the same value, and its up to the person who has the money to decide where to put it. In the case of my husbands college, one local kid every year got this particular grant - but 90% of the kids that went to the school got some tuition help outside of federal financial aid. MOST of them had great grades.

I'm not sure what the color of your son's friends skin has to do with anything at all. And you get to decide where to put your time and money in helping people. I gave my kid's high school an arts scholarship this year for someone who will probably major in Theatre and end up as a barista. Its my money, I get to put it where I want.

 

[Jake&IzzyLand]

I haven't read through all of this, but thought I would add some points.

Most people need college to find a successful career. A small percentage can make a good living without it.

What you major in will make a difference. Be smart about it. What interests you does not always equate a good paycheck.

Realize that you may not get the dream college experience, meaning going away to the school of your choice for 4 plus years.

A few ways to cut down on cost would be to complete your first two years at a community college. You can bypass gas, parking passes and eating on campus by taking online classes. This will put hours back in your day and allow for more time to work.

When you transfer, try going to a school that you can commute to. Rent an off campus apartment with other students with like goals.

Parents, don't put it all on the line for your kids to go to a prestigious school if you do not have the connections and network to go along with it.

 

[LuvOrlando]

No, but you seem to think that kids that don't get straight As have less value. I think that they all have the same value, and its up to the person who has the money to decide where to put it. In the case of my husbands college, one local kid every year got this particular grant - but 90% of the kids that went to the school got some tuition help outside of federal financial aid. MOST of them had great grades.

I'm not sure what the color of your son's friends skin has to do with anything at all. And you get to decide where to put your time and money in helping people. I gave my kid's high school an arts scholarship this year for someone who will probably major in Theatre and end up as a barista. Its my money, I get to put it where I want.

Nope, I said repeatedly that I think both should get help- I just said there should be additional support for kids at the top end of the spectrum.

Ethnicity is mentioned simply because you pointed out socioeconomic privilege as a barometer of success and by most accounts his particular ethncity is underrepresented

I think you are saying that good students should NOT get extra support, and so I'm going to just have to disagree. Nothing really to debate since you're not gonna change my mind and I'm not gonna change yours so it's completely unproductive. Recognizing that this line has nothing to do with anythjng at hand how about we just let this go and get back to figuring out loans for those of us who are interested in loans.

 

[Sagginit]

I think there isn't a lot of transparency in how money gets distributed and thus the debate over how to plan. I will say this, when I applied to colleges I got accepted to all of the ones I applied to (just 3 as I didn't feel the need to apply to dozens since I didn't realize how much aid would vary). I never heard back from one school so I called in. My letter of acceptance was delayed as there was an error with my application (admitted by the college on their part). They only offered me $1,000 a year as an academic scholarship. I was ranked 25 in a class of 400, two people I knew were ranked much lower and got more money. I called back to dispute it and the lady at the office was extremely rude saying I can't compare myself to others, when I pointed out they mishandled my application and wanted to know if they had simply run out of money as they promised it to others before finishing all acceptance packages they changed their tune. I ended getting a new offer but just a few hundred dollars more. This led to me going to an in state private college as my package was much higher and that would be the cheapest option. Looking back if they had not mishandled a batch of applications that year I may have been offered a lot more and gone there. The process isn't fair but then again life isn't.

The reality is parents need to understand the system and loan options years ahead of time in order to plan. My mother was divorced and if she married my stepfather they would have counted his income when calculating FASA. He had three grown kids he helped through college and had no intentions of helping me as my father was in the picture (which he quickly turned into a deadbeat when he saw the tuition bill, leaving me in a dorm my first week with the threat of eviction and being kicked out as he never sent in the check as he said he did). She put off not only getting married to him for four years so I could go to college but she also declined two raises at work and instead took more PTO to help maintain my FASA package. I had done everything right as far as we were concerned, I was 25 out of 100 kids, I was an honor roll student, I was in several clubs and even won a few awards (including volunteer based Key Club) but I qualified for more in financial needs scholarships than I did in academic. My sister in law had parents who wouldn't help her at all. They were middle class and as they had their own business on paper it looked liked they were well off. She wanted to declare herself emancipated to apply for aid based on her finances only but they won't let you do it that way, she would have had to been emancipated for years before hand. She worked her way through a local college for two years and then transferred to a better school to finish but had to take it all out in private loans. You can't fault anyone else who works the system to get the most it has to offer to them, you just have to learn to work it better yourself.

 

[MariMama]

What is your child doing to figure out how to pay for college? It is just as much his responsibility as it is yours. Our EFC was in the high 5 numbers. We knew we weren't getting financial aid, but our child was still offered a subsidized Stafford.
There are an unlimited number of variables that go into choosing how to pay for college that people can't possibly tell you all of them. I am not sure exactly what you are asking, since you disagree with anyone that posts something you take offense to and how it applies to your situation. No one knows your exact situation, which is the point posters are trying to tell you.

 

[LuvOrlando]

That's exactly it Sagginit. College financing is like snowflakes, no two situations are alike. I bet if you walk through any given college campus and asked 20 different kids how much they were paying you would get 20 different answers. I like hearing from that cross-section after-the-fact & after they are done and once they start paying because this info is very helpful to me

I had to have a conversation with my son yesterday about getting a job on campus because he wants to try to get a job with his best friend. However, his best friend is going to be eligible for the coveted work study programs and my son is not so in a campus as large as Penn State I'm guessing he's not going to find anything remotely suitable. Maybe there is a chance that he could get a job over the summer that was vacated by graduating senior but we'll see, I'm not holding my breath.

You're very fortunate your mom knew what she was getting into and was able to react accordingly. It is incredible how much fancy footwork is necessary

 

[LuvOrlando]

What is your child doing to figure out how to pay for college? It is just as much his responsibility as it is yours. Our EFC was in the high 5 numbers. We knew we weren't getting financial aid, but our child was still offered a subsidized Stafford.
There are an unlimited number of variables that go into choosing how to pay for college that people can't possibly tell you all of them. I am not sure exactly what you are asking, since you disagree with anyone that posts something you take offense to and how it applies to your situation. No one knows your exact situation, which is the point posters are trying to tell you.

Huh? When people talk to me about loans I don't find that disagreeable at all, in fact those of the best conversations that have taken place and I've learned a great deal more here than anywhere else. It's the rest of the stuff that's a little off the mark. Like people telling me if I can't afford cash for college I shouldn't put my kid in the college. Some assuming that because I'm looking for a loan means I need the loan and can't afford it. People piling on because they think I'm trying to get my kids into a situation that they shouldn't be in. Getting into debates about the relevance of grades and formal education in the first place. People telling me that I should just look at cheaper colleges because that simplifies things. None of these things are part of what I'm asking, I'm not asking anybody for their opinion on whether or not my kid should go to the school -at all- and while I wouldn't go to the extreme of saying the tangents are offensive I would agree with the dialogue being off the mark & not being helpful.

To answer your question, what my kid is doing is taking out Stafford because that's all he can do - by law as far as I could tell. We are not getting subsidized anything at all. Everything else is on us and I really would never trust the opinion of an 18-year-old when it comes to my own finances so if you're suggesting I rely on him do the research I've got to go with a no. I am doing all research and since there are so many parents on here it seems to be the best place to go to get a great cross-section of points of view and for the most part that's been true. That's why I am still here in spite of some unpleasantness

 

[MariMama]

Huh? When people talk to me about loans I don't find that disagreeable at all, in fact those of the best conversations that have taken place and I've learned a great deal more here than anywhere else. It's the rest of the stuff that's a little off the mark. Like people telling me if I can't afford cash for college I shouldn't put my kid in the college. Some assuming that because I'm looking for a loan means I need the loan and can't afford it. People piling on because they think I'm trying to get my kids into a situation that they shouldn't be in. Getting into debates about the relevance of grades and formal education in the first place. People telling me that I should just look at cheaper colleges because that simplifies things. None of these things are part of what I'm asking, I'm not asking anybody for their opinion on whether or not my kid should go to the school -at all- and while I wouldn't go to the extreme of saying the tangents are offensive I would agree with the dialogue being off the mark & not being helpful.

To answer your question, what my kid is doing is taking out Stafford because that's all he can do - by law as far as I could tell. Everything else is on us and I really would never trust the opinion of an 18-year-old when it comes to my own finances so if you're suggesting I rely on him do the research I've got to go with a no. I am doing all research and since there are so many parents on here it seem to be the best place to go to get a great cross-section of points of view and for the most part that's been true. That's why I am still here in spite of some unpleasantness

He can get a job, apply for different scholarships, as well as take out a Stafford. It isn't either/or. He needs to be somewhat responsible for figuring out how to pay for his own education, whether it be trade school, community college, a public university or private.

 

[elaine amj]

I get you're frustrated - it rings through in your every post. I completely understand needing to vent about it. But perhaps now that you've vented, it's time to accept the inherent unfairness of the system and figuring out how you can best work within it. It sucks, but life's not fair and that's just how it is for now. You can work to change things, but that doesn't solve your current problems. My guess is, you are frustrated, annoyed with the whole process, and just feel like there's no way to figure out the "best" solution.

It does sound like a confusing tangle. I really like the spreadsheet you started putting together. List each option, pros and cons, and full financial details including exactly what you and your child would have to do to get there. That way, you can have a more comprehensive view of the options. Will you know every rabbit hole? It doesn't sound like it (I agree - I would hate that too). Still, you'll have learned most of them. Then you and your child will have to envision each option together.

Also, from the sounds of it, both you and your son sound like very smart people. I bet you that if you get faced with a rabbit hole, you're going to be able to find ways to maneuver around it. Plan for the worst, hope for the best. He (and you) are going to make it through just fine. It may not work out just the way you envision, but all your extra research and planning will still pay off in helping you figure out solutions to every rabbit hole you may face.

I also totally get why you don't want your son to be in charge of everything. But it is a good time to get him involved in decisions that will affect his future. Yes, you will have to do your research (which you are doing). But he can definitely help you - it is his education after all. When I wanted to change my education path, I went and got all the info for my parents including all costs and presented it to them. I had narrowed things down to 2 options. I laid it all out for them and presented a plan as to how we could achieve my desired option (including my offering to work to pay all my own living expenses from my 2nd year onwards. And no, finding part-time work was not easy. I know you said it likely won't be easy for your son either. But if he wants it enough and is persistent and is as smart about the job search as he sounds, he'll get there). It was a fantastic exercise for me to get a good understanding of costs, etc. Given your complexities, you will certainly have to do more than my parents did at the time, but like I said, he should certainly help you out here. if nothing else, it will be an eye-opener to him of the complex world he is going to have to maneuver.

Also, considering the interesting tangents this thread has taken, perhaps it would be helpful if you lay out some specific loan options you are considering and ask about potential pros and cons? That might help you get the specific advice it sounds like you are searching for.

Good luck!

 

[crisi]

Nope, I said repeatedly that I think both should get help- I just said there should be additional support for kids at the top end of the spectrum.

Ethnicity is mentioned simply because you pointed out socioeconomic privilege as a barometer of success and by most accounts his particular ethncity is underrepresented

I think you are saying that good students should NOT get extra support, and so I'm going to just have to disagree. Nothing really to debate since you're not gonna change my mind and I'm not gonna change yours so it's completely unproductive. Recognizing that this line has nothing to do with anythjng at hand how about we just let this go and get back to figuring out loans for those of us who are interested in loans.

I'm saying that its up to the person handing out the money on whether good students get extra support or not. The vast majority of private grants and scholarships go out to kids with good grades. But there are some that go out for other reasons. A kid getting a scholarship from the Romanian American Association of Omaha because he's Romanian might have worse grades than a kid whose grandparents came over from Ireland, but the Romanian American Association of Omaha gets to determine the criteria for the scholarship.

As to federal aid, there is no good grade criteria because you can't compare someone with an A average at a not very good school in rural Mississippi to someone with an A average coming out of Stuyvesant. It is strictly needs based.

 

[LuvOrlando]

-

 

[LuvOrlando]

Thanks Marimama, I did just have an interesting conversation with a friend at lunch and she thinks she is going to go the home-equity route. On the one hand interest rates are lower and with a line of credit we can get away without any origination fees but is this smart to do in our 40s when we should be solidifying our stake in the world? Also the line of credit exposes us to variable interest rates. If we do fixed we need to project out the amount and pay interest on money we haven't used yet :/

We do have a lot of equity in the home but not so sure this is smart and I'm very uneasy... Still as I said I'm just using it as a buffer and don't expect to need it for long if at all

So it seems the things on the table are:

Half cash each semester.

The other half:

Stafford, because I want him to have some ownership but we're gonna be paying interest until he's out of school.

Remainder, I want to spread it out over the course of the year to act as a buffer.

Friend of mine used Sallie Mae for this purpose but it sounds a little dicey. I gather the best way to handle this organization is to create an online account and direct deposit interest & payments to prevent human error & needing customer service

Another friend of mine is proposing using home-equity loans but that makes me a little nervous

Parent plus - Im not entirely sure I really have a good understanding of how this works. Seems it is loosely affiliated with federal money and has certain protections and safeguards

Private- I will get great customer service but there are no safeguards and I will pay high origination fees

 

[Sagginit]

I had to have a conversation with my son yesterday about getting a job on campus because he wants to try to get a job with his best friend. However, his best friend is going to be eligible for the coveted work study programs and my son is not so in a campus as large as Penn State I'm guessing he's not going to find anything remotely suitable. Maybe there is a chance that he could get a job over the summer that was vacated by graduating senior but we'll see, I'm not holding my breath.

Actually for me work study was not a coveted job. When I was in college the government decided how much I could be paid an hour and how many hours I could work. The department wanted to pay me more out of their budget but the federal program would not allow it. Others who worked on campus without work study were getting paid more. I didn't have a car so working off campus wasn't an option so I was stuck. His friend might find out that although he gets a work study job they pay minimum wage and can cap him at 10-15 hours a week. A job off campus for fewer hours may be more profitable. When I was in college with the exception of a few people I knew we lived off our summer job money (exceptions, nursing student who got a job at a drs office as a med assistant made a decent amount as a student and those who could drive off campus to a retail/restaurant job).

 

[ruadisneyfan2]

I think the best thing you can do for yourself and your son, aside from weighing the pros and cons of each type of loan, is to stop comparing what others are getting. Just like everything in life, some have more than me, some have less. You're wasting a lot of energy comparing to his friends and other schools. None of that matters except your own situation and the offer from your son's school. Period.
You're making it more complicated than it has to be.

The Parent Plus loan is not "loosely affiliated with federal money". It is a federal loan except it's all in the parent's name. You can borrow up to 100% of the cost of tuition, room/board, books/supplies, transportation expenses, etc. but it must be a school expense.
You can alternate with your dh if want also so all 4 years are not in one parent's name.
Ds19 and I have the same servicer for his Stafford loan as I have for the PPL. Just different log in names. (and of course, different balances.)

ETA: I'm not sure but you might have the origination fees reversed. There is an origination fee for the PPL, 4.292% for 15-16 year, but not always for private loans. Then again, the only private loan I looked into was through Discover, only because I have a Discover card and they advertise student loans on my log in page. IIRC, they offered loans with no origination fees. The book I read about student loans/paying for college suggested private loans as a very, last option.

 

[TwoMisfits]

Thanks Marimama, I did just have an interesting conversation with a friend at lunch and she thinks she is going to go the home-equity route. On the one hand interest rates are lower and with a line of credit we can get away without any origination fees but is this smart to do in our 40s when we should be solidifying our stake in the world? Also the line of credit exposes us to variable interest rates. If we do fixed we need to project out the amount and pay interest on money we haven't used yet :/

We do have a lot of equity in the home but not so sure this is smart and I'm very uneasy... Still as I said I'm just using it as a buffer and don't expect to need it for long if at all

So it seems the things on the table are:

Half cash each semester.

The other half:

Stafford, because I want him to have some ownership but we're gonna be paying interest until he's out of school.

Remainder, I want to spread it out over the course of the year to act as a buffer.

Friend of mine used Sallie Mae for this purpose but it sounds a little dicey. I gather the best way to handle this organization is to create an online account and direct deposit interest & payments to prevent human error & needing customer service

Another friend of mine is proposing using home-equity loans but that makes me a little nervous

Parent plus - Im not entirely sure I really have a good understanding of how this works. Seems it is loosely affiliated with federal money and has certain protections and safeguards

Private- I will get great customer service but there are no safeguards and I will pay high origination fees

Rather than a home equity, you can do a cash out refinance (for say a 10 year period) and lock in the rate and payment period. Put the money in a savings account, accept you will never get even theoretical need-based aid at that point, and use it to pay the 2 college degrees over the next 6 years. That's a loan that is dischargable in bankruptcy, is probably gonna be at the lowest fixed rate you can get, and is the "cheapest" for fees. My parents did a cash out refinance just for college for my siblings and it worked great for them,