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

[Sarah'sMomfrom PA]

Just to clarify something...I was told by Navient (our servicer thru the Department of Education) that on a Parent Plus loan, should your child die, you are still responsible for the repayment of the loan. The only way that this loan would be discharged is if I were to die. I only have myself on this loan (did not include my husband) and my daughter actually pays all of the payments herself (including the Parent Plus) but I told her not to pay extra on my loan (Parent Plus) because I have medical issues and were I to die, the loan is forgiven. The sad part is that she pays a ton of interest on these student loans and cannot deduct one penny of the interest because as a single person, she makes too much money. I told her that any extra money that she gets, pay down the principal so she has started to do this.

 

[sksjasams]

Just to clarify something...I was told by Navient (our servicer thru the Department of Education) that on a Parent Plus loan, should your child die, you are still responsible for the repayment of the loan. The only way that this loan would be discharged is if I were to die. I only have myself on this loan (did not include my husband) and my daughter actually pays all of the payments herself (including the Parent Plus) but I told her not to pay extra on my loan (Parent Plus) because I have medical issues and were I to die, the loan is forgiven. The sad part is that she pays a ton of interest on these student loans and cannot deduct one penny of the interest because as a single person, she makes too much money. I told her that any extra money that she gets, pay down the principal so she has started to do this.

The rep gave you the wrong information. Parent Plus loans are forgiven if the parent who borrowed the loan or the student listed on the loan passes away.

 

[limpy]

http://time.com/money/4315466/college-decision-day-son-accepted-afford/

This is exactly why we need to set expectations with our children and start talking about this decision early and often, particularly the importance of being debt free and value vs. prestige when it comes to education.

 

[sksjasams]

This is exactly why we need to set expectations with our children and start talking about this decision early and often, particularly the importance of being debt free and value vs. prestige when it comes to education.

Exactly! They never should have visited or applied to a school that was unaffordable. That's what Net Price Calculators are for. If her son still wanted to apply anyway, it should have been spelled out to him by his parents he will not be able to go unless the price turns out to be below a certain amount.

 

[HM]

We haven't taken any loans out for our kids.
I had a small one each year when I was in school and had the ability to pay it off when the time came. I went to a meeting on campus each year to sign up. Have no idea who it was with at this point.

We used 529s to save for our kids. We're using that money and some monthly income to pay for their in-state schools.

I have been saving college money through a program called UPromise since my kids were little. When I use my connected CCs for things that can earn money, they automatically add it to my account. You might want to sign up for it. (groceries, gas, restaurants, even a car purchase one year). They also send up emails about student loans occasionally but I just delete them. You could go to thier website and see what the deal is with their loans.

 

[leebee]

Honestly, the best thing you can do for your child is to make sure they apply to a FINANCIAL safety school as well as an academic safety school. My niece applied to all her "dream" schools, and mommy and daddy said they'd make sure it'd happen. Well, it'll happen, but she'll end up owing about $65K for a 4 year education (obviously part of that is parent loan money as well as student loans). They are all excited as this means she only has to be responsible for about 25% of what it should actually cost (room, board, tuition, fees) but I just keep wondering how she's going to pay $700 a month in loans (assuming an interest rate of 5%) with a bachelors degree in anthropology.

And in case anyone is keeping score, that's almost $18,000 paid in interest.

 

[AliceIn]

The one thing I will tell you is to please, please, please understand that anything you personally sign or co-sign for in terms of borrowing money (Such as with a PLUS Loan) - you, personally are obligated to pay if your child doesn't pay the loan for whatever reason. You child not having a job, your child becoming ill or passing away, anything ... you are obligated. It is just as if you co-signed a mortgage or a car loan with your kid. If the first borrower misses a payment, they will be immediately coming to you for the money and you are legally obligated to pay the money.

Your post is right on!

Legally, you cannot transfer a Parent Plus loan to your child when they finish school. It is 100% the parent's responsibility to pay it. The only way to get your name off the loan is to have the child get a personal loan and repay the full amount of the Parent Plus loan, and then start paying the personal loan themselves.

If you co-sign loans for your children you are 100% on the hook for payments until the loan is completely discharged. Even if you are retired, and living on a fixed income, the can garnish your checks for the rest of your life.

My aunt and uncle ended up in dire straits due to enormous loan payments that their unemployed son and daughter could not repay. Each child had over $100K in debt after graduating because they picked schools with a $45K price tag per year with tuition, room and board. This is not uncommon for private colleges. They could have chosen a nearby state school and commuted and ended up with no debt. They could have chosen state schools and lived on campus and ended up with a fraction of the student loan debt. They made poor choices and are now in bad financial shape.

I have told my three children that we will pay what we can afford each year, so they are responsible for finding the money to pay for the rest. We will not get Parent Plus loans, and we will not co-sign any other student loans. They can get $5K per year for federal student loans for the first year, and a bit more the following years. We can give them about $15K each per year on top of those loans. They know not to set their sights on colleges that they have no chance of affording. There is no point attending a school that you have to get huge loans for if the major you will not pay you enough to repay it. There are many good schools at a lower price point.

 

[mickeyplanner08]

Oh my word! I have been playing with the Net Cost Calculator this afternoon. I certainly hope I can talk DD into one of the great in-state schools she has access to here. We've been saving, but apparently we should have stepped it up a little more.

 

[Mrs. Bradbury]

My daughter went to Pharmacy school in Boston so on top of tuition, we paid $1500.00 a month in rent for a small studio apartment. She came out with her doctorate in Pharmacy along with a combination of over $249,000.00 in student loans (both subsidized and unsubsidized along with Parent Plus). Our loans started out with Sallie Mae and are now serviced by Navient. Her loan payments are over $3500.00 a month but thank God she has a good job making 6 figures so she is able to handle the payments but I really feel sorry for the grads who come out with tons of student loan debt and are barely able to survive. I think that it is a shame that we can't help out our students more since my daughters interest rate goes from 6% to 7.25% when you can get a home equity loan for a lot cheaper. Good luck on whatever you decide to do. We also had a 529 but never anticipated her going to a 6 year program and in Boston no less so we didn't save nearly enough and to top it off, my husband lost his job her 1st year of college but we still didn't qualify for too much student aid. She did do work study for her spending money.

THIS. I was a single parent during some of my children's childhood and did not save for their education. I take full responsibility for not saving for their educations. Our state has lottery-funded partial college tuition but in the last few years the schools have packed on assorted fees which are not covered by HOPE, as well as housing, food, books, etc. Due to her rigorous program of study and a chronic illness, my daughter could not work and attend school. She graduated with honors and now has a fabulous job and a bright future. However, she has student loans that she has to pay and I have parent plus loans that I will begin to pay soon. My parent plus loans have been accruing interest since they were distributed. I knew this in theory, and felt I had no other choice at the time. My parent plus loans have been in forbearance for less than a year, and the balance has jumped $10,000 in that time, to $63,000. Because I'm not one of the super-financial-achievers that post here, I also have some credit card debt and a mortgage. I sought credit counseling to figure out how I was going to incorporate my parent plus loans into my budget, and was advised by CCC that I may have to declare bankruptcy so that I can afford to pay my parent plus loans.

There is one bright spot - because I work in public service, if I pay the loans for 10 years, the remaining balance will be forgiven. Also, because I am about to be 53 and retirement is looming, and my payment plan is based on earnings, if I don't earn, I don't pay. I guess that's a failsafe if I happen to become disabled.

Would I do it again? Given the same set of circumstances I was in, yes, because I was not supported in any way (financially, emotionally, ANY) when I was in college and I know it led to me quitting without earning a degree. I have broken the cycle, and that's easily worth $63,000 to me.

 

[Sarah'sMomfrom PA]

THIS. I was a single parent during some of my children's childhood and did not save for their education. I take full responsibility for not saving for their educations. Our state has lottery-funded partial college tuition but in the last few years the schools have packed on assorted fees which are not covered by HOPE, as well as housing, food, books, etc. Due to her rigorous program of study and a chronic illness, my daughter could not work and attend school. She graduated with honors and now has a fabulous job and a bright future. However, she has student loans that she has to pay and I have parent plus loans that I will begin to pay soon. My parent plus loans have been accruing interest since they were distributed. I knew this in theory, and felt I had no other choice at the time. My parent plus loans have been in forbearance for less than a year, and the balance has jumped $10,000 in that time, to $63,000. Because I'm not one of the super-financial-achievers that post here, I also have some credit card debt and a mortgage. I sought credit counseling to figure out how I was going to incorporate my parent plus loans into my budget, and was advised by CCC that I may have to declare bankruptcy so that I can afford to pay my parent plus loans.

There is one bright spot - because I work in public service, if I pay the loans for 10 years, the remaining balance will be forgiven. Also, because I am about to be 53 and retirement is looming, and my payment plan is based on earnings, if I don't earn, I don't pay. I guess that's a failsafe if I happen to become disabled.

Would I do it again? Given the same set of circumstances I was in, yes, because I was not supported in any way (financially, emotionally, ANY) when I was in college and I know it led to me quitting without earning a degree. I have broken the cycle, and that's easily worth $63,000 to me.

 

[Sarah'sMomfrom PA]

I agree in supporting my daughter's education. My husband and I did without for 6 years so that she could concentrate on school and we were ok with Parent Plus loans. She is now 26 years old, has her doctorate in Pharmacy and is a pharmacy manager at a major chain making good money. She just bought her house in March and even though she has a ton of student loan debt, we knew going into this that it was our obligation to pay this back. She has a good job and we are lucky and thankful but my beef with the government is the high interest that is charged on these loans.....6 to 8% is crazy when you can get mortgages; home equity loans and car loans under 4%. It is a shame for you to maybe have to declare bankruptcy to pay your loans back. We even had people suggest that we get divorced and whoever made less money claim my daughter so she could get more money. CRAZY!!!

 

[AliceIn]

I agree in supporting my daughter's education. My husband and I did without for 6 years so that she could concentrate on school and we were ok with Parent Plus loans. She is now 26 years old, has her doctorate in Pharmacy and is a pharmacy manager at a major chain making good money. She just bought her house in March and even though she has a ton of student loan debt, we knew going into this that it was our obligation to pay this back. She has a good job and we are lucky and thankful but my beef with the government is the high interest that is charged on these loans.....6 to 8% is crazy when you can get mortgages; home equity loans and car loans under 4%. It is a shame for you to maybe have to declare bankruptcy to pay your loans back. We even had people suggest that we get divorced and whoever made less money claim my daughter so she could get more money. CRAZY!!!

You mentioned that your daughter was paying the Parent Plus loans - you are fortunate that she landed a job where she can afford a payment like that. Many graduates find out after graduation that 1) salaries don't match with what they were told by their colleges, and 2) they may not find a job that pays enough to pay the loans. If the graduate cannot pay, it falls on the parents. The debt can and will increase drastically if you have periods where you are not making payments. This was my aunt and uncles downfall. My uncle ended up working until he was 75 - and finally his health gave out and he had to retire. He has lost his house, all his savings. His social security and pension are garnished to pay for the loans. He worked hard all his life for his kids - now he has nothing, and it only ends when he's gone. Very, very sad, but it's not that uncommon.

We were not able to save as much as we wanted for our kids. We definitely don't have enough for them to live on campus at even a state school. We don't have a ton of money saved for them now - we have bills that will be paid by the time they start, and we can use that for college. When the kids were little, daycare was astronomical. We are still paying for summer care for two of them. All of our extra money goes directly into our retirement accounts, we don't earn enough to fund both 529s and 401Ks - and neither of us have a pension at work. This year's vacation will be our last for a long time. We need to start stockpiling some money towards college. We took vacations the last 4 years - prior to that we had not taken one with the kids. I am glad we took the vacations - I think it was worth it to spend the time with them at the ages they were. The time for them all to be at home is speeding by so fast!

If circumstances change and we don't have that much extra, then they will have to make do with what we can afford. If they want to do that, they have to find the funds. We had our kids very late in life, so they will graduate college right around the same time that we are retiring. The kids have other options for college - military service, working, taking loans for themselves when they are adults. There are no options for loans to fund you through retirement.

 

[teller80]

http://time.com/money/4315466/college-decision-day-son-accepted-afford/

If only the author of this article (47% of adults don't have $400 in their emergency fund) would have read this article before making all of his bad decisions.

 

[Sarah'sMomfrom PA]

You mentioned that your daughter was paying the Parent Plus loans - you are fortunate that she landed a job where she can afford a payment like that. Many graduates find out after graduation that 1) salaries don't match with what they were told by their colleges, and 2) they may not find a job that pays enough to pay the loans. If the graduate cannot pay, it falls on the parents. The debt can and will increase drastically if you have periods where you are not making payments. This was my aunt and uncles downfall. My uncle ended up working until he was 75 - and finally his health gave out and he had to retire. He has lost his house, all his savings. His social security and pension are garnished to pay for the loans. He worked hard all his life for his kids - now he has nothing, and it only ends when he's gone. Very, very sad, but it's not that uncommon.

We were not able to save as much as we wanted for our kids. We definitely don't have enough for them to live on campus at even a state school. We don't have a ton of money saved for them now - we have bills that will be paid by the time they start, and we can use that for college. When the kids were little, daycare was astronomical. We are still paying for summer care for two of them. All of our extra money goes directly into our retirement accounts, we don't earn enough to fund both 529s and 401Ks - and neither of us have a pension at work. This year's vacation will be our last for a long time. We need to start stockpiling some money towards college. We took vacations the last 4 years - prior to that we had not taken one with the kids. I am glad we took the vacations - I think it was worth it to spend the time with them at the ages they were. The time for them all to be at home is speeding by so fast!

If circumstances change and we don't have that much extra, then they will have to make do with what we can afford. If they want to do that, they have to find the funds. We had our kids very late in life, so they will graduate college right around the same time that we are retiring. The kids have other options for college - military service, working, taking loans for themselves when they are adults. There are no options for loans to fund you through retirement.

 

[Sarah'sMomfrom PA]

I know we consider ourselves fortune that she has a good job and had lots of job offers. Even she says that the school she graduated from admitted 450 students into their PharmD program and she said that in 6 years when they graduate with their doctorate, the market for pharmacy jobs won't be there because a lot of the older pharmacists are staying in the field working part time for the good pay and there just won't be jobs for these kids yet the schools just keep pushing them into these fields so that they can make the money. I just think that it is time that the government steps in and lowers the interest rate on these loans...we have money for every foreign country but can't even help out our own American children. It wouldn't be so bad paying back the interest since my daughter did borrow it but she can't even take an interest deduction because as a single individual, she makes too much money and you can't believe what she pays in interest. That is why I told her that when she works and additional shift as overtime, to put whatever money is extra on these loans.

The pharmacy jobs in Pennsylvania are few and far between since we have over 7 pharmacy schools in our state. Thus our kids are forced to go to states with one or two pharmacy schools where jobs are more plentiful.

 

[crisi]

I had a horrible experience with Sallie Mae. I had over $120k in loans, I worked my butt off, and lived at my parents house for 8 years to pay that off. I worked two jobs too. One to pay for the student loan (my full time job) and another so I could have a bit of a life when I had a day off. Sallie was the WORST. I would pay over $1000 a month, but they would apply it to ONE of the 8 loans, not distribute it, then I would go into default! It was their job to distribute it properly, they sent me the invoice and I mailed back one check every month (this was before online payments). From what I understand, this still happens with some people. I also used Chase for a student loan as well when I got to grad school as I was done with Sallie Mae and their incompetence. The interest rate was about 3.5% (sallie was about 12%), and they were incredibly helpful and never screwed up a payment.

My husband went into bankruptcy over 20 years ago due to that. But it wasn't Sallie Mae. They are all lousy.

 

[UDFlyer12]

I don't know if this was mentioned but government loans are wonderful if your child plans on going into any sort of career involving public service. Full disclosure, I went to an expensive private college and then grad school...I owe around $165K. However, the majority of that are in government loans, which I pay through FedLoan dot com (i.e. Perkins, etc.) that I qualified for by doing my FAFSA. I work as a librarian at a public library and knew this was my plan from the get-go. Unfortunately all too often students will switch majors, so it is risky. However, not only do they allowe for Income Based Repayment, but if you work in the public sector, after 10 years of on-time payments, they will forgive the rest if you apply for the Public Service Forgiveness Program. My payments are very low due to IBR, and in about 6 years, my debt will be down to $20K, which is A LOT in the grand scheme of things. This is just one side of it depending on their career path.

The rest of mine are with Sallie Mae and Wells Fargo, I would recommend Sallie Mae personally, but Wells Fargo has been a complete nightmare to work with.

 

[limpy]

The issues with loan forgiveness and income-based repayment plans, is that there are very specific hoops that you have jump through to be eligible for loan forgiveness. I made two years of largish loan payments while working in public service because I didn't realize that the standard repayment plan (the one everyone is on automatically after the grace period) did not qualify for forgiveness.

If your kids are looking at these plans, they need to be very well-versed in the fine print/certification requirements AND realize that they are stuck in the lower-paying public service sector while their loans just keep getting larger. Also, if you cease working full time (or stop working completely), such as going part time or staying home after having a baby, none of the payments made during that time will count toward the 10 years.

Ask whether it's really worth being hamstrung like that for a certain school on a diploma. Competitive students can be very successful fish in a in-state school tuition pond.

 

[crisi]

Ask whether it's really worth being hamstrung like that for a certain school on a diploma. Competitive students can be very successful fish in a in-state school tuition pond.

And excellent students can get great packages a good-not-great private liberal arts schools.

 

[nancygirl1]

This is what I'm looking for thanks. We don't qualify for anything subsidized only unsubsidized Stafford and the rest is up to us. I did consider home equity but we're getting older, I'm not sure I want to stay here & I really do not want to absorb exposure to further property depreciation so I am looking to avoid this method.

What would be ideal would be for my kids to be able to take out loans in their names that we would pay as long as we are able to do so. Trouble is I'm frankly not seeing anything where people want to loan to my kids they all would rather have a piece of me and my husband

The Federal Stafford Loans are offered to the kids in their names and offered through the financial aid dept. of the college. The Parent Plus loans are Federal Loans, also and those are the ones that the parent/parents take out in their names and they are responsible for repayment of those. Here's a link describing the loan type https://studentaid.ed.gov/sa/types/loans/plus . This is why you fill out the FAFSA.

The other types of loans are "private loans". We have our "private" loans through the state of MA (MEFA) Massachusetts Education Financing Authority. Even though they're from the state they still operate pretty much like any private loan you get elsewhere. They would not give the loans to my kids as the borrower. They were required to be the "student" borrower with someone else as the "borrower". That ended up being me. Now that they've graduated we have switched them over to primary borrower and now I'm secondary. However, if they don't/can't pay they will start calling me.

You can get student loans through many institutions, i.e banks, credit card companies (Discover & Bank of America are 2 I know, credit unions). You can google this and get more info. You will have to have an adult with good credit and income apply for these "private" loans with the kids being the "student" borrower. Most do have origination fees, but do vary by institution. You can choose to pay while your kids are in school, pay just the interest or not start to pay until the grace period ends which is 6 months after the student has graduated.

Hope this helps...