Author Topic: Loans for college question  (Read 1872 times)

Rollin

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Loans for college question
« on: October 29, 2017, 05:55:33 AM »
Like I said, forget I asked. So many assumptions, judgement, and even some guilt thrown in to boot. Normally when one assumes one is incorrect and in this case way off.

Thank you to the few of you that answered my question.

Also, I know one can get loans anywhere, but I asked here on this forum because we often share our ideas and can point each other to better deals or better ways to address the issue.
« Last Edit: October 31, 2017, 12:40:39 PM by Rollin »

Cranky

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Re: Loans for college question
« Reply #1 on: October 29, 2017, 06:47:20 AM »
What do you mean by "FAFSA" covering most of the costs? Are you talking about loans?

Are you saying that you won't pay the EFC out of pocket?

GetItRight

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Re: Loans for college question
« Reply #2 on: October 29, 2017, 07:37:43 AM »
A job? Shouldn't be too hard to earn $6k/yr. I worked full time through most of college, part time through some of it... But I worked the whole time while taking classes full time year round.

Zamboni

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Re: Loans for college question
« Reply #3 on: October 29, 2017, 08:19:11 AM »
Is your child already taking education loans? If not, then perhaps a talk with the financial aid office would point you in the right direction? They should know the routes to loans.

Definitely want to go with a loan that has all of the interest deferred until after graduation.

SwordGuy

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Re: Loans for college question
« Reply #4 on: October 29, 2017, 09:41:39 AM »
Definitely have them get a job.   Having to do scut work for low pay is a great motivator to finish college - so they won't have to be stuck with that kind of job for decades.  It also builds character and reduces what they will owe.

Federal student loans for the rest, though going to college in their own town and living at home will cut costs in half.  Unless the college they chose is really known for turning out top-notch grads in their chosen field (and they are likely to be a top notch grad), they are better off at a less expensive college closer to home.


Cranky

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Re: Loans for college question
« Reply #5 on: October 29, 2017, 12:19:48 PM »
A job? Shouldn't be too hard to earn $6k/yr. I worked full time through most of college, part time through some of it... But I worked the whole time while taking classes full time year round.

OP said $6K/semester, so $12K/year. That's a lot of minimum wage hours to put in, going to school fulltime.

It also seems like it must be a very expensive school, if most of the cost is covered and $12K/year is not.

GetItRight

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Re: Loans for college question
« Reply #6 on: October 29, 2017, 05:44:49 PM »
A job? Shouldn't be too hard to earn $6k/yr. I worked full time through most of college, part time through some of it... But I worked the whole time while taking classes full time year round.

OP said $6K/semester, so $12K/year. That's a lot of minimum wage hours to put in, going to school fulltime.

It also seems like it must be a very expensive school, if most of the cost is covered and $12K/year is not.

Well that's a lot more, but still very plausible. That's only 20 hours a week at $11.53/hr. It's pure luxury to only work 20 hours a week. Heck I've made nearly $1k/mo on my side hustle buying/selling and adding value where possible, that's just in free time after work. The kid can do an eBay hustle from home and pay for school. Beyond that, I never worked a day in my life for minimum wage. If this person is smart enough to go to college then surely he/she is worth more than minimum wage.

spicykissa

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Re: Loans for college question
« Reply #7 on: October 29, 2017, 09:10:54 PM »
They can get a private student loan from any number of companies? Mine were from Sallie Mae (now Navient) and Wells Fargo. With a willing credit-worthy cosigner, getting the loan is trivial. Paying it back is another matter entirely. 


Laura33

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Re: Loans for college question
« Reply #8 on: October 30, 2017, 08:45:21 AM »
Too late for local college. This school has a very good reputation for turning out top notch grads, and this student will likely be one of the best. The student received multiple local scholarships, including the highest payout one and it is renewable for the four years.

Financial aid at top schools usually consists of four parts:  grants/scholarships; loans; work study; and the expected family contribution (the "EFC" referred to above, a/k/a "what we think mom and dad can afford to pay").  Usually, a "top-notch" school will start by subtracting the EFC and the federal student loans from the tuition/room/board/etc., add in a work-study job that they assume will bring in a certain amount, and then make up the delta with grants/scholarships and work/study. 

So this isn't about whether a kid can/should take out loans to pay for school, or get a job, or whatever.  It's about whether your kid should take out additional loans over and above what the college/federal government thinks they should, and/or get a second job over and above what the work study provides, to cover the part of the EFC that you are refusing to pay.

Unfortunately, you don't get to choose "expensive top-notch school" + "no EFC or loans."  You can send your kid to an expensive top-notch school, but you then need to be prepared to come up with the EFC.  If that isn't in the cards for one reason or another, you can send your kid to a cheaper local school, where maybe your kid can pay tuition out of those scholarships and the available federal loans and/or part-time jobs around town.  You're not doing your kid any favors by encouraging an expensive school and then demanding that they take out loans to cover your share as well as theirs.  If you don't want to cover the EFC, then tell your kid s/he needs to go to the cheaper local school that s/he can pay for independently.

The other alternative is to have your kid go to the financial aid office and demonstrate changed circumstances -- usually the EFC is based on the tax return from their junior year in HS, so if you have FIRE'd since then, they might be able to get a supplement scholarship to cover at least part of the difference.

The direct answer to your question is that there are a gazillion loan companies out there that will provide Parent Plus loans that you can require your kid to repay (morally, not legally), or perhaps direct loans to the student with a cosigner -- The Google can help.  But making your kid double-mortgage his/her future for a fancy degree?  Not a good idea.

jonjon40

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Re: Loans for college question
« Reply #9 on: October 30, 2017, 10:06:21 AM »
Coming from myself I am a 28 year old that completely blew off college and went into academic probation my first two years at uni and dropped out and worked and got back into school and finished my chem degree.

One thing I'm so surprised at is how much my parents helped me even after I failed. That's important they helped me financially to actually finish college and my first year out I was damn near making as much or more than my father.

I would suggest you fork out half and make your child get a part time job. Depending on the major it shouldn't be that difficult for them to come up with that hopefully the child still lives at home it saved me a lot. Maybe once they get a job you be aggressively involved in their finances so it doesn't hurt you in the long run.

apologies if this doesn't help you.

SimpleCycle

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Re: Loans for college question
« Reply #10 on: October 30, 2017, 10:20:47 AM »
Laura33 outlined the basics very well.

Also, do you know the school meets full need every year?  Some schools do, some schools do not.  I was lucky to go to a school that did, and so the amount me and my parents were expected to pay only varied with their income.  My sister went to a school that did not guarantee financial aid beyond the first year, and her contribution went up every year as the school provided less and less financial aid.  She took out private loans for the difference, which was not the best way for her to start off adult life.

I will say, I don't think I'd be willing to saddle my child with $48k in student debt while I was FIREd.  That is the kind of decision that destroys parent-child relationships (or possibly if I'm understanding your post correctly, parent-stepchild relationships).

affordablehousing

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Re: Loans for college question
« Reply #11 on: October 31, 2017, 12:19:13 PM »
Lendingclub loan?