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

[LuvOrlando]

The 10 month payment plan does not have to clean you out! You can choose how much money you want to spread out over the 10 month payment plans. We only pay room and board charges through the payment plan. Tuition and fees are paid another way (529 Prepaid for us, but you could do loans for tuition and fees). A combo of loans and the 10 month payment plan may work for you. It would allow you to pay in cash what your budget can support and borrow the rest, keeping loans to the absolute minimum. We have one in college now and another going in a year. We are saving tax returns now to help cover the 2nd child's costs. Our goal is to keep loans to the bare minimum if we have to use them at all.

Hmmm, 50% cash, part payment plan and part loan as a buffer is something I hadn't thought of so thanks

 

[LuvOrlando]

Duplicate

 

[LuvOrlando]

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.

Sorry to read about the health issues putting you in that sort of space. Sending positive thoughts your way

 

[LuvOrlando]

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.

I tried & it's difficult. I tried calling Penn State last year and got virtually no info because they don't know me so I only got the off the rack info that can be googled. So you can't get a "financial aid package" until you apply to, get accepted to & get the FAHSA processed for the school of choice so by the time a family gets answers they've likely already sunk money into the relationship via deposits and timeout is ticking on alternatives. For people who've never done the student loan thing it's a pressure cooker. I totally get loans but the student loan beast is a completely different animal because it's mostly blind until the end & I am getting the vibe that even people who are sure they understand what they are doing might not fully understand. I think it's very easy to drown in this water.

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.

this is a tough situation and I feel
Like the colleges play off of the emotions involved.

 

[LuvOrlando]

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.

But this is a hard call. My son will be paying full price while his best friend can go to Penn state for half price. My sons other friend will be going to a local community college for free plus he will be getting money for books, a computer and possibly a car with nothing to pay back. The range is extraordinary so I don't think it's cut and dry. I always knew we would get nothing at all & planned for that but even so the loan landscape is dizzying- but lots of people think they will get support but don't and then what? It's hard when parents & kids were sold on the idea hard work & staying in school will pay off only to discover the dreams cost as much as a house

 

[LuvOrlando]

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.

did she get a variable rate or fixed?

Personally I reject variable as too dangerous but that's a hard sell with such high numbers

 

[HopperFan]

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.

Something I feel strongly about and have shared when asked by parents of younger children how we handled college costs.

From the time our kids were entering middle school we told them - we will NOT pay for tuition. We will pay for room & board, books, car & related expenses and basics (clothes, cell phone ...). Tuition varies widely by choice and can be covered in many ways. They did have (and knew it) a college savings account that we pressed on them would be for graduate school or a down payment on a home. We did not want them depending on it for undergrad. THEY would have to find a way to pay for undergrad tuition = scholarships, jobs, instate tuition. By time they were starting high school we were pulling up college websites, looking at the programs offered, virtually touring the campus and most of all = calculating the cost of attending. This helped to narrow it down to what was in range financially, appealed to them, had programs they were interested in and many other factors that were important to us.

Without a long story of each kid; there were lots of serious talks about college, what you make of it, what you take away from it and how it's a stepping stone to the next part of life. We most certainly talked plenty about costs. They got jobs in high school to save (and still played sports year round), they made final decisions on instate (although there were acceptances and scholarships from out of state) and they got scholarships. We lived very tight to cover the part we promised. Both graduating college with their college funds in place. DD is halfway through out-of-state grad school using her savings, but due to her hard work gaining two jobs with the college for instate tuition and a free class will graduate with some savings left over.

I do feel getting an education is important but there are lots of ways to do it. DH went to a community, transferred to a private and got his graduate from a private. His parents could only afford the community and he paid the rest. I got my undergrad via private but lived at home, worked full time and went to school full time at night. There are so many options out there now. Be sure to dig through their scholarship pages as they are probably not going to help you until you apply, get accepted and submit FAFSA. Knowing what they can even provide is helpful. The online calculators are a real eye opener for many. I know when I first did one I was surprised. I will say from DD experience - she was offered LOTS of scholarship money by the small private schools. Don't rule them out. Oh and when she told one school she still couldn't afford they came back with even more money.

Food for thought: Their grandfather says to them all the time - when you start dating someone the first thing you ask is how much student debt they have as it will dictate your lives. It certainly has made an impression with them. Many of the stories here have proven his point.

I wish everyone luck. Whether you can save for them or not, you can still educate yourself on the process, the costs, the options and begin the process early. Many scholarship opportunities allow even middle school students to begin applying. Start them early. It helps them begin to understand.

Here is a site I have read through that has some good pointers. Sign up for their emails.
http://diycollegerankings.com/

Order this book for all the scholarships out there, put aside time, have them apply to as many as they can. Nothing to lose. If nothing else it's a learning process. http://www.amazon.com/Ultimate-Scho...d=1462935579&sr=8-2&keywords=scholarship+book

 

[TwoMisfits]

Something I feel strongly about and have shared when asked by parents of younger children how we handled college costs.


Food for thought: Their grandfather says to them all the time - when you start dating someone the first thing you ask is how much student debt they have as it will dictate your lives. It certainly has made an impression with them. Many of the stories here have proven his point.

I just wanted to mention...huge student loans are not good...but they won't keep you from finding a spouse...

Rather than impress upon kids that they need to ask how much student debt their date has as a 1st question...better to see if the couple themselves are willing to do what it takes to get on a financial footing with them. My spouse and I paid off $94K in student debt (and this is from 15 years ago, so that'd be like $150K or more now) in 5 years with only an AF LT salary and a county prosecutor's salary (and the Air Force LT made more). We lived in a cheap 2 bedroom apartment (rather than buy a house) and drove our old cars and lived on a single salary while the whole 2nd salary went to debt. We knew we eventually wanted a house and kids and knew that debt would be in the way of that plan, so we did what it took to get rid of it. Sending $3K/month to debt was painful at the end (we kept raising the amount as either of us got raises), but it made us realize we could live on much less than we thought and it kept us ever frugal and careful with money. We never lived like DINKs, so we lost nothing when we eventually had kids and those extra expenses - we pretty much replaced one for another...

So, it can be done...and it can work as long as both parties are committed (it was not my debt, but then again, now he supports me while I raise the kids, so we have always been a team)...

 

[HopperFan]

I just wanted to mention...huge student loans are not good...but they won't keep you from finding a spouse...

Rather than impress upon kids that they need to ask how much student debt their date has as a 1st question...better to see if the couple themselves are willing to do what it takes to get on a financial footing with them. My spouse and I paid off $94K in student debt (and this is from 15 years ago, so that'd be like $150K or more now) in 5 years with only an AF LT salary and a county prosecutor's salary (and the Air Force LT made more). We lived in a cheap 2 bedroom apartment (rather than buy a house) and drove our old cars and lived on a single salary while the whole 2nd salary went to debt. We knew we eventually wanted a house and kids and knew that debt would be in the way of that plan, so we did what it took to get rid of it. Sending $3K/month to debt was painful at the end (we kept raising the amount as either of us got raises), but it made us realize we could live on much less than we thought and it kept us ever frugal and careful with money. We never lived like DINKs, so we lost nothing when we eventually had kids and those extra expenses - we pretty much replaced one for another...

So, it can be done...and it can work as long as both parties are committed (it was not my debt, but then again, now he supports me while I raise the kids, so we have always been a team)...

That was something you knew and entered in to willingly. I would also bet your payment plan is not the route most with debt plan to take. Sadly student loans are way too easy to get and their uses too wide, leaving many under water for years.

I think the point is to know well in advance what you are getting yourself in to and if that is something you are willing to dictate your life. I stick by the advice the kids got; know the amount of student debt (all debt actually) someone has before getting serious enough to assume that debt. I may even go further and tell them to not get married until their significant other has paid off their debt if they themselves are debt free. Finances are a major stress to relationships so to start out with a huge amount of someone else's debt may not always be healthy.

 

[crisi]

But this is a hard call. My son will be paying full price while his best friend can go to Penn state for half price. My sons other friend will be going to a local community college for free plus he will be getting money for books, a computer and possibly a car with nothing to pay back. The range is extraordinary so I don't think it's cut and dry. I always knew we would get nothing at all & planned for that but even so the loan landscape is dizzying- but lots of people think they will get support but don't and then what? It's hard when parents & kids were sold on the idea hard work & staying in school will pay off only to discover the dreams cost as much as a house

I'm confused, you say you knew he would get nothing, then how come you let him visit Penn knowing it would be unaffordable for you if you agree that you should limit college choices to affordable.

On merit scholarship - we've always told my children that if they get it, they are lucky, but they can't count on such a thing and so don't factor it into school choice. And you are most likely to get merit offers from college campuses where your grades are much higher than the average person enrolled - not your stretch schools and likely not your dream schools.

 

[limpy]

I'm confused, you say you knew he would get nothing, then how come you let him visit Penn knowing it would be unaffordable for you if you agree that you should limit college choices to affordable.

On merit scholarship - we've always told my children that if they get it, they are lucky, but they can't count on such a thing and so don't factor it into school choice. And you are most likely to get merit offers from college campuses where your grades are much higher than the average person enrolled - not your stretch schools and likely not your dream schools.

This is exactly what I was going to ask. If it was even possible that you'd have to pay full price, that should have been considered a long time ago. I get that it is an emotional thing and hindsight is 20/20 at this point. No one likes to disappoint their kids, but your kids will absolutely thank you later on. I WISH my parents had done that for me.

 

[Mrs. Bradbury]

I wanted to give an update as a service to others who may come after me in this situation. Backstory - I have 2 kids for which I alone took out parent plus loans, their father is deceased. I remarried, and we have been filing our tax returns jointly, and from everything I read, when the time came to consolidate and begin paying them back through Fedloans, because the loans did not include my husband, I would not have to include his earnings in my income-contingent payment. This is wrong, according to the acidly-sweet woman I spoke with a couple of (sleepless) nights ago. They included my husband's income and figured my monthly payment at $700 per month. So now we are going to file amended tax returns to change our tax filing to married filing separately, because my payments drop like a rock if only my adjusted gross income is considered.

Fair warning: information on websites, even government websites, may be inaccurate. The woman admitted this. She said the wording was changed in paperwork we were sent and that's supposed to make it OK.

 

[LuvOrlando]

I'm confused, you say you knew he would get nothing, then how come you let him visit Penn knowing it would be unaffordable for you if you agree that you should limit college choices to affordable.

On merit scholarship - we've always told my children that if they get it, they are lucky, but they can't count on such a thing and so don't factor it into school choice. And you are most likely to get merit offers from college campuses where your grades are much higher than the average person enrolled - not your stretch schools and likely not your dream schools.

Who said it's unaffordable for us?

 

[LuvOrlando]

This is exactly what I was going to ask. If it was even possible that you'd have to pay full price, that should have been considered a long time ago. I get that it is an emotional thing and hindsight is 20/20 at this point. No one likes to disappoint their kids, but your kids will absolutely thank you later on. I WISH my parents had done that for me.

Again, who said it wasn't affordable?

 

[LuvOrlando]

so to go back to the beginning, I never said it's unaffordable, not quite sure where that came from, the reason why I am looking into loans is to manage the huge debt into bite-size chunks so it doesn't swallow us whole. Seriously, we're talking about the cost of buying a house, who in the world buys a house without a mortgage? Maybe some people but not normal people & we are, I think, in normal people range. College is 4 years x 2 kids (1yr apart) of very expensive costs and if something in our circumstances changes we may need to shift our behavior/finances and I think recent the economic collapse has or should have taught everybody that you can't get help when you need help so one is better off hedging with solid financial tools upfront.

 

[LuvOrlando]

I wanted to give an update as a service to others who may come after me in this situation. Backstory - I have 2 kids for which I alone took out parent plus loans, their father is deceased. I remarried, and we have been filing our tax returns jointly, and from everything I read, when the time came to consolidate and begin paying them back through Fedloans, because the loans did not include my husband, I would not have to include his earnings in my income-contingent payment. This is wrong, according to the acidly-sweet woman I spoke with a couple of (sleepless) nights ago. They included my husband's income and figured my monthly payment at $700 per month. So now we are going to file amended tax returns to change our tax filing to married filing separately, because my payments drop like a rock if only my adjusted gross income is considered.

Fair warning: information on websites, even government websites, may be inaccurate. The woman admitted this. She said the wording was changed in paperwork we were sent and that's supposed to make it OK.

Uggh, that's awful but thank you for sharing. I had a similar bizarre situation happen but without anywhere near as significant an outcome. We have 529 accounts for my kids and when I was finishing up the FAFSA I was stumped by whether I should be including that money as my kids or ours because both of our names are on it so it's a little twitchy. So I couldn't find a clear-cut answer online so I called and I was told to enter it as belonging to my kids and guess what? it got bounced back as wrong... This year I made sure to file after my CPA processed our taxes so I can just import everything and make it as idiot proof as possible. Sometimes even they don't know= head spinning

 

[LuvOrlando]

Something I feel strongly about and have shared when asked by parents of younger children how we handled college costs.

From the time our kids were entering middle school we told them - we will NOT pay for tuition. We will pay for room & board, books, car & related expenses and basics (clothes, cell phone ...). Tuition varies widely by choice and can be covered in many ways. They did have (and knew it) a college savings account that we pressed on them would be for graduate school or a down payment on a home. We did not want them depending on it for undergrad. THEY would have to find a way to pay for undergrad tuition = scholarships, jobs, instate tuition. By time they were starting high school we were pulling up college websites, looking at the programs offered, virtually touring the campus and most of all = calculating the cost of attending. This helped to narrow it down to what was in range financially, appealed to them, had programs they were interested in and many other factors that were important to us.

Without a long story of each kid; there were lots of serious talks about college, what you make of it, what you take away from it and how it's a stepping stone to the next part of life. We most certainly talked plenty about costs. They got jobs in high school to save (and still played sports year round), they made final decisions on instate (although there were acceptances and scholarships from out of state) and they got scholarships. We lived very tight to cover the part we promised. Both graduating college with their college funds in place. DD is halfway through out-of-state grad school using her savings, but due to her hard work gaining two jobs with the college for instate tuition and a free class will graduate with some savings left over.

I do feel getting an education is important but there are lots of ways to do it. DH went to a community, transferred to a private and got his graduate from a private. His parents could only afford the community and he paid the rest. I got my undergrad via private but lived at home, worked full time and went to school full time at night. There are so many options out there now. Be sure to dig through their scholarship pages as they are probably not going to help you until you apply, get accepted and submit FAFSA. Knowing what they can even provide is helpful. The online calculators are a real eye opener for many. I know when I first did one I was surprised. I will say from DD experience - she was offered LOTS of scholarship money by the small private schools. Don't rule them out. Oh and when she told one school she still couldn't afford they came back with even more money.

Food for thought: Their grandfather says to them all the time - when you start dating someone the first thing you ask is how much student debt they have as it will dictate your lives. It certainly has made an impression with them. Many of the stories here have proven his point.

I wish everyone luck. Whether you can save for them or not, you can still educate yourself on the process, the costs, the options and begin the process early. Many scholarship opportunities allow even middle school students to begin applying. Start them early. It helps them begin to understand.

Here is a site I have read through that has some good pointers. Sign up for their emails.
http://diycollegerankings.com/

Order this book for all the scholarships out there, put aside time, have them apply to as many as they can. Nothing to lose. If nothing else it's a learning process. http://www.amazon.com/Ultimate-Scho...d=1462935579&sr=8-2&keywords=scholarship+book

I read three books cover to cover. First was a scholarship book which would've been much more useful if it was alphabetized in some way (nothing seemed to apply), the second book was Sallie Mae, which appears to have morphed into Navient, it which is a little bit disturbing the third book promise to simplify financing college but it did not deliver as promised. It's sort of kind of helped in a few things but still just scratched the surface, which is why I'm here asking people who've done it because I gotta say I've learned a ton more talking to you all then I did in my books. it seems to me that all of these financial instruments define just enough to appear reasonable up front and then leave so many loose ends drifting into the unknowable distance that the strings could have nooses hidden at the end and you'd/I'd never know it.

 

[crisi]

Who said it's unaffordable for us?

You sound very conflicted about the loans. Like the total cost of college was far more than you anticipated and you didn't intend to take out that much in loans or something.

 

[LuvOrlando]

You sound very conflicted about the loans. Like the total cost of college was far more than you anticipated and you didn't intend to take out that much in loans or something.

I see your point of view but no, my conflict is with the complexity of the situation and the riciculous number of variations in financial vehicles offered as 'aid'- which is a poor choice of words at best. Most schools cost about the same as a moderate house at the end and considering that, I guess I expected things to be more transparent with cut & dry options like a 30 year fixed mortgage and what I have been seeing is anything but that . As a result of my confusion I tried researching what might be best for us but there are so many variations that it's impossible to understand any circumstance but your own more than a few months before you are expected to sign your life away & then with the swirl of change (I'm in it now) it's mind boggling to try and sift through. So I checked in here and am, from the bottom of my heart, grateful I did. Really, I am conflicted because it's a messy, scary, intimidating & binding process not because we are trying to live a champagne life on a tap water budget.

 

[Mrs. Bradbury]

Uggh, that's awful but thank you for sharing. I had a similar bizarre situation happen but without anywhere near as significant an outcome. We have 529 accounts for my kids and when I was finishing up the FAFSA I was stumped by whether I should be including that money as my kids or ours because both of our names are on it so it's a little twitchy. So I couldn't find a clear-cut answer online so I called and I was told to enter it as belonging to my kids and guess what? it got bounced back as wrong... This year I made sure to file after my CPA processed our taxes so I can just import everything and make it as idiot proof as possible. Sometimes even they don't know= head spinning

Thanks for the sympathy. It does help to vent!

And just to be clear, again for those who may be going through the same decisions soon, it's not like my husband makes a comfortable living and that's what's throwing the calculation off. In fact, he actually makes less than I do, but our health insurance is through my employer and that subtracts a chunk from my taxable income. Our W2 earnings are almost equal. Our AGI for last year was a hair over $63,000 (ironically, almost exactly what I owe for the parent plus loans). We're now a family of 3 since I can't claim my daughter as an exemption anymore (one child left at home). I'm being this candid so parents will understand these are the calculations for just regular folks - as you said, there is no solid information about what happens at the end of your child's education.

Again, I'm not hear to say "poor me" - faced with the same situation again, I would have done the same. I just hope my information will be helpful for other parents.