Are loans worth it?

School has gifted me $27,121, and the COA is $36,721.
My parents make $32k a year. I’m not accepting work-study, so I’d have to pay $1500 on my own.

They offered me these loans:
FEDERAL PERKINS LOAN: $1,500
FEDERAL DIRECT STAFFORD LOAN: $3,500
FED DIRECT UNSUB STAFFORD LOAN: $2,000
FEDERAL DIRECT PARENT PLUS LOAN: $1,100

I have a household of eight; three younger siblings, parents, and grandparents.
Is the loan worth it? Would it be difficult to pay off although the amounts don’t seem that large?

What is the school? What is your planned major?

Probably your loans will go up a bit every year (by $1,000 soph year, and $2,000 more the next year, holding steady there for senior year). So your loan total is likely to be (just including the parent plus loan, too, although technically that is your parents’ loan):

Freshman year: $8,100
Soph year: $9,100
Jr year: $11,100
Sr. year: $11,100

So the total could be as much as $39,400, and you will pay interest on that as well. So it is more than it seems like.

Why aren’t you accepting work study? It can be challenging to find jobs on campus, depending on the school, and W/S makes it easier to do so. Some WS jobs (not all) give you some time to study, too (say you are sitting at a desk at a dorm or library or something, checking people in – during down time you can study). Sometimes lab or professor assistant jobs (graders, etc) are more available for work study, and they can give you access to professors as mentors and look good on your resume upon graduation, too. I’d be hesitant to turn down WS. You don’t HAVE to work all the hours for WS if you get too busy and don’t have time for a job (one of my kids accepted her WS, then just didn’t have time to work, and there were no consequences, she just told the FA office once she figured out that was the case).

Most students are able through summer work to pay more than $1,500 of their expenses. You can earn a couple thousand dollars for sure in the summer if you work. Some students can get summer jobs on campus (which sometimes including housing), and make money there, too. So maybe you don’t have to take out quite as much in loans.

Some students become RAs in dorms to save some money (assuming you are living on campus). But you can’t count on getting an RA spot, they can be pretty competitive. And not everyone is cut out for the RA role.

One thing to watch for is health insurance. If you don’t have health insurance that the college considers adequate coverage while you are on campus, they will ask you to pay for their health insurance plan, and often it is NOT listed in the costs in your FA package. It is usually $1,500 - $2,000 per year if you have to pay for it – so if you do, you would probably be using summer earnings to pay for that. It can be hard to figure out the health insurance – Google for your college and see what their website is. You might have to call someone to figure out if whatever insurance you have now is sufficient, and whether you will need to incur this cost.

Why wouldn’t you accept work study?

You can’t take out the Parent Plus Loan. Your parents would need to borrow that.

Why aren’t you accepting work-study? Do you have a better-paying part-time job that you plan to keep while you are in school?

You have been awarded the maximum Stafford loan, plus some Perkins for a total of $7,000. This leaves you with an overall gap of $2,600. How much work-study were you offered? How much can you make with a different part-time job or with summer jobs?

You need to ask your school about the Perkins. Will you get that same amount every year, or will they phase it out as your Stafford loan amount increases each year? If the Perkins stays at this level, you would end up with $6,000 more than the Stafford maximum, for a total of $33,000 (instead of $27,000). Run the calculators here to see what the payment difference would be: http://www.finaid.org/calculators/loanpayments.phtml

For some majors, $33,000 would not be hard to pay back. For others it could be. What do you plan to study?

This seems a bit of a tight squeeze to me. What is the college and what are your other options?

Do not make the HUGE mistake of declining work-study. First, it doesn’t obligate you to work, it just makes the option available so you can choose to take one or not later. And you will have access to jobs only students who accepted work-study can get. This would be a HUGE disadvantage to turn down. Second, you would not have the money you earn from work-study counted against you for FAFSA it will be removed from the calculation for EFC. Again a HUGE disadvantage to turn down and find you have to get a non work study job to get by. Third, large studies show that students who work low hours, like 10 to 12 hours a week, like you were awarded, actually get higher grades–presumably from gaining time management skills.

My kid was given a grant so she didn’t have to do work study the first year at all. But she decided after one semester to do it anyway. She held many positions working with faculty and different flex hour jobs that were very useful and gave her spending money to go out and socialize with friends and buy a few extra things.

Alright, I’ll accept work study then. Thank you guys.
It’s because I have a job I can get there that can pay it off but if the work study option is always there, I’ll accept it!
Also, I plan on attending UCR and my major is pre-business (plan to do accounting, or may switch to another major)
$30k+ sounds like a lot to me, is this not worth it?

If you are able to work this summer, you shpuld be able to cover the amount from the Parent Plus loan. I would suggest you try very hard not to take that loan.

@thumper1 what is bad about parent plus loan?

Your parents are low income so they won’t be able to afford to pay the plus loans back. Don’t do that to them

Your threads are confusing. You mention that you were given about $15k for room and board. And you would likely be given a Cal Grant for tuition. So, why are you saying that low income students aren’t being given enough???

@mom2collegekids so because of that I shouldn’t accept the one parent plus loan I have right?
Would it be better to not accept any loans?

YOU aren’t allowed to accept the parent plus loan. your parents would have to APPLY for it…and get accepted. You can’t do that. It’s a loan for parents.

It’s fine for you to accept the small amount of loans you’ve been offered, but work as much as you can to avoid loans that won’t be needed.

@mom2collegekids ah I see… So they’re just estimating that’s how much I would get if my parents were to apply for it.
Thank you so much for helping, by the way. My parents are Asians who don’t particularly understand these things, and I’m the first kid going to college. I really appreciate it.
So basically, accept the loans (except parent plus), but try to pay them off before interest starts? Is that even possible to pay off the money you borrowed hence returning the loan you accepted?

Accept them, but try to work/save over the summer and during the school year. You may find that you will not need t the loans for the third quarter and you can tell the FA office that you don’t need loans for