Best Financial Options

Paying for College
1

<p>I just found this site today as I was doing some research on best finance options for us. Our first son to enter college (TH) is a senior (Class of 2010) with a brother right behind him (AH) (Class of 2011).</p>

<p>TH has applied to a PA state school and has been accepted. Total costs with Tution, room, meals is $17k. Though "gifted" TH does not apply himself. He got a 1140 on SAT and has a 84 GPA. Good enough for state school.</p>

<p>AH is still a Junior, but is an over achiever. 95 GPA overall and will be taking SAT in spring. Most likely a private or larger university (PSU, Susquehanna, etc) with a much larger yearly cost.</p>

<p>FASFA dry runs show that the wife and I make to much for ANY grants, subsidized loans, etc. Some assume that means mommy and daddy should pay without any strings.... Not in this house!</p>

<p>What I am trying to do is set it up so that TH has to perform and have some skin in the game. It appears that Stafford non-subsidized will only allow for TH to borrow $2k on his own behalf per year. Any other loans are at max - cosigns, but at very high interest compared to say home equity loans. We currently have means to pay back a loan within the year, so duration is not an issue for year one. With TH going for Secondary Ed (History/Social Studies), he needs to maintain a 3.0. If he does not and merely goes for a vacation or puts out little effort, I want him to be accountable to the fullest degree. If he does maintain and works, we will provide all our means to limit his monetary baggage as he exists college.</p>

<p>If you have any experience with similar situations, please provide some input. Not sure of options for student only loan with the above info factored in, vs cosign, etc. Any direction is appreciated.</p>

<p>The following year, my hope is that AH gets some scholarships due to his particpating in state FBLA in Accounting as well as his climbing GPA and overall effort. Beyond that years 2,3,4 (both in) will be painful to us as parents. Though we do make a good wage, both in college and us footing the bill will have a long impact on us with a tough recovery (ages 44/45).</p>

<p>Thanks again and any thoughts, please let me know.</p>

2

<p>Many parents expect their kids to work full-time in the summer and part-time (say 8 hours a week) during the school year to help with college expenses and to provide some pocket-money.</p>

<p>Also, many parents require a certain GPA for funding to continue. Of course, the expectation must be reasonable.</p>

3

<p>

That is not correct. A freshman student is eligible to borrow $5500 in Stafford loans of which up to $3500 may be subsidized if there is financial need. If there is not financial need then the entire $5500 may be borrowed as unsubsidized. Stafford loans do not require a cosigner. The amounts increase a little each year ($6600 2nd year then $7500 the remaining years till the max is reached). Interest rate is 6.8% on unsub Staffords.</p>

<p>You do know that when both kids are in school at the same time the EFC will be reduced? The part of the FAFSA EFC generated by the parent information is divided equally between the students. Of course that may or may not make a difference as far as aid is concerned, depending on your financial situation.</p>

<p>There is nothing wrong with expecting students to have some skin in the game. Both my kids have Stafford loans though they both have subsidized only. Currently it looks like they will hopefully both stay at around a maximum of $10k each (for undergrad, 1 is talking about masters or Phd). I would like to be able to help them repay the loans but have not mentioned it to them. It is possible we will not be able to as we are older parents and my husband is already retired. $10k is not too onerous.</p>

4

<p>^^^</p>

<p>swimcat is right.</p>

<p>And, she’s also right about $10k total in loans is not too bad. The repayment is about $115 per month for 10 years. Not too painful, but most adults will “feel” that every month between the ages of 23 -33. :slight_smile: So, definitely, some “skin” in the game.</p>

5

<p>Dependent Students
(whose parents were not denied a PLUS loan) </p>

<p>Combined Base Limit for Subsidized - $3,500</p>

<p>and Unsubsidized Loans Additional Limit for Unsubsidized Loans - $2,000</p>

<p>Total Limit for Unsubsidized Loans (minus subsidized amounts) $5,500</p>

<p>for First-Year Undergraduate (Freshman)</p>

<p>I got this from here: [FinAid</a> | Loans | Student Loans](<a href=“http://www.finaid.org/loans/studentloan.phtml]FinAid”>http://www.finaid.org/loans/studentloan.phtml)</p>

<p>Maybe I miss read it? The “minus subsidized amounts” is what had me thinking if you couldn’t get subsidized, you could only get $2k (in students name).</p>

6

<p>The maximum Stafford loan is $5,500 per first-year student, which can be entirely unsubsidized or a combination of subsidized (maximum $3,500) and unsubsidized (the remainder of the $5,500).</p>

7

<p>It mean that if you have any subsidized loans the amount of unsubsidized loans available would be reduced by that amount. The total available is $5500 of which up to $3500 may be subsidized. If you have $3500 sub then that leaves only $2000 unsub. If you have $3000 sub then that leaves only $2500 available for unsub etc.</p>

8

<p>That really helps me approach this the way I would like. $5.5k totally on his back definately helps. So for the other $12k, something like a cosigned loan (Sallie Mae Smart Option Student Loan, or ??) and pre-pay down for him as objectives are reached?</p>

<p>Thanks!</p>

<p>Ted</p>

9

<p>I don’t know what kind of kid you have, but I would not let my kids choose between working more in the summer/borrowing less and just borrowing more. </p>

<p>Kids can be short-sighted. They can purposely work less in the summer (for fun) and think “I’ll just borrow the max Stafford”. </p>

<p>A $20k loan is not easy to pay back if a newly minted grad isn’t making a lot of money during those early year. It can be like a second car payment for 10 long years.</p>

<p>My kids typically earn about $3k+ during the summer and about $60 per week during the school year. Their school year income is pocket money.</p>

10

<p>I just wanted to add to the above…</p>

<p>While it’s certainly a good idea to let kids have some “skin in the game,” it’s also important for parents to realize that college costs aren’t what they were when we went to school. </p>

<p>It’s not our kids’ fault that college costs have FAR out-stripped inflation. While many of us were able to “work our way” thru college, that is not the case anymore. I went to UCI in the 70s. I could earn my fees (tuition) by working a few weeks. The rest of my earnings went to housing, car, and fun. That isn’t the case anymore.</p>

<p>Some parents specify exactly what they want their kids to pay for…such as books & meal plan… or housing…or whatever. </p>

<p>And, if parents’ incomes are so high that the kids can’t get any “non loan” financial help, then parents should expect and plan to contribute. The kids shouldn’t be penalized just because their parents make too much.</p>

11

<p>Agreed. I worked June-August full time every summer to fully pay for tuition, room and board for the entire year in the mid-80’s. That would almost pay a semester tuition at a state school, nothing more. </p>

<p>I feel the best contract to ensure output is to clearly define expectations, as well as define objectives that must be met for parental contribution. If objectives are not met (i.e. Johnny learns to party), then parental contribution should be minimal to near zero. I see to many times where mommy and daddy have the money and just pay and we watch the kids fail. My kids succeed (applying themselves hard), they will have minimal burden coming out the end of the college tunnel.</p>

<p>My philosophy is - I appreciate something I work/pay for much more vs something handed to me. Unfortunately the shift in the U.S. is towards the latter, but no need to go there.</p>

<p>I really appreciate the help so far. I have a good deal of work between now and Jan/Feb to make this work for my son.</p>

<p>Thanks again!</p>

<p>Ted</p>

12

<p>I feel the best contract to ensure output is to clearly define expectations, as well as define objectives that must be met for parental contribution. If objectives are not met (i.e. Johnny learns to party), then parental contribution should be minimal to near zero. I see to many times where mommy and daddy have the money and just pay and we watch the kids fail.</p>

<p>Oh, I agree. This is what many families do/agree to do.</p>

<p>1) parents are given access to online grades, to periodically check how the semester grades are going (so no semester-end surprises from excessive partiers). Some parents only start doing this once there is a problem; others do it from DAY ONE. We did it from DAY ONE. That said, we RARELY ever check on-grades. Maybe it’s because our kids know that we can see their grades whenever we want serves as an extra incentive not to let grades slip. I think being able to see grades from DAY ONE helps prevent a student from getting too heavily into partying.</p>

<p>2) children are expected to earn XXX dollars to pay for - laptop, books, pocket money, whatever. Children are expected to have summer jobs with a good number of working hours - 20 hours or more (or whatever).</p>

<p>3) parents won’t pay for following semesters if grades dip below 3.0 GPA (or whatever). </p>

<p>One of my siblings had his child sign a contract.<br>
.</p>