What websites should I be researching to see what is available to us for loans? We have no idea where to turn and what we should be doing. After my sons merit aid and student loans we still have gaps. Are we suppose to contact the school to figure it out? Do we just apply for loans on our own to see if we are eligible for any and if so where should we be looking? Any help would be appreciated.
You probably already know about the federal Stafford Loan since any college student can take that and it is usually packaged with the financial aid offer that you have already seen.
They may not have mentioned to you the Parent PLUS loan, which is a [federal student loan](https://studentaid.ed.gov/types/loans/plus) that you (the parent, not the student) can borrow. You do have to qualify for it but the threshold is generally low, with a clean credit history. You usually have to apply through the school and you can borrow as much as you need - up to the cost of attendance minus the financial aid the student already has received. (
In addition of course you can research private student loans; if you already have a bank or credit union most of them will have their own student loan products that they offer. You can also visit other vendors like [Sallie Mae](Student Loans for College: Apply Today | Sallie Mae) to look at alternative student loan products. You can apply for these on your own, and the lender will forward the money directly to the college.
(I have also heard of some schools that have preferred student loan vendors or recommended lenders which might be a good place to start research.)
As far as what to look at when you’re researching loans, I think the most important financial features are the interest rate and the origination fees; you probably know to look for a low interest rate but I’ve seen some loan products with low interest rate but high fees – the fees take a bite out of the amount that you get when you borrow, so a $1,000 loan with a 2% fee only gives you $998 to use towards college costs for example. This makes borrowing more expensive for you (since you have to borrow more than you need – not just to cover the tuition but also to cover the bank fees, and pay interest on all of it). I would also look up what happens when it comes to repaying the loan; some loans have prepayment penalties if you try to pay part of it off earlier.
One good quality about the Plus loans is that they are dischargeable in the event of the death or disability of either the parent or the student. The bad thing is that the interest rates are both fixed and fairly high; you may be able to get a better interest rate if you have good credit and your own bank with a checking account.
@DimitriR Thank You very much for your response I haven’t quite figured out college confidential yet. Do you just throw out a new discussion question and hope someone responds or is there a more direct way for me to ask regulars questions? I haven’t received most of our f.a. awards yet due to being chosen for the selective issue because we couldn’t use the DRT. We don’t qualify for low income but with one parent working right now and with only one child we agree his future is more important to us. We don’t mind taking on loan debt because we plan on paying half or more depending on what the payments are. For us it’s a no brainer education costs money and we will pay but we want to make the smart choice and know what our options may be and if we even have any. We don’t know what to stay away from and what is legitimate.
How much on loans do,you need? That is your first question that needs to be answered.
The Parent Plus Loan is available to those who have completd a fafsa. But if you have been selected for verification, you really need to get that done…now…with any college your child is considering.
Not to pry…but why can’t you use the DRT?
We are not sure why we were not allowed to use the DRT. It said something about filing head of household but never gave a reason. When we called the FAFSA helpline the lady had no idea why we were denied she just repeated that we were not eligible. We are the biological parents we live together but are not married i’m unemployed right now not collecting and his dad is the only one working and claims head of household and claims me because he supports me. We think the unmarried thing may have been why. We have no clue. We are not sure how much in loans we may need. We haven’t heard from all of our schools if he has been accepted or not and we have not received f.a. award packages from all the schools that he has been accepted at. Here and there schools are requesting we send in tax transcripts,w2s and fill out a verification sheet from their schools. The selected for verification thing when we were denied the DRT made it sound like only when schools ask for more info then we do it. That is correct right? We don’t have 2 send in any ex info until a school requires it and asks for it right? At this point it seems like that will be the case with every school. I don’t understand what the point of filing the FAFSA early was. If they were going to hold up our f.a. award packages anyway. I assume this also means we may be missing out on money even though we filed it early is that correct? I understand we should only be counting the direct costs as our actual COA but because we don’t make much money right now. I read all these horror stories about hidden costs and once the kid starts he needs money for all different things that were never mentioned. How am I suppose to know besides travel and monthly living expenses that we can decide on our own how am I suppose to guess what he may need money for? My fear is what if I under guess his costs and we get hit with excessive bills right after he starts classes that we can’t pay on the spot or we over guess and miscalculate the COA and it puts the COA out of our ability to cover. When exactly are we suppose to apply to see if we are eligible for any loans? Is there a deadline to apply for loans or do we have until we are ready to pick one school? I have no idea how the loan process works. His dad said we have to wait till we pick one school then you apply to see if you can get loans but that doesn’t sound right to me. What if we get denied loans after we pick one school and then we get denied now we have no schools. Am I overthinking it? His dad also said he can’t just start applying to a lot of different loans because everytime someone does a credit check on him he said it lowers his score. Is this true if so how many loans should you apply to? His score isn’t very good to begin with. it’s recently improved over this past summer and he has applied for 2 credit cards to try to build it up.
I’m sorry it’s so long. I’m a talker can you tell?
A suggestion…next time, leave a space between paragraphs.
Your initial FAFSA filing date is still your initial date of filing. So you are in the financial aid queue as of that date.
The colleges all have a cost of attendance on them. If you look, it usually breaks down the billable coats (ones the school bills you for…tuition, fees, room, board, sometimes health insurance), as well as other costs…personal expenses, transportation, books.
I would very strongly suggest that your student plan to get a small job either on or off campus to help with his own discretionary money, and perhaps books. He should be able to work 10 hours a week.
You apply for loans once your kiddo has selected a school. It doesn’t take long for the loans to be processed. You will need to send a deposit when he chooses a school, but this is usually under $1000…I think ours was $500. It is applied to your first term bill. Your first term bill won’t be due until sometime during the summer.
It is very likely that the HOH issue is why you were selected for verification. I don’t know enough about taxes to say whether or not you qualify for this…but there are others who might chime in…I hope.
If you are very concerned about affordability, I would strongly suggest you choose a school that is most affordable to you. Don’t over extend yourselves. Remember, this is a four year commitment…and the loans will need to be qualified for annually.
Thanks for the spacing tip. Do most people who take out loans apply for new ones each year or do they take out one big lump sum to cover the 4 years? I think I read in another post that each year you have 2 apply for the loans and you may get denied. What would cause this to happen? If we are approved the 1st year for a loan are there certain things we should stay away from or maintain so that we don’t hurt the next years chances at a loan? The few schools that have sent us our award letters had given him work study of like $2500.
Ok so before he even starts school the 1st semester bill will be due? Does the money he gets from all his sources combined pay this bill or does it stay owed until scholarship & loans kick in? I am not expected to pay this 1st bill out of pocket am I? Thank You for your help.
For private loans or a parent PLUS loan, you have to reapply and be approved each school year, as the school is only able to certify the funds for one year’s worth of expenses.
Typically a student’s bill is due sometime in August, after the student has registered. I’m assuming most schools have a process where if all of your tax paperwork has been turned in and loan applications submitted and processed, the aid will be authorized towards the billing statement even though funds won’t disburse directly to the account until school starts.
@kgos16 thank you! Do you know what things can mess up your chances of getting a loan the following year?
Here is what happened with my kids. I cannot guarantee that this is what all colleges do.
We received a bill for our kid’s fall term. The amount of aid, grants, etc. including Direct Loans that we accepted for the one term…were subtracted from the amount we owed. The balance was pretty clear. We had to pay that amount. And yes…before the term began!
We actually opted for a ten month payment plan. This does NOT reduce your net cost…but instead of paying it per term, we paid it over ten months. We took our net cost (billable coats minus aid received) abpnd divided that amount by 10…paid it each month. Many schools have a company that handles these payment plans.
Your student’s aid will be divided by the number of terms. So if semesters…by 2. If quarters by 3.
So…if your child goes to a school with two semesters, you will get two bills, one for fall, and one for spring. Aid is divided in half and applied to each term. The fall bill is usually a little larger because there are annual fees that are paid at that time.
My personal experience matches with what kgos16 describes.
When you have something like a loan or a grant and the college knows about it, their business office will place a pending credit for that amount on the student bill. You should get an itemized listing of all the direct charges (tuition, fees, room and board, insurance if that’s required, etc.) as well as a list of credits that have been posted to your account as well as credits that will be posted once the money comes in from the bank, the federal government, or some other third party source. In my experience, the college may or may not show you a balance but as long as the total money that will be sent to the college covers these direct charges, you’re fine; they don’t expect you to pay the balance upfront before the money comes in.
As far as work-study goes, I think it’s a useful program but the only issue it has is that it’s up to the student to apply for and find a job and earn the money over the course of their employment, just like a normal job. It’s not like a grant or a loan where you get the money up front. It’s not a bad deal for spending money and personal expenses but it’s not helpful in paying the direct charges since the student won’t have the money that soon and it will probably be too late. So if I was working through how much money I would need to pay for those direct costs before the student gets to college, I wouldn’t count the work-study award just because of that limitation.
When it comes to not qualifying for a loan, for the Parent PLUS loans the only disqualifying criteria I know of is an adverse credit history – being delinquent on debt or having certain events recently on your record such as bankruptcy or a lien. Private student loans are also concerned about that issue but they also take into account your credit score as well as ratios that they calculate to see if you can handle the debt. One common one that they use is comparing your total debt to your income to make sure you aren’t overloaded with it. It’s possible for the student loans themselves to be what causes your debt load to reach the point where they won’t give you any more money. I’m not sure how much control you can have over these things.
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It said something about filing head of household
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We don’t qualify for low income but with one parent working right now and with only one child we agree his future is more important to us.
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Is a married person filing as “head of household” ? If so, why? Usually that isn’t allowed. A married person is supposed to file as married filing joint, or married filing separately. If you filed that way to “pay less taxes”, then that is incorrect and the tax return needs to be fixed with the correct filing.
If this is the problem, then it sounds like you can’t use DRT, because your filing was done incorrectly. If so, then they want your filed returns corrected…they don’t want “garbage in”, “garbage out”.
As for loans, and qualifying for future years…if you go the private banks route, then you might not qualify for a later year because your debt ration has become too high for your income.
They are the unmarried biological parents and are living and raising their only child together.
See OP’s Post #5 near the beginning.
If they are unmarried, would only the father be listed on the FAFSA and his income and assets plus the student’s?
For FAFSA purposes…whether married…or NOT married, both parents are supposed to be listed on the FAFSA.
They are living together. That is the requirement.
@thumper1, I did not know that, thank you.
BOTH parents need to be on FAFSA if they are living together…even if unmarried.
That said, there seems to be some issue with how taxes are being filed. Are both parents claiming the student?
Probably dad is claiming both mom and their child as dependents, and as stated, his filing status is HOH.