Completely Dumbfounded

Paying for College
1

<p>So, I have known the typical amount of money that are affordable to middle class families such as mine. I attended a state school this past year with a $5k merit scholarship, so, in total the bill this year is approximately $20K ($15k tuition -$5k scholarhip + $10k room and board). I believed this to be more than manageable, though I very naively assumed this was reasonable for my family (one sister who just finished college at the same state school, and a combined income a bit over $100k), without looking into the details. I figured they were paying a certain amount each semester, while loans would cover the rest, and we would work together with those.</p>

<p>Now, as I am in the process of transferring, I am finding out that my parents have been taking loans for the entire bill. They said not to worry, as they would help me with the loans, once they are able in the future, but as I contemplate attending a school that would cost $37k for my last 3 years ($57k is tuition plus room and board, though I received a $20k grant), I am unsure if I can afford going to any college at all! </p>

<p>I am trying to get things sorted out, but it honestly seems like this is not possible. I heard anything near $50k in debt is pretty unreasonable, and I'm realizing that I will surpass that easily even if I continue at my state school! </p>

<p>So my question is: Is this not common? I really hope I'm missing something.</p>

<p>This sounds like I have to completely reconsider whether or not I can even attend college, and I could have never believed this.</p>

2

<p>I am finding out that my parents have been taking loans for the entire bill. They said not to worry, as they would help me with the loans, once they are able in the future</p>

<p>???</p>

<p>What are your parents doing? What kind of loans are they taking out? They cannot take out loans that YOU are responsible for. If they think that they can take out loans behind your back that you have to pay for, they are wrong. What have they been doing? If they took out Plus loans, then that is THEIR problem, not yours. You aren’t obligated to pay one cent of those back.</p>

3

<p>If I understand what you’re saying, your parents are planning to pay $37,000 a year for the next 3 years solely with loans? So that at the end of your 4 years of college, there will be over $100,000 in loans (whether yours, your parents’ or a combination)? Unless your parents have the money to pay for your college and are borrowing for liquidity or similar reasons, that’s too much. And if they’re expecting you to pay the loans back, it’s waaaay too much. Why are you transferring? Is there some reason you can’t/won’t stay at your state school?</p>

4

<p>You are legally responsible for the loans you have taken out in your name… no more that $5500 for your freshman year (unless you have also been granted a Perkins loan in your name, a state or university loan, or our parents applied for a Parent PLUS Loan, were denied, and you took out the addition $4000 in federal loan that you would have been granted when parents denied for the Parent PLUS.)</p>

<p>So, at this point you are responsible for the loans you have taken out, and your parents are responsible for the loans they have taken out. They cannot take out loans in your name.</p>

<p>What school are you looking to transfer to? CC? A state school you can commute to? </p>

<p>What is the plan?</p>

5

<p>I think it is important that you know if they took out the loans in YOUR name or in their own names. Unfortunately, there are a lot of people out there who blithely use parent/child PINs, SSNs, electronic signatures without full informing and getting the consent of the other person. It’s illegal, for one thing, terribly so, since you are dealing with the federal government here, and it’s unethical as well as a rude thing to do. But,yes, it is done. Since so much can be done without the loan officers seeing you in person, by using online and even mail, this does happen.</p>

<p>I suggest you find out what loans you have. Get a credit report and also go online and find out, after asking your parents for the list of the loans. But I have known kids who have found out that their parents filled out all of the loan stuff while they were in school, and when looking for jobs or trying to get credit once out of school, find out that their credit history is laden with loans the parents took. Also happens the other way around.</p>

6

<p>What have you been doing so far? Sounds like your parents have been taking on the whole bill. You need to pick up a share with a Direct Loan.<br>

I wouldn’t say that. It sounds like the state school is generally affordable. Take a $6.5K loan as a sophomore, work over the summer for another couple of $K and you’ve whittled the cost down to $11K.</p>

7

<p>How did your parents pay for your sister’s four years at the state school? Did they use up all of their saved money for her and now expect you to pay for your education?</p>

8

<p>

Your parent didn’t force you to go to college.</p>

<p>If you so concern about the debt, then drop out and find a job. Save enough money and then go back to school.</p>

9

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</p>

<p>Wow, that’s pretty harsh! We don’t even know what this student’s situation is . . . but it sounds like the parents are the ones who are accruing the debt, and not the student. And, as noted above, that’s their responsibility and not the OP’s.</p>

10

<p>I wish the student would come back and clarify. It sounds like the parents were secretly taking out loans, but they expect their child to pay back much of those funds (and they’ll “help”). </p>

<p>What are these loans? Plus? If so, this student is not obligated to pay any of them back.</p>

11

<p>Sorry for not responding to everyone sooner. So here is the situation:</p>

<p>My parents (only giving me estimates so far, instead of the exact numbers, though they should be relatively accurate) claim to have actually paid $3k for college this last year. The remaining $17k was handled through the maximum Stafford loans, and through a personal loan created in my name (without my knowing) with them as cosigners.</p>

<p>To give more background, my parents paid for my sister to attend the same college (though she did not have a scholarship), and the grand total was about $95k for 9 semesters (after which she graduated). Allegedly, my sister now has $49k in loan debt, which my parents will help her pay back. So we can estimate that during that time, my parents paid about $46k out of their pockets. However, they explained reasons for being able to pay this much, such as my father receiving money from unemployment while still receiving the salary from the job in which he was laid off. </p>

<p>To help put this in perspective, so that I have some type of understanding, is the amount they paid extremely low when considering the fact that their combined income was a bit over $100k (before taxes), with no state schools qualifying my sister or I for grants?</p>

<p>My parents claim to be able to try to fairly pay similar amounts they did for my sister over time, but I’m unsure if even that will be enough given the fact that my sister has $49k in loans after graduating from a state school…
They have attempted to console me by saying that the FAFSA is unreasonable and it is absurd for someone of their income to have an EFC of approximately $25-$30k per year, and that other people they know take on similar loans.</p>

<p>Additionally, I am transferring because I now want to major in engineering, which is not so strong at my current school, and I have also been very unhappy there with the social aspects and lack of academic inclinations of the students.</p>

12

<p>Your parents committed fraud when they took out a loan in your name. Wow</p>

13

<p>The remaining $17k was handled through the maximum Stafford loans, and through a personal loan created in my name (without my knowing) with them as cosigners.</p>

<p>wow…how did they do that? did they forge your name? Tell them to stop doing that. (I wouldn’t pay one dime towards that fraudulent loan. Make them pay it.)</p>

<p>No, most people do NOT graduate with similar debt. Your parents are trying to justify very bad behavior. </p>

<p>I’m glad to hear that you’re transferring.</p>

<p>To help put this in perspective, so that I have some type of understanding, is the amount they paid extremely low when considering the fact that their combined income was a bit over $100k (before taxes), with no state schools qualifying my sister or I for grants?</p>

<p>Yes, that is an extremely low amount that they paid. I can understand that they couldn’t pay $25k, but there’s a big difference between $3k and $25k.</p>

<p>They should have been upfront from the get-go so you could have applied to affordable school or schools that would have given you large merit for your stats as an incoming frosh.</p>

14

<p>If this is all debt that’s going to be on you, I would come up with another plan. If the state school you’re attending doesn’t have a good engineering program, is there another state school that does? $37,000 a year, when you’re going to be taking out loans for nearly all of it, is simply too much. Most people coming out of college don’t have $37,000 in debt total, let alone for one year. The school you’re contemplating transferring to is too expensive. </p>

<p>One thing to consider - if your parents have been unable to save for your college costs to date, what makes you think they’ll be in a position to help much with repaying the loans? Also, what are YOU able to contribute? Do you have a job? And I agree with prior posters that your parents committed fraud (and forgery) in obtaining the loan in your name without your knowledge. Were you 18 at the time? I would ask to see the paperwork immediately.</p>

15

<p>First of all, I want you to know that this is too commonly done. It is wrong, illegal, fraud, but it’s done way to often and with impunity because family members are not going to push charges against each other, except in very rare situations. It’s done by parents like yours did, and by students in their parents’ names and PIN. </p>

<p>I suggest the first thing you do, is get a change of PIN and use an Email that your parents do not know ,keep it private, and set it up so that it is difficult/close to impossible to get it. Not easy, since they will have your private info such as SSN that will make it easy to get another change, but make sure anything that happens with that PIN is reported to you via that new Email. This way if they should take any other student loans in your name, they will run into impediments, and you will be notified, at least for Direct loans. I do not know if the PIN is required for cosigned loans. Do let your parents know that you want to be told about any loans taken out in your name as cosigner or otherwise. Check your credit report and see what is on there in terms of what has been taken out. </p>

<p>Parents are just as imperfect as anyone, and, abuse of money is a rampant problem. There was a case where one parent who felt her straits were desperate, borrowed maximum COA each year with kid as cosigner, without the kid knowing, even as the other parent was paying the college costs. So the kid graduated with nearly $200K of debt, believing it was all paid. So, yes, the abuse happens. And kids have taken out loans using parents’ PIN without telling them either. Without the face to face, it is too easy to do. </p>

<p>Pushing the parents in a confrontation is a dicey thing. Yes, OP can claim fraud, and as it is a federal offence, they can be in serious trouble. But that also means a major family breach, more trouble, maybe than it is worth, and no further cooperation at all on the FAFSA which will mean only the Direct Student entitlements on an unsubsidized basis will be available. One has to weigh all of the ramifications of this. I have known parents and families who have shut down for several years due this kind of mess. One does have to make the decision as to whether it is worth it go after the parents even internally. The OP can get his own paperwork without going through the parents, and probably should do that, but shut down any future transgressions of this sort. </p>

<p>As to what you can do for the future, I don’t think the type of loans you will have to take at the school you are considering transfer is a good idea. You now know your parents are not going to be able to pay more than a small amount towards your costs. That is now a given. If you can come up with a computer science major at your current school, or find commutable inexpensive options, you will better off. I know your parents likely have the best of intentions that they are going to pay back those loans for your sister and for you, but if the numbers don’t work out, you can’t squeeze water from a stone, is the reality of the situation. They will HAVE to start repaying your sisters loans soon, and so it’s not like there is going to be relief from her being out of school That’s the problem with loans–they extend the misery of paying for college way beyond the time in college. </p>

<p>Those loans are going to be on your credit history and with the cosigned ones, if the parent who signed dies, you are stuck for the whole thing. No bankrupting out of them, and if they miss or are late on a payment, you are going to penalized as well. </p>

<p>The thing is, your parents most likely HAD to go the copay route because they were probably declined by PLUS which is the Direct Loan program for parents. If they were so declined, it’s because they have some financial issues, like very late, maybe defaulted payments. They really cannot afford to be paying much for your college at all. They are not deemed credit worthy on their own to get ANY loans for schools, and have to drag you into the picture to borrow, so that both they and you are on the hook.</p>

16

<p>$3,000 on an annual income of $100,000 is very low. That said, it is what some families can manage to pay, given cash flow issues. I wouldn’t worry as much about the loan amount (which may still be manageable if you stay where you are). I would worry more about their lack of honesty with you.</p>

<p>Your sister left college with about $50,000 in debt. At this rate, you will leave with $65-70,000 in debt. They came up with $3000 for the year - that’s $250 per month! They were probably spending more on you while you were living at home during high school, and even if they continue to spend $250 per month for the rest of your life, it’s not going to make a dent in your monthly loan payments. If they can only afford this much because they are “helping” your sister with her loan payments, then the difference between what she’s stuck with and what you will be stuck with is even greater.</p>

<p>You need to ask them to see all the loan documents, and you need to order a credit report (maybe from all 3 credit bureaus, just to be sure). Are you sure they didn’t shove some papers in front of you to sign last fall? If they did, it’s still unethical, but if you signed the loan documents without reading them, then you are still legally responsible for the loans. The credit reports will show you just how much in debt you are - and can be used to verify whether you are being told the truth by your parents.</p>

<p>If they were willing to take out loans in your name without your knowledge, I wouldn’t trust any promises they make. Take that into consideration when deciding what to do next year. With a household income of $100,000, if they are only contributing $3000 a year toward your education, I can see only 2 explanations:</p>

<p>1 - they can’t afford more than $3,000 which suggests they are having financial difficulties, and you can’t count on them to be able to help in the future</p>

<p>2 - they choose not to afford more than $3,000 because they are not willing to make any small sacrifices to their lifestyle - and again, you can’t count on them to help in the future, even if they can afford to do so.</p>

17

<p>It’s too easy to take out school loans in someone else’s name. You just need the PIN, SSN and the other info is something household members will have. Electronic signatures are very easily done with the PIN. There are warnings galore saying that it is a federal offense to use someone else’s electronic signature but it is done all of the time, many times with permission, but when people get too casual with the process, their eyes glaze over the warnings and legal notice and just push the send button. I firmly believe that the financial aid office or bursars’ office should require those who sign these loans send a notarized document from a bank–that there is no doubt that those signing for these loans are indeed the people that are named. This fraud is rampant. I’ve seen this over 20 years now, and it is truly a crime, but blowing up a family is just not worth pursuing it as such. Jail time is possible if nailed on federal fraud.</p>

<p>When my son wanted a Stafford loan last year, he would have been thrilled, had I done the whole thing for him. It was a pain in my neck to have to set it up so that HE did it. It would have taken me less than 15 minutes as I am very familiar with the whole process and can get through it as fast as I type. But it took him hours, and some things got screwed up. Plus he got selected for verification for just $4K in subsidized Direct Student loans. So, yes, it would have been SOOO much easier to have done it myself. But this way he is acutely aware, painfully aware of the situation, and he is trying to pay this thing back on his own by the time he graduates and still pay his share of expenses for the rest of the time. Very difficult, and he can see first hand what paying a 7% interest means. Yes, on $4K, the interest alone would have been about $275 by this summer. He’s knocked off about a grand from the loan, and still incurred over $200 in accrued interest so he owes more than $3200 even after paying more than $100 a month when the school year started. So, he’s now shooting for $2000 to be paid, maybe more, with at least half paid by the end of the summer. Still will incur over $100 in interest expense. Scary, huh. But he’s learning a very valuable lesson. Those parents who are saying, “don’t worry, hun, it’ll all work out” are not letting their kids feel the impact of interest even in small amounts. We are talking $4K here, and there are lots of kids who will be owing 10X that amount when they graduate. My son is horrified at that very prospect, as he sees how hard paying back what he borrowed is going to be.</p>

<p>I fully believe that these parents are looking at things too optimistically, and took what they felt was legitimate license as parents without thinking about it. I’ve said outright that this was wrong, illegal, fraud, but I don’t believe it was ill intended, and a I have seen this done with ill intentions where the money went to places other than the school.</p>

18

<p>Put very simply, what your parents did was wrong, and it was illegal.</p>

<p>The Stafford loans are less egregious (although taking them out without your knowledge or consent was still illegal!) - it will be a relatively small amount and they are loans that you probably would have taken out yourself, had you understood the situation.</p>

<p>The private loans are another matter entirely. You have three choices:</p>

<p>[ol][li] Contact the bank and tell them that you did not authorize these loans. The loans will be removed from your name . . . but the bank will likely pursue criminal charges against your parents.</p>[/li]
<p>[li] Ask your parents to take over full responsibility for the private loans and have your name removed from the account. I would guess that the bank can work with the three of you to accomplish this. If your parents cooperate in assuming liability for the loans, then there’s no need for the bank to know that there was ever a problem, and your parents would not face any civil or criminal liability for their illegal actions.</p>[/li]
<p>[li] Simply ignore what your parents have done, and assume full liability for the loans.[/ol]</p>[/li]
<p>And from now on, you should do the following:</p>

<p>[ul][li] Find out exactly how much your parents are willing to spend (out-of-pocket) on your education.</p>[/li]
<p>[li] Find out exactly how much you can borrow through the federal direct student loan program. This figure is readily available online - you can look [here[/url</a>].</p>[/li]
<p>[li] Ask your parents to apply for a PLUS loan. They won’t actually have to take out the loan if they’re approved, so there’s no risk to them. But, if they are denied, the federal direct student loan amount that you are able to borrow would increase.</p>[/li]
<p>[li] Figure out how much you can contribute to your college expenses every year from summer and school-year earnings.</p>[/li]
<p>[li] Do not attend any college that will cost you more than the above combined amounts. If that means taking a year off to figure out your options and regroup, then do so. Get a job for a year, figure out which engineering school you can afford, and then go back to school.[/ul]</p>[/li]
<p>You must also make clear to your parents that if they ever again take out a loan in your name, or use your online PIN number, you will report their conduct to the lender.</p>

<p>You will also need to check the [url=&lt;a href=“http://www.nslds.ed.gov/nslds_SA/]federal”&gt;http://www.nslds.ed.gov/nslds_SA/]federal</a> student loan database](<a href=“http://studentaid.ed.gov/]here[/url”>http://studentaid.ed.gov/) periodically to make sure your parents are not continuing to borrow without your knowledge, and you should also check your credit report periodically for the same reason.</p>

<p>This is a very serious situation because now that your parents have done this once, there’s nothing to stop them from doing it again. You have to make sure that doesn’t happen.</p>

19

<p>Dodgersmom has a great sequence of things to do, for the OP. Just a few issues that I see here. It is my guess that your parents tried to get a PLUS (Direct Loan for parents) and was denied. Look and see how much you owe in Direct Loans. If the amount is $9500, that is what happened because $5500 is the maximum otherwise allowed for a freshman.</p>

<p>Though they may have gone the bank route, my guess is that they took out a cosigned loan through Sallie Mae, as it could be done on line. There is no way in the world that the OP will get released from that loan without the full amount paid back. The ONLY reason, that these loans are around even, is because BOTH parent and student, or adult and student are financially hogtied on them, so that both are hit hard if there is any default. IF the loan is taken back, the school will want payment for the amount and the OP will be immediately hit up for what is due and likely will not be able to enroll for the next term or even have access to transcripts until the balance is paid. There is not going to be much sympathy for this. Schools are notoriously harsh about unpaid balances. </p>

<p>So, on a pragmatic basis, there really is not much a student can do if he wants to continue to go to school and get some cooperation with the parents.</p>

20

<p>Yes, treat your parent like criminal, and your parent will be VERY happy to take out loan to pay for your education.</p>