Completely Dumbfounded

Paying for College
21

<p>^^^ First, what the parents did is criminal. And, second, the parents have not taken out any loans for this student’s education, and have also not given any indication that they ever would.</p>

<p>In response to ctpofthehouse’s concerns, it makes no difference who the lender is, the student can and will be released from the obligation if the loan was obtained without her knowledge and by fraud. Also, if the OP is able to negotiate a settlement with her parents under which they agree to take full responsibility for the private loan balance, one way to accomplish that is for them to take out a new (private) loan to cover the entire original loan balance, and simply pay off the cosigned loan and be done with it. This would work regardless of who the original lender is.</p>

<p>Also, I’d guess the parents have not yet applied for a PLUS loan. Seems unlikely they would have been denied for PLUS and approved to cosign for a private loan . . . or am I mistaken???</p>

22

<p>Seems unlikely they would have been denied for PLUS and approved to cosign for a private loan . . . or am I mistaken???</p>

<p>I agree. Getting approved for Plus is EASIER than getting approved for a private loan.</p>

23

<p>OP, do not

you’re still depend on your parents to:

  1. sign-off FAFSA which is required for Direct Loans
  2. apply any Parent PLUS Loans</p>
24

<p>You can get a private loan–SallyMae will even take your app for one, and yes, you can get approved for one when you are rejected by PLUS. The private loan is primarily a STUDENT loan with a parent cosigning. The fact that both are on the hook, can often get approval for one of those, BUT, there is a big BUT, involved here. The terms of those loans depend very much on the credit records of the parent and child. Most kids will have a clean credit record. If a parent is turned down by PLUS, it is not due to the credit record but because of past due payments. The private cosigned loans will be based on credit score. However, if a parent is denied PLUS, I cannot even begin to imagine what the terms and interest rate of that cosigned loan. PLUS is no big bargain in that it is nearly 8%. But it has very flexible terms and adjustable terms if there are hardships. The government is generous that way with PLUS. Also if the student or parent dies, the loan is forgiven. These private loans backed by the government do not necessarily have any of those benefits. The interest rate and time period are dictated by the credit scores. </p>

<p>So if it is a private cosigned loan, getting the student dropped from it cannot be done. Those loans are backed by the government but the terms are pretty clear. The student is the primary borrower with the parent cosigning. Take the student out of the picture and the loan is defunct. And if you cry, fraud, yes, there could be federal consequences including jail. Fines, most certainly, and they will take that money back from the university, one, two, three. I’ve actually seen such a scenario, and it is ugly. You can’t claim mistake because the process has you six sides to Sunday CLEAR that both student and parent have to fill out and identify themselves on line, so it is clearly fraud. IF the student wants to claim that, then, yes, there can be criminal consequences. </p>

<p>The cases I have seen are when parents want to welch out of the loan and claim they were unaware their kid put them on the loans, not the other way around, and they find out very quickly that the consequences are severe. You either own up to the loan or the school shuts you down, all federal aid comes to a dead stop, until the mess is cleared up, and there could be criminal prosecution because this is all backed by Uncle Sam. These private loans are backed by the government, you know. That’s why private lenders are even offering them. </p>

<p>So, no, I do not recommend that the OP accuse their parents of fraud, though,yes, that is the case. The consequences can be far reaching such as having warrants out for their arrests and all kinds of fines and consequences that I do not think the OP wants the parents to incur. I’m afraid this is a done deal, and if the parents can’t pay the lone in it entirety now, or refuse to do so, there isn’t much the student can do unless is he willing to bring down the boom on the parents.</p>

<p>In doing so, without a FAFSA from the parents, the student will only be eligible for subsidized Direct loans in the amount of $6500 as a second year student, and would have to get a waiver for the parental FAFSA to boot. The college can also refuse to give fin aid due to no parental FAFSA. Yes, the student can appeal, explain the situation, but really the bottom line is that there will be no money. The payments released by the loan will go back to the lender, and the student will be stuck with a balance due. There is no winning in this situation. </p>

<p>The student can try to get the parent to take out PLUS for the past year if that was not already attempted. He needs to find out what loans were taken out from where. IF he has $9500 of direct loans, the only way that was done, was through app for PLUS that was denied, and then a cosigned loan, probably also from Sallie Male, but through a private venue, done online was probably done for the rest.
My advice is for the OP to find out exactly what the damages are. Shut down the PIN and safeguard the new one, and let the parents know, no more loans without the student doing the signature, electronic or otherwise. That the student wants to be right there in the process. But really, depending on the home situation, being belligerent and threatening about this, even though, yes, it is criminal, fraud, illegit, etc, is not going ot be useful if the student does not want to push it to the ultimate consequences. I’m being pragmatic here. And there is also the emotion. THis is mom and dad after all.</p>

25

<p><a href=“Sallie Mae | Education Loans, College Planning & Online Banking”>https://www1.salliemae.com/get_student_loan/cosigning_loan/&lt;/a&gt;&lt;/p&gt;

<p>This is the simplest way for a student, or a parent pretending to be a student to get a cosigned private school loan. The more credit worthy the parent or cosigner, the better the terms of the loan, but unlike PLUS these loans will use credit score, outstanding debt and salary history and pay level to decide whether to give you the loan or not. You can get denied a PLUS loan as a parent if you have anything on your credit record as unpaid for a given period of time, but it doesn’t matter if you have any income whatsoever, what your credit score is, how much is outstanding. But with these cosigned loans, your salary, how much other loans are out there play a huge role in getting accepted or denied. I have seen people who were denied PLUS get these loans because they have reasonably high paying jobs. BUT, if their credit score is not so hot, the interest rate and payment terms are terrible. Like 12% interest. Also no death provision, no revising of terms without another fee, and huge late fees on top of the interest and all sorts of penalties They are the loans that are really putting the squeeze on some people because of the those fees, penalties and high interest rates. And remember, the kid is equally on the hook for the loan WiTH the parent. They have two people to hit up. A parent who throws his hands up and says, “don’t got the money,lost my job” for PLUS, there feds will just focus on the one parent. With these loans, they go after the kid, his job, his credit, his tax refunds, garnish his wage.</p>

<p>From what the OP says with a $100K salary, but very late on some payments, would put these parents into a category where they do not qualify for PLUS, but with a cosigned loan, could get one that way. </p>

<p>The OP needs to find out exactly how much he owes and to which program. Direct student loans of $9500 means denied PLUS, and some private venue like the Sallie Mae loan with very dire terms.</p>

26

<p>I agree with co4usc2016. Regardless of whether your parents did something wrong or not, if you put them in a difficult position it is unlikely that they will help you with your college costs.</p>

27

<p>

Op’s parents did take out loans for OP’s education. See

</p>

28

<p>

</p>

<p>Uhhhh . . . I hardly think the parents did the OP any favors by taking out loan’s in the student’s name! What they did not do was take out any loans in their own names, and they haven’t indicated they ever would. </p>

<p>Do you really want to suggest that these parents “helped” the student by cosigning on a loan that they took out in her name by fraud?</p>

29

<p>What they did was fraud, Dodgersmom. No question about it. However, they probably simply did not think about it. They may have gone down this path with the first student, and it just is so much easier to just run through the process that it was routine to them. It’s too easy to do. As I have said a number of times, I don’t think the parents can take out any loans in their own names, and they probably have justified what they have done because the money all goes to the school. Believe me, I agree 100% that what they did was a crime, and made it even a worse thing, by not telling the student leaving him dumbfounded. Absolutely what they did was wrong.</p>

<p>But what to do now? I don’t think they can get a loan in their own names. Even if they could, if they won’t do it, strong arm techniques in this case being that these are parents are not a good idea, IMO. I’ve seen this happen a number of times, I’ve told you, but it’s always been the kid doing this without telling the parents, and the parents come to find out they are on the hook for tens, maybe hundreds fo thousands of dollars in loans that they did not know about and did not authorize. To deny that they took out the loans means throwing the kid to mercies of the legal system, because it is fraud. Federal fraud. Just like tax fraud. You really want to do that to your kid, or to your parents? </p>

<p>It’s not like, you deny the loan, and it’s all ok for the OP even monetarily. The funds get returned,and then the STUDENT, not the parent, but the STUDENT owes money to the school. Where is he going to get that money? No way without an adult cosigning, is going to get that kind of money? If he has it , he can just pay off the loan right now and that’s the end of it. The terms of that loan cannot be good. </p>

<p>People with outstanding overdue payments and bad credit cannot get loans, except for student loans that are backed by the government, so where do you suggest these parents get the money to pay off these loans. In fact, where is the money gonna come from for future years? The parents are going to be paying on the other student’s loans, and believe me, if they took these cosigned loans for that student and not PLUS, they had better pay them. The penalties for not paying are heavy and they make PLUS look like the fairy godmother when that happens. So the student is going to have to pay something for next year, and if the parents don’t have it, they are going to want to do the same thing over again. When the student gets over his shock that his parents did this, he may end up just doing the same danged thing or he can’t go to school unless he finds a local affordable option. It appears that he is a strong student who has done well and gotten merit money to boot, but there is still a gap that his family is expected to pay, given that they make what they do. Where is he supposed to get that money to fill the gap, if parents don’t have it, have bills that exceed income as it is?</p>

30

<p>jrdoll28 wrote in post #11:
“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>A bit off topic, but I’m curious about this statement. Depending on the state, I thought you could only receive unemployment if a one-time lump payment was received as severance. How can the father receive unemployment and a salary (which I am assuming is severance payments)? Does anybody know?</p>

31

<p>Yes, this is OT and what difference does it make? Yes, in my state you can get unemployment even when you are working if you are deemed “underemployed”. There is a recognition that of hours being cut and/or getting a much lower paying job. This allows those who lose their jobs to still get gigs here and there, or take a position with much lower pay, without losing all of the unemployment benefits and having to get back in line and start over each time the gig ends.</p>

<p>None of the reasons matter. The parents are completely wrong in what they did regardless. They committed fraud, pure and simple. The question now is what to do about it and how to proceed in the future, now knowing that there is little to zero money to pay for the OP’s education. Most of it is going to have to come from loans and the parents may not be able to borrow on their own.</p>

32

<p>^^^
I wasn’t trying to be antagonistic to the OP or derail the conversation. I just try to learn as much as I can from these postings.</p>

<p>I was, honestly, just inquiring, as a friend of my sister’s will be finding himself in this severance pay/unemployment situation.</p>

33

<p>It will depend upon state rules.</p>

34

<p>I am curious as to whether or not my hopeful school could be affordable given how much my parents were able to pay for my sister’s education (as I said before, about $46k). I know they output significantly less for me so far, but if they were able to do so, in addition to helping me out with loans after graduation, would my school be feasible? In essence, my two options in transferring seem to be:</p>

<ol>
<li><p>State school: commute for one year to a branch campus ($15k), and then live at the main campus for my final 2 years ($25K), for a grand estimated total of $65k for my final 3 years.</p></li>
<li><p>Hopeful college: attend for 3 years, where my cost for the first year would be $37k, though I believe this amount could decrease my last two years since there are limited funds for transfer students, whereas the last 2 years I would be offered what all returning students are eligible for through financial aid. Assuming the worst, this would be $111k over 3 years. </p></li>
</ol>

<p>[Staying at my current school would be an additional $60k over 3 years, so I would choose option 1 over this route]</p>

<p>And for those curious, my parents did not apply for a PLUS loan, because they didn’t want the debt in their name, and felt uneasy about affecting credit reports and so on (this is strictly what they said). I mentioned how I was upset that they took out a loan in my name, but they kind of laughed it off as a joke regarding the fact that I could potentially send them behind bars.</p>

35

<p>

Or they could kick you out of their house and not pay for your education.</p>

36

<p>How about this: transfer to a community college, making certain all credits transfer, live at home, get a part-time job in the field you are considering going in to, even if it menial work - just get into and organization and learn names and work hard, pay tuition as you go, buy used books…make certain all courses you take are transferable to a four year state school as well as give you the associates degree…after two years (and considering your freshman year transfer credits) you should have enough credits to transfer to an in-state school for your senior year…potentially even had made enough working part time to not only have no debt from those two years at community college, but perhaps even some to apply to your last year of school. Additionally, you may have a very high GPA and some work experience, (on top of meeting some good friends in places you least expect it) so you may get some merit aid…try to finish up college with as little debt as possible, yet matriculating from the best school possible for the money/degree you want. Your work experience in those two years may also lead to contacts that give you a “foot in the door” when looking for a job upon graduating, so keep names and contact information handy. Also, tell your parents to never do that “loan thing” for you again, and check your credit report. Your first thing you want to do is pay that debt off. Good luck!</p>

37

<p>I think either option is too much debt, but option 1 is definitely better. It’s hard to say with 100% certainty without knowing which two schools we’re talking about, but, considering the amount of debt required for even the less expensive option, I can think of very few schools that would be worth the extra $50,000 of debt. $111,000 on top of what was borrowed this year is just a crushing debt load. It will have a huge impact on your life.</p>

38

<p>

There’s no ways OP could borrow that much without involving his/her parents.</p>

39

<p>jrdoll28,</p>

<p>I am going to vote with direstraits on this one. The debt you are projecting is too much. Your best option is to commute to a community college while you work at least part-time so that you keep your costs down. Then transfer to a state U - if that commuting distance branch campus has your major, finish up your degree there.</p>

<p>If you do very well at the community college, and take advantage of the help that the transfer counselors there have to offer, you may have other options for finishing up your degree. You need to do your best to take as much of the money aspect of your education as possible out of parents’ hands. Let them file the FAFSA and other financial aid applications for you, but don’t count on them for anything beyond that. You need to figure out how to do this without needing any money (beyond any living expenses they can cover for you while you commute) from them.</p>

40

<p>So there appears to be a bit of a misunderstanding with my parents; they paid approximately $10k this year out-of-pocket, and are on target to be able to provide similar amounts until I graduate, and will continue providing when I am continuing to pay off loans beyond graduation.</p>

<p>TO CLARIFY, if this amount my parents can spend is $50k total, is that still too little for either one of my options???</p>

<p>Option 1 would be $65k total plus the $20k from the last year, minus $50k, leaving about $35k in debt.</p>

<p>Option 2 would be $111k plus the $20k from the last year, minus $50k, leaving about $81k in debt (this seems unreasonable).</p>

<p>As no one has commented on it, is it alarming to anyone how much debt my sister is currently in considering my family’s income, and the fact she went to a state school (about $25k per year)???</p>

<p>Finally, I don’t know how to react because my parents do not seem phased by the situation. They know that option 2 is quite expensive, but want me to decide if I think the cost is worth it, and they seem puzzled as to why I’m so concerned about how much money will be left for me to pay off, as if this situation is the norm among college students.</p>

<p>Edit: I am not sure if it makes any difference, but the cost of the school for option 2 is $57k with all expenses factored in, and I received a total financial aid package of $27k ($7k were in subsidized and unsubsidized loans)</p>