<p>My D will begin dental school in August 2015. She will be getting married in June 2015. I'm wondering how to help her (them) as she prepares her FAFSA. She will be claimed on our 2014 federal taxes, but will no longer be our dependent once she gets married. </p>
<p>Related, I'm wondering how best to help them manage her student loan debt (which may be substantial). Since interest is no longer deferred on unsubsidized loans, should we begin paying the interest immediately? We'd like to help them as much as possible. Her fiance is an engineer and has great earning potential, but he is just starting his career as well. Should we consider a home equity loan? Should we lend them the money and charge them a smaller interest rate? </p>
<p>Students are considered independent of parents when they finished undergrad and fill the FAFSA for graduate school so she will not report your income, it doesn’t matter that you claimed for for the year. She will have access to federal loans for grad students. Once she is married, the filing is done for the combined income the following year. </p>
<p>You might compare the rates for the federal loans against what you can lend them or do some sort of combination.</p>
<p>She can borrow 20,500 under Stafford. Any more is Grad Plus.</p>
<p>While your D will be independent because she has already completed a bachelors, some professional schools (med, law and dental) will ask about the income of parents (and when she gets married her spouse) when it comes to giving out their own need based aid. </p>
<p>They will ask for your information on Need Access, (which is almost like filling out the CSS profile)</p>
<p>All grad school loans are now unsubsidized. You D could borrow the full cost of attendance - any financial aid as a GradPlus loan.</p>
<p>Depending on where she practices and the type of practice she has, she may be eligible for IBR (which will include her spouse’s income) or she may be eligible for public interest loan forgiveness after 10 years of consecutive payments.</p>
<p>You need to check the dental school financial aid page. It will tell you whether your parent financials will be required on your daughter’s dental school FAFSA. Some require this even if the student is married. </p>
<p>Tax filing status has nothing to do with financial aid status. In other words, her being on your taxes for 2014 doesn’t matter in terms of being independent for financial aid. For dental schools, that is a school policy.</p>
<p>You have to check each school. For example Tufts Dental School uses FAFSA and CSS and tax returns for student and parents, UPENN uses FAFSA, their own form and student and parent taxes. BU and Columbia appear to use the NeedAccess (linked above). It might behoove her to see if she is eligible for any financial assistance before she gets married. It may be a case where they count the student, spouse and parents before awarding any aid or it may not matter because many schools offer no “free” aid and only loans. </p>
<p>Helping them by paying off the interest, as the Grad Plus and Stafford loans accrue immediately, would be a very generous way to help. </p>
<p>Thank you for all the great help. She is actually hoping to be accepted at Tufts. Although the tuition is hefty, Boston is where her fiance already has a wonderful job opportunity.</p>
<p>Specific to Tufts (or other schools): why is parents’ FAFSA and CSS required if she will be married?</p>
<p>I’m inclined to believe it really won’t matter–most schools offer no “free” aid and only loans.</p>
<p>As you noted, there really isn’t much need based aid given for professional schools above the loans.</p>
<p>The schools we know of give (small) grants to some students of need. But these require the parent to be included on the FAFSA. If the student wants only the loans, then the parent does not have to be included. But YMMV depending on the professional school.</p>
<p>I’m not sure if I’m looking at this correctly. Assuming she has to borrow $60,000 per year, with $20,500 of that unsubsidized at 6.21% and the remainder a Grad Plus loan at 7.21% (39,500) and we want to pay the interest each year on the loan, how do I figure out what that yearly interest would be? Is it as simple as calculating that amount as if the loan were being repaid in a year? I feel like I’m missing something important here.</p>
<p>Only do that if you take out life insurance on your D. If she were to tragically die before it’s paid off, you won’t be able to recoup the money …but a policy will provide funds to pay it off. </p>
<p>If she gets a Grad Plus loan and she were to die, the loan is forgiven.</p>
<p>@thumper1 is right. Some of these schools will give some small grants to students from poor families, so they want to look at parent income.</p>
<p>Direct Loans are “simple daily interest” loans. This means that interest accrues daily. The amount of interest that accrues per day is calculated by dividing the interest rate on your loan (as a decimal) by the number of days in a year, and then multiplying that by the outstanding principal balance.</p>
<p>For example, on a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate, the amount of interest that accrues per day is $1.86:</p>
<p>The life insurance on our D is something I never thought of. Is that something she and her spouse should consider if they borrow the money on their own? Should they insure her for the full amount? What happens in the case of someone who dies without have life insurance? Is the surviving spouse responsible for remaining that loan?</p>
<p>I believe she can tell the loan servicer she wants to pay the interest and she will be billed. Or she should be able to access her loan acct and see the interest accrued.</p>
<p>If she borrows a federal Grad Plus and she dies, then the loan is forgiven. I don’t know how other private student loans are handled (such as Discover)</p>
<p>If YOU take out a home equity loan and then you loan that money to your D, and then she dies, who is going to pay that back? Her grieving H on an engineer’s salary? Not likely. You need to take out a policy for her and have YOU named as the beneficiary. If she takes the insurance out and makes the payments, then her H will have to sign (notarized) that he agrees that YOU will be the beneficiary for that policy. </p>
<p>When you’re married, and you name a non-spouse as a life-insurance beneficiary, then you need to get your spouse’s notarized signature since marital funds are paying the premiums.</p>
<p>I know that Sallie Mae is rolling out protections similar to that of the Direct loans for when a student passes away, but I am not sure if Discover or Wells Fargo (or any other private lender for that matter) will be following suit. </p>
<p>kgos 16 - It looks to me like the easiest way to help them out is by paying the interest for them each year. </p>
<p>For example, on a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate, the amount of interest that accrues per day is $1.86:</p>
<p>(0.068 / 365) * $10,000 = $1.86</p>
<p>If I’m understanding this correctly, $1.86 per day, x 30 days in a month is $55.80 x 12 months in a year would be $669.60. Of course, that’s for $10,000. Do I have my math correct?</p>
<p>Yes, the math looks right. The student will be able to view the interest accruing on the loan by logging in to the loan servicer’s website. If your daughter isn’t sure who her servicer is, after the funding has disbursed she can log in to the National Student loan database at nslds.ed.gov. Her entire loan history will be available, including which company is servicing each loan. The servicer’s website will have the principle loan amount listed as well as the interest that has accrued since the funding has disbursed. </p>
<p>Also remember if you loan her the money, the interest that she pays you is taxable income. The IRS has rules about what the minimum interest rate can be. Since you could be talking about large sums of money, consulting an tax accountant about the best way to do this might be worthwhile. A written loan agreement might also be a good idea.</p>
<p>^^^ The IRS has minimum interest rates for the loan to be considered an ‘arm’s length transaction’ but there is no requirement that you charge interest at all. Lending money at no interest is allowed, it just might not be considered a loan by FAFSA or others judging your financial situation. For a grad student, it probably doesn’t matter.</p>