<p>As with most answers in life, it all depends on the circumstances and how a family feels about a situation. I’ve seen families take out full loans when they don’t make enough to live what I consider a decent life, to send their kids to college. Many say it was worth it.</p>
<p>You and your parents can take out student loans up to what the Cost of Attendance is for the college you attend less any scholarship or other awards you receive to bring down that number. The COA is the official number the college reports to the Feds and that is the ceiling when it comes to student loans. Families can borrow up to the whazoo if they can find lenders, outside of the student loan world, of course. But that is the maximum a family can borrow towards a student’s year in college in the student loan area.</p>
<p>You, as a student cleared by FAFSA, are automatically eligible for $5500 in your own name without a credit check or credit history. THat is if your COA supports this. If you have full ride, you can’t just borrow that amount, for example. That amount goes towards your COA max.</p>
<p>Your parents can borrow through PLUS very quickly, privately, on line if they have filled out a FAFSA. The answer is nearly immediate. If they are turned down, and I believe the criteria here is a lot easier than most other loan credit checks–I’ve known people who were turned down for a $500 Old Navy or Macy’s card get the PLUS money for mega bucks, then the student is eligible for an additonal $4K of
Stafford money. There are also other federal funds like PERKINS loans that are subsidized, and a school might have loan money as well but that is determined by the individual schools and not guaranteed at all. </p>
<p>As to how much your parents should borrow, that is up to them. They can deduct the interest if their tax brackets and categories happen to be in certain ways. An accountant or financial advisor looking at what they have can give their opinions about it. But the bottom line is what they can work out themselves. The same with how much they should take out of savings each year to pay college costs and how much of current income they can put towards college costs. Unfortunately too many of us live to the max of our incomes and tie it up in thinks that are not easy to get out of when it comes time to meet a new expense. But when you look at buying a car, which is of a far lesser scale, the same determinations come to mind. How much of a down payment, how much in current income to pay the loan if any, how much to take out of saving to pay it? People make different decisions bases on the way they do things.</p>
<p>You can start paying off PLUS and other loans as soon as they are processed. Or you can defer them up to 6 months after graduation, but interest accumulates. The repayment terms are very flexible and there is virtually a plan for every need, but you do have to pay them. </p>
<p>PLUS is in the parent’s name only. The Stafford is in the student’s name only. If you start going to outside student loans, they usually give it to the student with the parent(s) as cosigner(s) and all of you on the loan are equally affected on the credit history and responsible for payback. With PLUS and Stafford, if the person who owes dies, the loan is over. Not so with loans with co signer. You are all responsible regardless of what happens to the others on the loan. </p>
<p>You have to look at deadlines for individual schools. The FAFSA cannot be completed for the year coming up until the January 1, before that school year begins, and awards are not usually distributed, and they are distributed to the school, not to you, until the billing starts up at the individual schools. I don’t know exact deadlines for each school, but at my son’s school, we just recently did a loan for him and it could be obtained right up to year end. But that is one school. A lot of the rules can be up to the individual schools. </p>
<p>In our family’s case, and this is an individual situation only for our family, we use past, present, future earnings in the forms of Savings, Income, Loans for us and for the student in coming up with a payment play. We do have some money we set aside for college and other expenses for our kids, and we dip into it trying to leave a fair amount for kids still left. We make a budget plan and decide what we can afford out of the monthly paycheck to put towards school. In our case, it 's a bit ieasier because we are on a monthly plan for high school tuition since our kids all went to private high schools, so we just keep it rolling and that amount becomes the amount we can pay for college, and we try to add to it. Not easy to do, because there are always things that come up that we try to cover out of regular income, like a visit to the kid for something special, a care package, an emergency that comes up for college kid, etc. Yeah, they happen. We have to balance what goes for college vs our emergency/short term savings fund. Then we have to decide how much to borrow and we break it into a 10 year payment. Our students do the same. </p>
<p>But things change, My son figured he could make it easily this year with no loans. Then this great opportunity arose for the summer. But that means 3 weeks of not earning money this summer, and he earns a lot in the summer. Not to mention the cost of the opportunity. If he pays it all out of savings, it blows his plans for what he has committed to pay for his school next year. So, he decided to take out a loan for this semester, which will take care of that issue at the cost of repayment over what he hopes is only 5 years, which it will be if nothing else unforeseen costing money happens. Since he did not borrow at all, this option was open to him. Otherwise, I guess we would have floated him the loan, but dang, we are tight this year, very tight on money.</p>