I see that one must have financial need to be eligible for subsidized direct student loans. If the NPCs are listing a subsidized loan as part of the possible financial aid for our family, can I assume that means we have met the “financial need” criteria? We’re considering using subsidized loans, but would like to avoid the unsubsidized.
Probably.
Need is COA less EFC less grants and scholarships.
But some calculator are better than others. Was that one that asked a lot of detail?
Subsidized loans for freshman have a $3500 limit.
These are FAFSA schools and they asked all the usual income questions (no, we don’t own a farm, etc.). Each came back with the sub and unsub loans listed (as financial aid, ha ha). So, I guess that means we’re deemed eligible in the eyes of the NPCs. D16 might need just the $3500 in subsidized direct loan a year, plus $6K from a FT summer job with a 10-hour/wk sy job (starting in second semester freshman year), plus the rest from parent cash flow. If she lives at home, she could reduce the subsidized loan to $1500 per year.
If this calculation seems odd, it’s because I’ve applied an expected full-tuition grant that the NPC doesn’t consider.
That full-tuition grant will reduce your need, and then you may not have any more need for the subsidized loan. Say COA is $40k and your EFC is $20k. If the full tuition is $20k then you no longer have need and you’ll not get the subsidized loan but only the unsubbed ones.
That’s what I’m wondering about. Now I figure I need to talk with someone in financial aid who’s familiar with these tuition grants who could tell me how it might play out. Of only the $2K unsub loan is the option, she’d have to eliminate the $1000 personal/fun spending I added to pad her budget. Boy do I hate thinking that such “relatively small” amounts of money might make the difference between residential and commuter. And having to start paying on an unsubsidized loan as soon as she’s in school (if that’s how it works) might be the straw that breaks the camel’s back. If payments don’t have to start immediately, then the Hail Mary pass would be to rely on Income-Based Loan Repayment with Public Sector Loan Forgiveness after graduation. Because social work career goal.
You won’t have to start repaying an unsubbed loan while in school, but the interest will start and continue to accrue. She should plan to pay those loans back. Forgiveness is nice, but it takes 10 years and that’s a long time.
Thanks! She is ambitious financially, but with social work, you never know and I want her to prepare for the worst-case scenario too. She is aiming for a school social worker job once she gets her LCSW credential. So, there will be grad school costs as well as 2 years post-MSW prior to the LCSW exam. If she invests in the undergrad BSW as a residential student, she could shave one year off the MSW program.
She’s not trying to freeload, but she wants a career in a typically low-paying field. She told me she heard that social workers get paid at what society believes their clients are worth.
Still, we’re trying to keep her out of extreme student debt. If she could keep her undergrad student loan payments to $200/month or below, perhaps that’s doable. I’ll have to check on details about MSW grad school debt and see what that would do to her monthly payment.
So she could save $8000/year by commuting? How far is it?
Would she choose a to be a residential student at a school that is commuting distance? If so, she could start out residential freshman year and then commute subsequent years if the finances aren’t working. Many students move off campus at some point anyway. Also, keep in mind that your at home electric, water, grocery, gas bills, etc. will be reduced if she is on campus. Personal toiletries and the like are added to the projected cost of on campus COA, but they will also be deducted from your home budget. Less laundry makes a difference! We definitely saw a reduction in our household bills when each kid left for college. Even low maintenance kids contribute to household bills! You seem so close to being able to make this happen. Keep looking, I think you can find a way.
Good job in trying to limit her debt load. She will appreciate that when she is older. Good luck.
“Of only the $2K unsub loan is the option, she’d have to eliminate the $1000 personal/fun spending I added to pad her budget.”
That may not be the case. Freshmen are eligible for $5500 in loans per year … of which UP TO $3500 MAY BE subsidized. If she is not eligible for any subsidized loans, she can receive the full $5500 in unsubsidized loans. It all depends on the COA and the other aid awarded.
Here is the formula for unsubsidized loans: COA - all other aid. So if COA is $40,000 and the tuition scholarship is $20,000 there is plenty of room for that $5500 unsub loan. Unsub can replace EFC, as long as the total of all aid does not exceed COA.
The dream school is not commutable, sadly. It’s drivable, but not as a commuter.
When I compare her undergrad OOP cost of the cheapest option (which would require a subsequent 2-year grad program) with the residential at the desired college (which would result in a 1-year grad program), the difference for the undergrad degree is $22,000. But if I total up the OOP costs for the undergrad + grad degrees for both scenarios, they wind up costing the same, pretty much. All because of advanced standing and because a commuter student still eats, needs transit fare, and uses some resources/utilites at home. I haven’t added in interest on student loans, though.
BTW, it was extremely helpful to wade into the weeds of the fine details of each school’s COA (plus some grad school funding research - thanks CC hive!). Data helps show hidden things better. Like, I did not realize how much of a premium she’d be pay for room and board for the three Boston schools her list. Like $5K more per year. Also, I didn’t realize that the OOP cost of attending one of the three commuting-distance schools would only be about $5500 less per year than to send her as a residential student to the dream school. Now, the choices are more obvious when we weigh the pros and cons and consider her wants/needs with our resources. Thanks all!
There can be a big difference between the COA and the actual billed costs (R&B, tuition, fees). You can borrow up to the COA if you need it or want it, but you are in control over the difference. Most schools will estimate the travel expenses at $2000 or so, but if you live an hour away, your costs are going to be a few tanks of gas. Books? much depends on the major but one school that requires a lot of computer codes may be more than one that is fine with older editions. You are probably never going to be able to figure an exact amount, but just make sure you are comparing the same items at different schools, tuition and fees to tuition and fees, R&B to R&B. Because of your unique situation of getting tuition exchange, you also need to make sure any aid offered in general will still be there if you get tuition exchange. Most universities do not award TE and school merit (no stacking) but will allow federal aid (Pell, SEOG, loans), may give some school financial need money. Don’t expect the NPC to be accurate with getting tuition covered.
My daughter’s school charges a ridiculous amount for room and board but then gives aid to cover it. However, that means she has to pay more in taxes on that extra amount; it’s about $5000 more than her sister pays, so that’s going to be $500 or so in taxes that, if the cost was lower/aid was lower, she wouldn’t have to pay. Still, it is a better deal than at a school that charges only $8000 in r&b but doesn’t offer aid to pay for it.
Thanks to CC, I’ve been collecting info about the bugaboos of TE (TEP and CIC-TE). So, I used the NPCs to collect (old, 14/15) COAs on each school, double-checked those items with the 15/16 tuition and fees for each school, teased out what the fees and other line items listed actually covered (bus pass, orientation fee, med insurance, etc.), researched air fares, added tax if TE covered room, and tried to build the most accurate COA, personalized to us, as possible.
Then I ignored all the merit aid, etc., listed on the NPC results. I subtracted the TE grant from only tuition (in most cases it covered tuition 100 percent). Apparently, when you’re approved for TE by the accepting school, that’s all the free aid you get. Reasonable. Then I applied our self-help to the cost for each school to see where we landed.
It took some work, but it’s given me some baselines to use. I hope I’ve considered everything. (Didn’t learn until today that a TE award would likely change one’s “need” profile, and result in losing eligibility for the subsidized direct loans.) We won’t know for sure until the award results come out in spring.
BTW, can one pre-pay on the principal of a Fed direct student loan? I’m finding unclear info on that.
Prepay? Or pay before the loan comes due?
Your daughter can make payments on her Direct Loans at any time. If she takes a subsidized loan, you could help her by paying the interest as it accrues.
You mean a non-subsidized loan, thumper1, to pay interest as it accrues.
For a subsidized loan, I don’t know how they would apply a payment during the time a student is in school. Usually, a payment is applied to interest and charges first, then to principal. However, for a subsidized loan, the government is paying the interest as it accrues so you wouldn’t want to pay anything unless it goes to principal. It probably does reduce principal, but I’d check to make sure first.