<p>Could use some advice - this is probably a stupid question.</p>
<p>We filed the FAFSA form in case our daughter decided to go to one of the more expensive colleges that she had applied to. Fortunately, we believe can cover the cost of the school that she has decided to attend (less a merit scholarship) as long as she gets done in 4 years. </p>
<p>(1) People at work have suggested that we take the Stafford loan whether we need it or not - I don't understand why, especially with interest rates rising.</p>
<p>It's possible that our daughter will need to utilize the loans in her final years if she changes her major & takes longer than 4 years or if we have paid for study abroad in the interim.
(2) So do we keep filing the FAFSA every year in case she needs to get the loans in her senior year or can I wait until the year before I think she may need to subsidize her education?</p>
<p>I appreciate any guidance or advice.</p>
<p>People at work have suggested that we take the Stafford loan whether we need it or not - I don't understand why, especially with interest rates rising.</p>
<p>I personally don't understand that either- have they given a reason?</p>
<p>So do we keep filing the FAFSA every year in case she needs to get the loans in her senior year or can I wait until the year before I think she may need to subsidize her education?</p>
<p>I would - heres why
You would file FAFSA in january 2006 for instance for the 2006-2007 school year- long time from january 2006 to spring 2007- anything might arise during that time to make finaid necessary- already having the FAFSA filed will be a big help.</p>
<p>There are 3 parties to this transaction: You and daughter, the payor. The Bank or financial institution, who is the lender. The school, who is the receiver. </p>
<p>The school doesn't really care or perhaps doesn't even know where the money is coming from. So the school can be ignored.</p>
<p>Now picture yourself as the Bank-Banker, rather than the payor. See if you can come up with ways to minimize your risk, maximize cash flow, increase your asset performance, and pay as little as possible for operating the bank and its various functions. </p>
<p>This will take some thinking processes and perhaps paper and pencil. If you do use numbers, keep them very general. After you come up with possible solutions, you will understand why some of your coworkers suggested student loans.</p>
<p>A Stafford loan is a way to involve your D in owning her education.</p>
<p>good point
My daughter earns $3000 summers for tuition and money earned during school year pays for her personal expenses and books
I would expect any kid regardless of parental wealth to be covering at least that much-
but if the stafford loan is not subsidized, interest will accrue even if you get pay back deferred while in school.
Still have to fill out the FAFSA though</p>
<p>The Stafford loan rate is low now - 2.77. But I heard that figure was going to go way up. Is the rate variable or if you are lucky to get the 2.77 does it stay that way? Also, the loan people said best option is that the student should the interest while there in school.</p>
<p>
[quote]
The student loan interest rates starting July 1, 2004 are at the lowest levels ever. The interest rate for Stafford Loans is 3.37%, down from 3.42%. (The in-school interest rate is 2.77%, down from 2.82%.) The interest rate for PLUS loans is 4.17%, down from 4.22%. This is likely to be the last year of historically low interest rates on student loans, as interest rates are expected to increase by 1% to 1.5% next year. In addition, Congress is proposing to change the consolidation loan program from a fixed interest rate to a variable interest rate starting July 1, 2006. Students who will be graduating or who have already graduated but not yet consolidated their loans should consider consolidating their loans in order to lock in the new low rates.
[/quote]
hmm now it looks like D should consolidate her loans to reap the lower interest rates even though she will need to take out another for senior year
<a href="http://www.finaid.org/loans/%5B/url%5D">http://www.finaid.org/loans/</a></p>
<p>I appreciate the suggestions and facts - Thanks!</p>
<p>Our son is taking out the Stafford Loans. They are HIS contribution to his college costs (other than all of his spending money). His are unsubsidized meaning that the interest does accrue while he is in school. BUT....DH and I are actually paying the interest when it is posted as our "gift" to DS. It's not much per year...and it beats paying interest on the interest.</p>