Fear of massive student loans

<p>My daughter has applied to and been accepted by three schools, two state and one private. After visits, research etc. the private school is the only one she really even wants to consider. (She isn't being snobby, it just really is the best fit for her and is where I also want her to be.) However finances are extremely scary to me. Our income is around $60,000. After this years FAFSA our EFC was $18377. At the private school she wants to attend, the total for tuition, room, and board will be around $31,900 (not including books and extras of course.) This school has offered her $8353 in "scholarship" type awards with $1,600 worth of Federal work study available and has granted her $4,400 in Perkins and Stafford loans (which are still loans and must be paid back!) Those totals subtracted from the total due still leaves us owing around $14,000 for this year. Now, we can afford that amount this year but that will deplete much of what we have been able to save for her college education in the very first year. (We thought we could cover at least the first two years and it would at a state school.) Although I really want my daughter to attend this school, and she is determined to do so, as a parent I am extremely concerned with her coming out of school with student loans looking at over 50,000 PLUS the Stafford/Perkins loans to pay back. What do you suggest? I know we re-file the FAFSA each year but will our EFC come down that much? Is our aid likely to come up? What can we expect?</p>

<p>I don't understand your math. 31900 (cost) - 8353 (grant) - 1600 (WS) - 4400 (loan) = $17547, which is less than your EFC (18377). so you will have 4400 x 4 = 17600 low interest loan for a "dream" school. What is the problem (in a very nice way)?</p>

<p>Are you saying you can't pay your efc w/o getting a loan?</p>

<p>I think the problem is that they can pay for this year, but don't know about the next three years...but that might be because that's the problem I'm having right now.</p>

<p>Yes and no. We can pay our EFC for this year, and part of next. After that lies the problem. Frankly, I don't know anyone personally who can pay the EFC they recieved. Even the admissions counselor at our "dream school" said "Let me guess, you got the figures and laughed!" The 4400 x 4 = 17600 that you mention is just the stafford loan she was given. OK... 31900 x 4= 127600, subtract 33412 (8353 x 4), less 6400 (1600 x 4) = 87788 for the 4 years. Subtract the 20,000 we have saved and you get 67,788. Then we can subtract the 17600 low intrest (at least 6.0%) which is STILL a loan and a debt she will be paying, and were looking at 50188. In four years there is no way we can come up with even a fourth of that amount. We planned on her financing some of her education herself but that seems like a lot to comw out of school owing.</p>

<p>thricedotted, is your child finishing up their first year or are you in the "should they go to this school, how will we/they pay for it" stage?</p>

<p>We are all in the same boat per planning for 4 years. It looks like this "dream" school will meet 100% of your need as they did it this year. Call them to confirm that. </p>

<p>If they meet your need, your efc goes down next year, the COA goes up next year, their aid should go up next year. who knows, your child may find some research project that offers stipend or something. </p>

<p>I think I read it some where on CC, schools would like to keep the students they have. So, make sure your child earns good grades. </p>

<p>BTW, I still don't understand how could you get an EFC of 18K+ if you could only afford 5K+. Did you save all the money under your child's name?</p>

<p>An alternative would be to attend a public school for 2 years, work and save money, and then decide whether or not to transfer to a private college.</p>

<p>Graduating from a private college with a lot of debt is not going to be fun. Surf the web and you'll find lots of articles of young adults who are burdened and saddled with debt - at jobs where they can barely pay their current overhead, let alone the debt.</p>

<p>Doesn't make sense to incur debt for this.</p>

<p>There are calculators on line which will project how much you'll have to pay back per month, and for how long. What is your dd's realistic earning potential during those years? What will her life look like with that burden?</p>

<p>Look at dollars and cents.</p>

<p>What school is dream school? People here may know about how their financial aid packages work during a student's 4 years in college.</p>

<p>One thing to check on is whether the percentage of the package that is loans goes up over the years, which is typical of what many colleges do.</p>

<p>Much of the money IS in her name unfortunatly. Betwee stocks and savings bonds (which only three of the twelve she has are mature at this date) We didn't realize that a higher percentage of her savings/assets were used to determine EFC. (I believe this is correct is it not???) However, if after this year her 2,000 from a TAP account is gone and we have sold off her stocks to pay the first year, we could expect a much lower EFC...?? am I right?</p>

<p>The "dream school" is Easter University in St. Davids, PA. Also the Stafford loan package does increase each year but I am still considering that as debt.</p>

<p>jess, try running the numbers for next year on one of the calculators on <a href="http://www.finaid.org%5B/url%5D"&gt;www.finaid.org&lt;/a>. Eliminate the funds that you're going to pay this year, assume a reasonable increase in income (if you expect a raise or something like that), and see what happens to your EFC.</p>

<p>You can also speak to a financial aid officer at the school directly. They are used to calls like yours and are often quite helpful in answering questions about subsequent years.</p>

<p>jessc - your EFC seems high for an income of $60,000. Are there fairly substantial unprotected assets? (ie not home or retirement funds). </p>

<p>If you are asking if depleting the $20,000 will reduce the EFC much - probably not. If it is in parent names only @5.6% of assets only contribute to the EFC - so the $20,000 would only account for @1100 of the EFC. If the savings are in your daughter's name they have a much higher impact - 20% - so would be 4000 of the EFC.</p>

<p>BUT - a big but - Even if your EFC does drop substantially, looking at the package you have been offered, can you bank on the school meeting your need with anything other than more loans? It does not seem they offer their own grant money and for Federal grant money you would need a much lower EFC - @4040.</p>

<p>Personally I think you are right to be concerned about so much debt. The Perkins/Stafford loans are OK - they would come out to @ 17.5K which is not a bad debt for school. The additional 50k - much too much in my opinion for her or for you on your income. I would not encourage my own child to come out of school with 67k of debt for undergrad. While your daughter thinks it is ok she probably has no clue what an impact those loan payments will have on her as she starts out her life.</p>

<p>edit - gosh I am a slow typer!! While i was typing I crossposted with 5 posters including the OP. But I think most of what I said applies so will leave it as is though I am repeating what has been said :)</p>

<p>One way to try to figure out how the outlook looks for next year is to run the
numbers you will have next year (no college savings) through the EFC calculator. </p>

<p>To get a federal EFC of 18,000 with an income of 60K you must have some substantial assets other than the college savings. According to my calculations it would look something like 200,000 in savings, stocks etc for the parents and then the 14,000 in the child's name.</p>

<p>Then I reran the numbers without the 14,000 (the assumption that it will be gone next year) and it only reduced the EFC by 2K (16,000). If you hadn't maximized your roth, you could reduce your assets by another 10K, but it only reduces EFC by about 500. Assuming you can do this for 2007(before april 15),2008 and then 2009 before you file next years FASFA the best I can forsee is an EFC of 14,500. </p>

<p>Of course I based this on a bunch of assumptions, and you could have other options to spend down your assets.... If it's a FASFA only school, consider paying down your mortgage. It won't help for this year but would for next</p>

<p>BTW you really did get a nice package - Did you compare the costs to a state school yet?? Many state schools don't have the endowments to give much.</p>

<p>Oh no, I just cross-posted with everyone also.</p>

<p>I think 100% of the money under student's name is fair game for school and only 5% of parents' money is used for consideration. </p>

<p>Well, how much is the difference between State U and "dream" school? With your high EFC, you probably will not get much from state U. Put a "love" sign in front of the difference and send your kid to the "dream" school. Afterall, how many times you could make your child's "dream" come true? </p>

<p>Seriously, the dream school is pretty good in terms of meeting the need. As long as you can show need, you should be fine. People have car loans bigger than 20K.</p>

<p>WOw more cross posting This thread is hot right now.</p>

<p>Dad II - they are looking at loans of @ 67K. That is a lot. </p>

<p>If the EFC goes down - well - More need that is met with more loans = more debt.</p>

<p>SCM, you are right about 67K is a lot. I was under the assumption that the increased need will be met by grant money. </p>

<p>Some school, i.e. Duke, has promised to keep the loan amount the same in all 4 years.</p>

<p>"thricedotted, is your child finishing up their first year or are you in the "should they go to this school, how will we/they pay for it" stage?"</p>

<p>I am the child, and the situation is the latter.</p>

<p>For the record, my own family is looking at $100k of loans for an even more expensive school. So it goes...</p>

<p>"I think 100% of the money under student's name is fair game for school and only 5% of parents' money is used for consideration."</p>

<p>I thought it was 30%...?</p>

<p>That is a great promise from Duke DadII - helps a lot in the decision making to know exactly where you are. Unfortunately I don't think it is the norm for all schools. The OP should check with her school.</p>

<p>thrice - For FAFSA it is 5.6% of parent assets and 20% of student assets (it used to be 35% of student assets up till a couple of years ago).</p>