Looking for input/tips/tricks, etc. on how to fill the financial gap to Cost of Attendance. EFC (which says for many I believe, that they can afford much more than they really can)…if all gets pooled-parent $ kids $, college funds, family $ etc, merit, talent & outside scholarships (most of which you don’t know you get until well after 5/1), student loan of $5500…what if all of this does not add up to actual cost of attendance? How does the ‘gap’ get filled? Does the parent then take out the loan or the student, or is it cosigned? Which loans are better for education?
Looking for input, ideas, advice and some knowledge from those in the know or those that have ‘been there, done that’.
Thank you!!
Thanking the Lord every day that my son was accepted at Montclair and that he is definitely leaning that way. Hopefully can handle most of the cost and we hope that he doesn’t have to do student loans, but if he did, they would be minimal. Don’t want these future struggling actors having a $200K burden on their heads before they even get started.
@lithpool you may want to post this on the financial aid forum http://talk.qa.collegeconfidential.com/financial-aid-scholarships/
There is a federal loan called a Parent Plus, which is in the parents name. Private loans in the student’s name would need a co-signer.
The folks on the financial aid forum are very knowledgeable, and can go much more in detail.
@lithpool you can always appeal the FA package as well. all schools have a procedure for that and the worst they can say is no. It won’t be held against you or your child in any way. I did it and it was successful. I know others who have as well. To start, talk to the Admissions Counselor at the school your child ultimately chooses if you see that the FA package just won’t do.
Realistically the parent is on the hook for the gap. How big is the gap? Did you have a plan in place before now? A budget?
Seconding what @KatMT posted. Parents can take out Parent Plus loans. We did.
@soozievt - What is the interest rate on the Parent Plus loans and how long do you get to repay?
@onepercentmom This was a while ago and the interest rate could have changed, and I forget what it was and how long the repayment period was. I also paid all the student loans and so there were many different loans (two kids, two undergraduate degrees and two graduate schools) and I don’t have them all memorized. It would be pretty easy to look up Parent Plus loans and get the information.
PS, I just looked up the current rate for Parent Plus Loans…7.6% fixed.
Thank you for input!
Sorry, yes should’ve added that for the school or two at the top from a choice perspective, we plan on going back to them.
Yes, we have a budget, and a plan as much as we can anyway. The problem we’ve found is that you just don’t “know” what you’re going to get from a scholarship perspective, from most schools… it’s not black/white…
I just looked up the repayment period, @onepercentmom, for the Parent Plus Loans and they have more than one repayment plan. The standard plan (though not the only option) is ten years.
Interest rate on parent plus loans is almost 8% - wow!
The parent Plus loan is, I think, at 8.5% but it also has a 5% origination fee. You can start repaying immediately or ask for a deferment while your child is in school. I think the repayment can be up to 10 years, just like the student loans.
Private loans may have a lower interest rate, but the protections and terms will be different. You have to compare them and decide what is best for your family.
We have parent plus loans for both my kids…the interest rate is definitely higher than a private loan, and loan repayment is the parents’ responsibility not the student’s. So, if anything happens, you’re holding the bag.
You take out a new loan at a new interest rate every year. You have the option to just pay the interest while they are in school if you want.
You can defer the loan payment until 6 months post-graduation. It’s usually 10 year repayment plan, but you can extend that.
If you have a State Bank, check with them for private loans. It was cheaper for us to take private loans from the state bank than the federal unsubsidized student loans.
Thank you all!!
We got a HELOC with a rate of like 3-4% from our credit union. And can repay as we will. We found it to be the best way for us to fill the gap.
Not MT specific but my parents put 7 kids through college - we kids took out the loans we were allowed to, they had saved for college and the “gap” amounts came out of their home equity, especially for my education (I was the last). I am not recommending people go into debt but if you’re going to take out loans anyway mortgaging the house is a much cheaper option than parent plus.
@calmom but if you end up getting into financial trouble and can’t make the payment, the price is losing your house 