<p>It’s the other way around
Subsidized Stafford = interest doesn’t accrue until 6 months after student leaves school
Unsubsidized Stafford = interest accrues even while in school</p>
<p>The total amount of subsidized Stafford available for qualifying students for four years is $19,000. $3500 Freshman Year, $4500 Sophmore Year, and $5500 both Junior and Senior Year. More is available as unsubsidized loan.</p>
<p>My son (a college senior) qualified for the full amount of subsidized loan each year and borrowed the full amount freshman and sophmore year. In his junior year we felt he didn’t need to borrow the full amount just because it was offered and we requested a lesser amount (kept it to the $4500 amount that he borrowed sophmore year rather than the additional $1000 he could have borrowed just for having made it to junior year. I checked with the financial aid office and was told if we found that we needed that additional amount it would still be available. For his senior year we tried to get by without taking any of the loan amount. He is on a three term system and we realized towards the end of the second term that his expenses were more than we had anticipated but by the time he got his request in, it was into the third term and therefore only 1/3 of the yearly amount was available for him to borrow, not the whole $5500 that he had qualified for, for the year.</p>
<p>Four years ago, I was having my son look at the acceptances and financial aid offers as you would look at a car loan. And like Lucy in Post #5, I figured that’s exactly what he was doing. When he graduated he would have the equivalent of a car loan, a college degree, and most likely would only be able to afford a used junker for transportation. And four years ago that’s how I had my son compare his acceptances and financial offers as well - as if he were buying a new car - and looking at whether paying extra for the features of one vehicle over another was going to be worth the extra cost.</p>
<p>crzymom – it’s the other way around: a subsidized Stafford means the gov’t is paying interest while the student is in school. Unsubsidized means that the student can choose to pay interest in the loan while in school or let it accrue and that amount will be capitalized and become part of the principal when he/she graduates/goes into pay status (in either case, 60 days after graduation).</p>
<p>At our house, the loan limit is Staffords, but we kept S1 to the limits that were in effect the beginning of his senior year (limits were raised 7/1/08). That’s about $19k and is a reasonable amount of skin in the game without a crushing monthly payment. He pays the interest on his unsubsidized loan every quarter. The only way he would get out of Staffords would be if he had taken the full ride at the state flagship. I expect we will apply the same rule to S2, unless he chooses to take advantage (?) of the higher Stafford limits.</p>
<p>Of course each family’s situation is different, but I don’t think that taking 10K in loans/year is necessarily unreasonable for the student. If a combo of sub and unsub Staffords. If the student really wants to attend the more expensive school, then they would need to determine whether they are willing to take on this debt. No More than 10K per year, but a max of 10K per year is still OK when you consider they will have 10 years to pay it off after undergrad. It seems reasonable that even if they ended up working at McDonald’s they would be able to make the payments. </p>
<p>Now, if an expensive grad school is in the future- then I would rethink it and probably keep to the max sub stafford limit.</p>
<p>psych_, I can afford the lowest cost option on her list without loans. Would need loans to send her to her favorite. As an older-than-average parent with not much work time left to make up for the 401k losses, I’m not willing to take on the debt. </p>
<p>I’m not sure if that answers your question.</p>
<p>ChiSquare, I hear you. I think I also am an “older” parent. It seems to me once past 50 others and myself no longer think of retirement being a long ways off. Those under 50 seem to think that they have the time for a full recovery of the stock market. I wish I had the answer. On the one hand you can’t always put a dollar sign on the dreams of your child. He is my youngest so there are no more vying for my resources. On the other hand am I setting myself up for trouble in retirement? Wish there was an easy answer. I have some savings that could be used–money that was not in the stock market. I won’t take on loans, but still expect my son to, because his dream school is so much beyond what was paid for his siblings.</p>
<p>Y’all are right (of course). I got subsidized and unsubsidized mixed up as I was running out of the house this am. Thanx for the correction. So, my d’s fa award arrived and is sitting there; I don’t want to open it without her and I’d dying!</p>
<p>ChiSquare, are you talking about loans separate from and addition to what your daughter would take out, or would she “make up the difference” and shoulder all of the loans?</p>
<p>She would have to take on the entire loan debt to “upgrade” to her top choice. I had previously been imagining that that might be 5k/year. I had not anticipated the huge disparity between top and bottom schools - silly me.</p>
<p>Now that I know how big that gap is, I no longer think it is a workable plan to have her shoulder that much debt. So I guess the top choice schools are out of the picture.</p>
<p>I just worked out a spreadsheet for S showing the cost of his “dream” school that we would pay for (as with others here, that’s the cost of his other private school option with merit aid) with another column to include HIS Stafford loans and there is still a gap that we’re unwilling to pay or cosign for. If he can negotiate with the school, GREAT!</p>
<p>In my mind, we’re still paying a lot of money, and to add $20,000 in his loans if he chooses is plenty.</p>
<p>$10k/year is beyond my comfort zone unless the school is MIT or the like and (ideally) the student is going to have a highly marketable degree like engineering or computer science. This is the one area where I think students should think hard about the prestige of a college and how its average young graduates are treated in the workplace. Colleges that change lives are great if you can afford them, but I would not want my kid coming out of Hope College with an English degree and $40k+ in debt. No way.</p>
<p>I’m with most everyone on this thread. S accepted to four schools, waiting for F/A from a couple. All have offered good packages so far, but only one with no loans. Surprisingly it was not the state school he applied to. It is however across the country. we’re going to sit down and do the pros/cons together. I’d like him to graduate without debt, since I think he wants to go to grad school, but if he prefers to have a “car payment” at graduation that’s up to him.</p>
<p>Here’s where I’m confused, S was offered scholarships and financial aid letters at all schools he applied to. I think we have it narrowed down to 3, but all the schools even including one of the state schools in the FA award letter shows us (the parents) having to take out a loan to make the full tuition. This is where I’m confused. We’ve been told if we get denied then he can get additional loans, but we don’t want to HAVE to apply because I’m sure we wouldn’t get denied. What to do? That is our dilemma.</p>
<p>Interesting thread … I’m up nights thinking of exactly the same thing (as are many of us!).</p>
<p>Re Hanna’s comment: “$10k/year is beyond my comfort zone unless the school is MIT or the like and (ideally) the student is going to have a highly marketable degree like engineering or computer science.”</p>
<p>My son wants to major in comp science (hopefully lucrative after just 4 years) & a school he got into is ranked in top 10 in that major (UT Austin). However, they are asking us to take loans of $35k a year! With savings/$ from my current working, we might get it down to $20k a year in loans, but that still seems like I’m way off the chart in the ‘acceptable borrowing range’ here. </p>
<p>But thinking that the advantages of a higher-ranked school in a comp sci field might be worth it (echoing Hanna’s comment) … wonder if anyone else is doing a similar calculation for a kid in a similar type of major/situation?</p>
<p>I take it that you are out of state for UT? It’s a good school to be sure, but not worth, $80k+ in debt, imo. What are the FA situations with the other schools to which he was admitted?</p>
<p>Thanks, psych_ – yes, we are out of state for UT. His other top preference is U of AL – has near-free-ride (probabaly cost $3k a year or so, cheaper than community college). He loves the campus & environment, but it’s not in the same league as UT for his major (in coursework or internship/recruiting opportunities).</p>
<p>If her were an Eng/Hist major or a pre-med/pre-law major (i.e. not necessarily in a lucrative career for a while or very likely going to grad school & incurring more debt) – it wouldn’t be an issue (would go to cheaper school).</p>
<p>But–since he might be making decent $ after 4 years & his 4 yr degree could be all he’ll have to launch into the career-world – thinking harder about the costlier/more prestigious option. </p>
<p>At his previous job, my dad (an engineer) was involved in hiring process for new engineers. He said what mattered was a) GPA (for making the HR cut) and b) internship experience (and, of course, “soft factors”) and that school attended didn’t really factor in. Of course, this was one company in one field, so take that with a grain of salt, but from what I’ve seen “pedigree” seems to matter less in techie fields (and UA still isn’t a bad pedigree by any means!).</p>
<p>psych that is what I love about engineering. Less focus on that elite tag and more on what you bring to the table. Stay over a 3.0 GPA, find good internships and off you go.</p>