I’m a student at a very expensive college in Boston. I got a lot of grant money-currently, we’re paying 29,000 a year, and it’s projected to go down to about 21,000 next year. My parents are being very generous and paying the majority of my cost of attendance-however, my mom wants me to take out one large loan (about 21-22 thousand) to pay off senior year.
I explained to her that I should probably just take the student loans each year-the majority of mine are subsidized, and even the unsubsidized loan rates are significantly lower than the ones through our bank (4.66 vs. 8.99). If I take just the subsidized loans each semester and bank them, I’d have almost enough to pay senior year outright-I’d just have to take one unsubsidized loan.
However, my mom doesn’t understand that interest doesn’t collect until you graduate on subsidized loans-she says “why take it out when you don’t need it and rack up interest.”
If I take out 21,000 senior year at 8.99%, I’ll end up paying back around 31,000 over ten years. Is she right, or should I be explaining my plan a better way?
You don’t need her permission to take out the subsidized loans.
You cannot borrow $21000 senior year unless she cosign a private loan.
I would take the subsidized loans each semester AFTER the full balance is paid (to make sure you get the loan amount as a refund). (Then make sure the refund is direct deposited to your bank account and not mailed as a check to your home address).
Try explaining it again with numbers? If that fails do it anyway.
You can’t take out a $20k loan. Your mom would have to cosign, which means if you couldn’t pay, she’d have to do it. I don’t think PLUS loans are forgiven, so even if the student becomes disabled or dies, the cosigner is required to pay it back.
Banking borrowed Direct Loan funds does NOT count for FA. Neither would banking other FA monies. If you want, you can put it in a separate acct.
Your mom has to cosign for that large amount.
However, you don’t need your mom’s permission to NOW get that sub or unsub loan. Just walk into your school’s FA office and ask for it. You’ve already filled out FAFSA so you’re fine.
Is your mom foreign? There’s been a couple of posts from you about your mom that make her sound a little extreme…like threatening to kick you out if you went to a CC.
What if your mom could not qualify to cosign a loan for you senior year? What then? If she could not get a bank loan, at most you could borrow $7,500 plus an additional $5,000 if your mom got denied for plus loan. Not enough. Would you not be able to finish school then?
I think your plan is a good idea, taking out subsidized loans as they are available and saving that money.
Print out info that explains about subsidized loans and their terms. Also share with her your calculations.
You posted this a little less than a year ago. Has something changed? Aren’t you the nursing major who was at UMass…but wanted to transfer…but your parents weren’t particularly supportive of this transfer plan?
How many years more do you have? I believe you are currently a sophomore. You have a limit on subsidized loans…and the total for soph, junior and senior year combined will not be $20,000.
ok…you need to tell mom that you can ONLY borrow $7500 as a senior. If you need to borrow more, then SHE will have to cosign. If she won’t agree to that, then say that you will have to start borrowing now and banking it. Or don’t tell her that part, and just do it.
@mom2coIIegekids She’s not foreign, but I’m first gen-I think that’s why she’s so hell-bent that I go to a four year from the get-go. She eventually did come around for the transfer when I did really well at UMass and got accepted to Northeastern-which is a little more than UMass was last year, but very similar when you calculate in my loan amounts.
I don’t know if she’s trying to do the skin in the game thing by saying I have to take it all out senior year-obviously I don’t mind taking on loans, it’s more than fair considering the price of college and the fact that it’s my education, but it makes more fiscal sense for me to start banking FA funds now. The only reason I can think she’s trying to stop me is because either a) she doesn’t understand what I want to do/how the loans work (this isn’t me being disrespectful or rude-I’m first gen and no one else in our immediate family really discussed how the federal loans work) or b) she’s planning on somehow covering all of it.
I will explain to her that I can only take out 7500 as a senior next time I see her-when I talk to her over the phone about it, she gets annoyed with me! Thank you all for your help
Tell her there is no way for you to get more than 7500 Sr year. Not from the govt and not from private. No one will lend it to you. They will only lend it to your parents alone or as a cosigner. If you have room to take a sub loan now then do it. You only get that chance each year, then it is gone.
So you can borrow each year in your own name (sub + unsub):
fresh 5500 (3,500 sub)
soph 6500 (4,500 sub)
jr 7500 (5,500 sub)
sr 7500 (5,500 sub)
27,000 (you can borrow a 5th year to 7500 until you reach the cap of 32,000)
If you wait until Sr year then your eligibility is gone for the previous years. You can only just borrow
sr 7500 (5,500 sub)
If she plans on covering the loans once you successfully graduate, she can still do that. The subsidized loans should not accrue interest until 6 months after graduation.
Piggybacking off the discussion above. Can somebody provide a link to a definitive document that confirms that money borrowed as a Student loan and saved to pay college expenses in the following years will not count as asset on the next year FAFSA (and CSS Profile)?