<p>So way back earlier in July I posted a thread asking how viable private student loans were, and I now know that frankly, with the state of the economy they're a huge risk and an unwise choice. After much talking with the parents, I did find out that they'd be willing and able to contribute 25k a year, since my top choice is Vanderbilt and they guarantee to meet all of your need. However, our EFC came out to be $30,000 on College Board's IM calculator, which I've heard is a pretty good approximation for what Vandy and other private schools would calculate. Since they have around 160k saved in mutual funds and such (Franklin Templeton is the specific name), would they be able to draw from these funds and contribute some to paying? Seems like it would be better than using solely earned money from their salary. Also, is it a good idea to get a Stafford unsubsidized loan to cover the gap between what they can pay and what the EFC is at? PS: This is assuming that I don't get any merit aid from Vanderbilt. I know there's always the chance of that, but I want to make sure that I have a viable plan in case I don't.</p>
<p>Merit aid would just get applied to your need…it wouldn’t go towards EFC.</p>
<p>Your family can use mutual funds to pay if they want. It’s their choice.</p>
<p>Yes…you might be able to take out an unsub loan if your EFC from Vandy is a little short. However, that’s only if Vandy doesn’t put one in your FA package. I don’t think Vandy does, but schools sometimes change policies. </p>
<p>Other schools do put loans in FA packages.</p>
<p>Did you include those mutual funds in the FA calculator? It would seem like your EFC would be higher if your parents have a good income, can pay $25k per year…and have $150k in mutual funds.</p>
<p>Did you include home equity as well?</p>
<p>We recently refinanced so we have zilch home equity. And I included the mutual funds in there as well, and it came out that way. In case your wondering, the combined salary of both my parents is 130k per year. I mean I hope I’m calculating the home equity right, but basically we paid $160,000 for the house, but its worth $280,000 now according to a recent assessment value. However, the refinance loan we got a couple months ago is for $174,000. On the calculator it says not to put assessed value though, plus I don’t think we technically have any equity anymore because of that refinance. Am I right?</p>
<p>If your home would sell for $280k and you have a loan for $170k, then you have about $100k in equity.</p>
<p>You use the value that the house would sell for…NOT the value that you PAID for the house. Then subtract mortgage, etc.</p>
<p>If someone pays about $100k for a house, but now it would sell for a million, and they only have $75k mortgage, they would have over $900k in equity.</p>
<p>Anyway…be sure to have some financial safeties that you’re certain to have all costs paid for just in case Vandy figures a higher family contribution.</p>
<p>So, does this mean that the refinance has taken into account the amount that my parents have already paid off on the loan when it gave them a $174,000 loan to pay off? They’ve owned the house for 12 years before they refinanced and have paid the mortgage without a missed payment. Regardless, I have in-state options like Virginia Tech which have a good reputation along with affordability. Plus, even UVa wouldn’t be too bad with cost I suppose</p>
<p>Ipepper, you have some great affordable choices, so you can go to town with your reaches and see how they pan out admissions wise and with their aid packages.</p>
<p>It doesn’t matter that they’ve paid on the house for 12 years w/o missing a payment…that’s what we all do. </p>
<p>If your tax assessment is $280k, then it’s likely it will sell for more than that. You take the amount it would sell for…then subtract the mortgage…that’s your equity.</p>
<p>If your parents refinanced, that means the new mortgage completely replaced the old one, which is no longer relevant Their equity is the current market value of the house (the Zillow website is one way to determine this very roughly; a real estate agent could give you a better number) minus the outstanding balance on all mortgages, including a home equity line, (a kind of second mortgage), if they have one. To put it simply, if they sold the house today and paid off the mortgage(s) with the money they received, how much would they have left? That’s home equity.</p>
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<p>Unless you know what state the house is in, and more specifically what community the house is in, and then have current assessment and sales data for the community, you have absolutely no way to justify saying that.</p>
<p>In Illinois, for example, assessments lag the market (because by law, assessments are based on four-year averages of comparable sales). In a time of falling home prices, most Illinoisans would be overjoyed to be able to sell their houses for the amount on which they’re being taxed. In some communities, actual current sales data shows the average price to be around 2/3 of the assessed value.</p>
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<p>Is this a pretax tax sheltered annuity with funds invested in Templeton? If so, any withdrawal would be added in as INCOME AND your parents would have to pay taxes on it.</p>
<p>They need to contact their financial planner (whomever helps them with their Templeton investments…if anyone) or check the Templeton website. Sometimes folks can borrow against these accounts for college expenses. BUT there usually are stringent provisions for repayment to these accounts. They need to check THEIR accounts to see what is permitted and what is required.</p>
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<p>you (the student) will be eligible for up to $5500 in Stafford loans in your name. Many students take these loans to help fund their college costs.</p>
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Also, is it a good idea to get a Stafford unsubsidized loan to cover the gap between what they can pay and what the EFC is at?</p>
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you (the student) will be eligible for up to $5500 in Stafford loans in your name. Many students take these loans to help fund their college costs. *</p>
<p>Yes…but only as long as there aren’t already full Stafford loans in your FA package. I don’t think Vandy puts loans in FA packages …but I don’t know if there’s an income limit or a possible FA change in the future. </p>
<p>But for another school, you may have a family contribution of $30k, and a need of $20k. The school may meet that need with $5500 in student loans. That means that if your parents will only pay $25,000, then you can’t take out a $5000 student loan to meet your family contribution.</p>