Loan questions, I'm feeling confused, please help

Parents Forum
1

I came here hoping to get answers and I have gotten a lot by reading, however the loan borrowing is still baffling me for some reason. I’m reading discussions, articles and anything else I can get my hand on and seem to be seeing differing answers.
Any help would be appreciated.

My daughter is a junior right now and does not have any extra circulars. Please trust me, she has none as of right now, she studies and reads, that’s it. My point is, I’m expecting that to be a problem as far as getting aid from schools. She has 3.9 gpa and doesn’t have her ACT scores back yet, her practice ones were 29 and 30. If all goes well, she will graduate with 4 AP classes and two classes at local colleges (don’t know if this has the same name everywhere, here it is called Youth Options)
She hopes to get 100 hours of community service over the summer, but in reading it looks like colleges will consider that to be a last ditch effort and might not help her.

So here is my question,

Are there any loans that we (her parents) or she can get every year that we would not owe payment on until she graduates?
I ask this because I keep reading there is a limit to Stafford loans for the student and I have read that the Parents Plus loans starts right after you sign for it. But have also seen the opposite for the Parents Plus loan.

Thank you

2

Please be wary of taking on too many loans. There is a limit to what students can borrow. I can’t really speak to Parents Plus Loans, but run the numbers carefully. Unless you expect a change in living circumstances, it may be just as hard to find the extra dollars to pay back the loans after she graduates as it is to fund tuition now.

Need-based aid would depend only on your income/assets not on her ECs (although admission to the college would). There are many good colleges, including many large state universities, that are numbers driven and really don’t look too much at ECs. Did she do anything outside of class, even if it wasn’t an official EC (babysitting, other job, music lessons, non-school sport, art class?).

There are many schools and with her grades and ACT scores, she may well find a place you can afford without major loans. Good luck.

3

Yes, we are aware of not borrowing too much. We want to help her a little and were hoping to save from now until graduation to help her out at that time. But right now we don’t have a “chunk” of money, so it would be all loans.

I also understand that need based is based on our efc after filling out fafsa, that’s is sort of my point. I believe we will make too much to get need based aid, but not sure what she could get otherwise without ec’s.

Like I said, she has no ec’s, I’m positive about that.
Thank you

Anyone else know about the Parents Plus loan?

4

The lack of EC’s may be a problem for some schools for admissions and competitiveness. It will vary greatly depending on the type of schools you are looking at. Many schools will be quite happy with her GPA, class rigor and test scores and not care about the rest. It really depends. Some schools offer merit aid based on stats alone whereas others will look holistically. She will have plenty of options despite the lack of EC’s, they may just not be tippy top ivy super competitive options but she has options.

Have you put together a list of target schools, figured out what you can really afford to spend? Run some net price calculators at the target schools and see what they say. I would do that first before worrying about loans. With her stats, if you shop and research (check out the links for schools with good merit aid, really look at your state school options, consider private catholic schools that are known for being generous, etc) you should be able to find some nice matches.

Stafford loans, either subsidized or unsubsidized are limited in the total amount and it varies by year.

For Stafford loans, each year, dependent undergraduate students can borrow up to:

$5,500 for first-year students enrolled in a program of study that is at least one full academic year. Only $3,500 of that can be subsidized loans.
$6,500 if you’ve completed your first year of study and the remainder of your program is at least one full academic year. Only $4,500 of that can be subsidized loans.
$7,500 if you’ve completed at least two years of study and the remainder of your program is at least one full academic year. Only $5,500 of that can be subsidized loans.

Total possible is 31K, (no more than 23K subsidized)

The student is responsible for all interest that accumulates while they are in school, in deferment, and during the grace period. Students can take out both subsidized and unsubsidized loans as long as they do not exceed Stafford yearly borrowing limits.

After the student graduates, leave school, or drop below half-time enrollment, they have a six-month grace period before they are required to begin repayment.

On the Parent Plus loans, you can request deferment until 6 months after graduation. However the interest starts immediately. As noted by @mom2and I would be very very wary and careful of taking too many loans, either Stafford, or Plus or both.

Basically a Direct PLUS Loan enters repayment once your loan is fully disbursed (paid out).

If you are a parent borrower, contact your loan servicer to request deferment:

  • while you or your child are enrolled at least half-time and
  • for an additional six months after your child is no longer enrolled at least half-time. Interest still accumulates during deferment. You can pay off the interest during deferment. Your loan servicer will notify you when your first payment is due.
5

Each college provides information on a Common Data set. You can look at each school you’re interested by typing the school name and Common Data set in the search bar. This will tell you what each school considers in admissions. Some consider ECs with others it’s not so important. As a general rule the more selective the school the more things beyond GPA (transcripts) and test scores matter.

You are right the limits to the Stafford loans are $5500 yr 1, $6500 yr 2, $7500 yr 3 and 4. Do you know what you will be able to contribute to your child’s education? You can get a pretty good estimate of your Expected Family Contribution online. One advantage you have this year is that they will be using 2015 taxes to determine 2017/18 your EFC. Remember that it a figure used by the government to determine your eligibility for federal grants and subsidized loans. It really says little about how much you should expect to pay though the lower the number the better for you. Once you have ACT scores (take the SAT if you’re not happy with them some students do better. I’m not sure how the new SAT will affect that statement) you can look at schools where she would be in the top 25% and top 10%. The higher the more likelihood for merit aid. The more selective the school the less likely she will be eligible for merit aid and the more likely the school will primarily give need based aid.

Once you have your test scores, EFC, and know what you can contribute you start to hone your college list. She’ll need safeties (at least 1), matches and reaches are good but optional. A school can be an admissions safety but a financial reach or really a variety of combinations. Start running the schools by the people here on this website but stay away from the “Chance me” forum. Apply to any college you want to get merit aid from early, preferably by November 1. Shy away from applying ED unless you feel confident you will be able to afford the school.

Good luck. Share as much info as you are comfortable sharing. The people on this site can be helpful, direct and sometimes painfully honest. Remember to due your own due diligence because the information is only good if you can confirm it.

6

What is your home state? Public universities, especially the non-flagship, often care less about extracurriculars than top ranked private schools or top public flaghips. Her GPA is very good. If she can raise her ACT up to 32, there would be many options where she would be an auto admit with full tuition covered, sometimes more. Has she tried the SAT?

Some focused test prep could yield large benefits and reduce the need for loans.

Check these out:

http://automaticfulltuition.yolasite.com/

http://competitivefulltuition.yolasite.com/

7

People on this board are very knowledgeable about where to apply if you post preferences ( major, big, small, rural, city, part of the country, price you can afford, etc) and what schools give big merit. (Unfortunately, I am not personally that knowledgeable but plenty of people here are).

So, before you go thinking about lots of loans, I’d suggest posting as much info as possible and you’ll get plenty of recommendations.

And as already mentioned, not all schools are concerned with ECs.

8

Wow, ok thanks for the info, I will see what I can answer here…
We really don’t want to take on too much loan, my husband and I had a large home equity loan once and swore we would never do it again. We currently have a very small one for emergencies, a nest egg in savings, and of course 401k and that sort of thing. We only have one car loan at at time (that’s our rule) and a mortgage. However we do NOT want to touch any of the above for college. We have always felt that our kids would pay for their own college, but the prices did grow leaps and bounds since we were younger (I didn’t go to college and my husband got a degree at a two year college) so I think we are a little surprised at the costs and now want to help, at least a little. But like I said, we don’t have a large chunk of money right now, we would need to save over the next few years. I am sure as time goes on we will be very careful about the decisions we make. Thanks for the advice.
As for specific questions, we live in Wisconsin, I don’t know that our closest UW school is all that great so I’m hesitant to make her go there, but I could be wrong, any thoughts on UW Parkside?

My daughter really wants to go to Florida, warmth is her goal, I don’t blame her, but trust me, we are working on the “stay hone for your first year or two”
Her concern with that is, we don’t don’t know how often credits wouldn’t transfer, she doesn’t want to go close to home, only to find out credits can’t go with her when she moves. I have no clue if this is a valid concern or not.

@eandesmom Just to clarify, if we do get a Parents Plus loan, I understand the interest accrues right away, but after graduation, it’s not all due in one lump sum, correct? That is when payments start, right? Also do you just ask them for deferment or does there need to be a special reason? I don’t want to get the loan (even if it’s a small one, only to find out we can’t defer it til after graduation)

@lvvcsf I don’t know what you mean by Common Data, is there a website you plug this information into?
I think I read fafsa will allow you to fill it out as early as Oct 1st this year, should she apply that early also?
I’m not sure if you can send in fafsa without sending your app into the college, I’m unsure of how that’s all linked together. So in other words, I’m told fafsa should be done ASAP during the allowed time, but what if you don’t have all the apps in yet? And CAN you apply to colleges that early?

@mamaedefamilia Thank you for the links.

Otherwise she doesn’t have it all together yet as to what she wants. Florida is the goal possibly a degree in psychology, but I’m stretching it by saying that right now. She would like to go to college in the city and would like it to be walkable or with close safe transportation. She will not have a car any time soon and I know sometimes you can’t your first year anyway. She is very quiet and not outgoing. I don’t think a large school would scare her, but she really is still not interested in clubs and extra curriculars even in college.

9

There’s a thread about schools offering good merit money, usually for stats.
And have you been running the Net Price Calculators on the college’s web sites? That’s a college’s own look at your picture.

The EFC you get online (eg, the Fafsa Forecaster,) is a starter only. Eg, if your EFC is 25k and the school costs 65k, do not assume you’d get 40k. They run your details through their own formulas (hence, why the NPC is a better idea of what aid you may get.)

Also, not all schools have the funding or the policy to be generous, at all. So you look for schools that can be (and the best of them will want ECs.) Or the schools offering merit aid for stats.

As for loans, the Parent Plus is separate from student loans. This is a long thread and some of it I didn’t agree with, but check it http://talk.collegeconfidential.com/parents-forum/1498510-read-this-before-you-take-out-a-parent-plus-loan.html#latest. You’ll see a very recent post from a parent who has 48k PP loan and $600 due monthly, for the next ten years.

The terms of the PP loan let you defer payments. Otherwise, the first loan (for first semester freshman costs) starts due the following spring. This allows you to get started paying a small amount, starting that ten year clock. A few months after the 2nd semester funds are disbursed to the college, that addl payment amount clicks in. and so it goes. There’s a process to defer, but why not get started?

Run the NPCs. Look for generous merit.

10

To get a school’s Common Data Set you Google “Name of School Common Data Set”. It’s a uniform report. Section C “First Time First Year Students” will show the criteria the typical admitted student meets. There will be a check list with things like race, geographical location, volunteer work, SAT scores and GPA. The individual schools will check off whether they think these things are very important, important, considered, not considered. You can also use the tool on this site, “College Match.” My son got into every school on the match that he applied to, so I feel it’s pretty darned accurate.

Your daughter has good grades and a good ACT score that will likely rise. You should definitely look at the “automatic full tuition” list and investigate some of the schools. You should stay on here and ask questions. You should be discussing the importance of financial aid with your daughter so she can adjust her expectations, if needed. I feel this site has helped us a lot.

Instead of volunteer work this summer why not have her get a job? Places are hiring now. My son banked everything he’s earned in summers between 8th and 12th grade and he will pay for his own books in college. He will probably also work about ten hours a week in school.

11

@lookingforward I did go to the fafsa4caster site and got a number that we can not do at all. There is no way we can make payments on a college loan as early as next year. Which is why I’m asking about deferment. Trust me, we will have rules for my daughter, we will not co-sign on something we can’t afford. We realize she will not be going to a $40,000 school. I’m just concerned about our local college and trying to figure out if we can do something for her. I will look into the NPC’s thank you.
My daughter hasn’t narrowed anything down yet because we are waiting for her scores to come in. But what totals do the NPC’s give? Do they actually tell you what if any merit aid you might get?

12

@momof2inwi In case you don’t know, merit scholarships and other opportunities typically are for incoming freshmen. If your child goes to CC for two years and then transfers, she might not be eligible for lucrative awards.

If she wants Florida, she would do better to look at some of the smaller private schools that are known for generous merit scholarships than the state schools.

Get a copy of the book Colleges That Change Lives - there are many good suggestions for schools in the south - for example NC and GA also have nice schools in this category.

If she’s willing to consider an all female college, scholarship opportunities are often good there as well.

UW-Madison is supposed to increasing its merit scholarships starting next year.

Do you know if you will qualify for financial aid? Go to the websites for a couple of schools that interest you. Look for the net price calculator. Plug in your numbers. See what it says.

You can learn more about the EFC, how to calculate it, and what it means here:

https://studentaid.ed.gov/sa/resources#information-on-getting

I believe the College Board also has a EFC calculator on its website.

Takeaway point - you may do better at private schools than public universities out of state. Run the numbers, investigate the possibility of merit money, and take it from there.

13

A 3.9 gpa and ACT of 29/30 is going to have a lot of options for acceptance, and some for merit too, if she applies to them. An ACT of 32 would really open things up, like warm sunny U Alabama with free tuition, for instance!

Run some net price calculators on schools she is interested in now, and then again once you have the ACT score.

I think plenty of studious reader kids go to college with merit money :slight_smile:

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It’s called the Common Data Set

An Example

https://www.google.com/url?sa=t&source=web&cd=1&ved=0ahUKEwjZwpOy5NfLAhWMloMKHcY-D40QFggKMAA&url=http%3A%2F%2Foaa.osu.edu%2Firp%2Firosu_cds.php&usg=AFQjCNGSSSuw8YenY_ztvmsk6xT4s2Ym2Q

If you go to section C it will give you a good bit of information concerning admitted students and statistics.

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I too am a mom in Wisconsin of a child who wanted to be warm. D1 attended college in California, which we were able to afford because of the combination of merit and need-based aid she received from a small private university in the greater LA area. If you’d like your daughter to stay in Wisconsin for college, I suggest looking at some of the other UW System universities. Each has strengths in certain majors. They will certainly cost less than private colleges and universities and some even offer merit aid. Look at Whitewater and Eau Claire, for example.

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I echo the recommendation that your daughter practice the ACT (just take a section test or two a week) until she scores around 33 fairly consistently. If she can get a score of 32 or higher, she will have several options. Right now, if she is into small LACs, she may want to consider New College of Florida - they automatically grant $15,000 a year scholarship to OOS students regardless of test score. (bringing the cost for freshman year from $43,000 to $28,000) If she scores 29 or 30, she should be accepted. I’m not saying this is the perfect school (it’s still not inexpensive). NCF is merely an example to illustrate that she may have options outside the local university, and maybe even in Florida. Don’t limit her to being close to home. Check out private colleges, such as Lawrence University in Appleton, WI.

Run the Net Price Calculator for every single school. (have you run them yet for any school?) You may find that your daughter does qualify for merit aid and your income may qualify for need-based aid.

Does your daughter have any hobbies? Interests? What does she read? Again, think broadly. My daughter only participated in one school-based EC but she had other interests and activities. She didn’t have much but taken together, she presented as a pretty interesting person. Other students have part-time jobs, which count as an EC. Other students may have large families and need to care for relatives, either very young or very old. What colleges really want to know is what the student is like outside the classroom.

17

Have you used any of the net price calculators to at least get a feel for whether you’d qualify for any need based aid or not?

You can find them on all college websites or several others are out there. You can get a fairly accurate feel for what the schools will think you can contribute. You, not your daughter. You need to do this to know where you and she stand. This is a sample one, there are tons. Each school will have one that factors in their costs so you can see what they think you should pay, what they might offer (and some calculate merit stat awards in their basic calcuator) and tells you the difference you have to come up with. This one is general and just shows your base contribution.

https://www.aidcalc.com/EFC.aspx

See what that comes back and and think really hard about what you can contribute yearly. It will spit out a number that likely doesn’t match anything you have in mind but it will be the number schools look at when the consider making offers as to what they see the needed difference (if any) as being.

If she doesn’t know what she wants to do, she should choose a school that has many options in areas of interest. A full ride somewhere is pretty useless if it isn’t the program you want.

The reality is, if you expect her to pay for her own college, or the bulk of it, 2 years at an in state community college while living at home, followed by 2 years at an in state 4 year school is going to be the most financially responsible choice unless she is awarded merit scholarships that make up the difference elsewhere. She will be unable to get all the loans needed on her own unless she is offered merit monies or need based aid. However, as stated, going to CC for a couple of years first only makes sense if she doesn’t get a better freshman offer elsewhere. With her stats if you do your homework and cast a wide net, she should be able to.

This gives you a ton of data about your state school system
https://www.wisconsin.edu/download/publications(2)/Fact-Book.pdf

If you look at all your state schools (and I’d look at Minnesota too as they have some kind of reciprocal arrangement on tuition) you can look under scholarships to see what she might be eligible for based on her stats. Each school will have different options but the public schools are relatively transparent on what is available and in most cases the student is automatically considered at application. Since you are asking her to foot the bill I’d have her start looking too.

However, if she wants Florida, I’d start researching all of the private liberal arts schools there and try to figure out who might offer her money. All of your public schools in Florida are likely to be far out of your price range You can research what kind of money a florida state school might offer her as well but those are typcially quite competitive and I would think (not remotely being a florida expert mind you) that her chances for award offers are better at some of the private schools.

this is the thread a few have mentioned, bumping up her ACT would put her in the running for more.

http://talk.collegeconfidential.com/parents-forum/52133-schools-known-for-good-merit-aid.html#latest

Is she willing to take on the Stafford Loan or work now to save towards this, over the summer, during college? Those are big questions to answer. What can you start saving now to help out? Is her school counselor able to help her navigate any of this?

18

Have her volunteer or work at the library starting now. If she loves books, it shouldn’t be a huge imposition. And common app won’t care that she started in March, it’s still 11th grade.
If she loves books, she can start a book club for teens at the library. She can start a book club for elementary school kids, participate in Reading Hour for kindergartners… If she’s shy, she can start a blog about her favorite books.

Run the NPC on St Olaf, Beloit, Gettysburg, Dickinson - they meet need for 95% applicants and have merit, too.
Do the same with Guilford, Roanoke, Sweet Briar, Agnes Scott, Eckerd, New college of Florida, Rollins. Those offer packages depending on how much they want you :).
If they ask act, enter 30 since it’s likely your daughter will get +1 between her first test and application time.
At all colleges that seem "doable"financially, fill the Request information form so that they know you’re interested (interest ‘counts’, from their point of view there’s no point in offering scholarships to a student who’s not interested in coming.)
Scholarships are relative to the college so you’ll have to hunt for that info, College by college, reading this website and guidebooks.

I second the book “colleges that change lives”.
The best financial aid goes to freshmen applicant so she should NOT attend community college or a nearby university before transferring - she’d lose all her chances at scholarships.
Loans should be the last resort, after doing due diligence to find colleges she likes and are affordable. Fortunately there should be lots of them. :slight_smile:

19

On the Parent Plus loan - you can borrow each year for the following academic year. You can choose to defer pymts until 6 months after graduation - but interest does accrue. You will be making monthly pymts for 10 years after graduation. It is wise to pay the interest as you go so it is not added to the loan balance.

Borrow wisely. It is very easy to get a Parent Plus loan every year. Don’t get in over your head.

20

Try Flagler College in St. Augustine. Low tuition (about $16000) and merit aid offered. It is in downtown St. Augustine so no car necessary. It is, however, a very small town.