<p>D has a friend staying overnight who is trying to make her final college choice. She is down to two LACs. One about $10K less than the other to start with, and the cheaper one gave her a bit more merit aid.</p>
<p>Her family did NOT apply for need based aid, they figured they would not get any. But her parents are only willing to pay a little over $20K per year for college. They figure it is good for their kid to have "skin in the game", and she will have to figure out the rest. My D happens to have applied to these same schools, and I know she got merit aid quite similar to my D's. She plans on a humanities based major, but not the "least employable" ones... she is also hard working, likable, and hustles. No plans for grad school, and I think she is the type of student who will probably get a job on graduation. She reminds me of my older D, who did pretty well in this situation when graduating last year.</p>
<p>So... this kid (and her parents) is either going to take out $85K in loans (more expensive school) or about $30K in loans (less expensive one). I assume they will have to take out private loans, as they did not apply for aid. One of her parents is pushing her toward the more expensive school because he thinks it is a better college. He is right on the academic side. I am not aware of any plans for the parents to help pay off the loans at graduation for her, am pretty sure they will not do that.</p>
<p>I don't want to interfere in their decision making process/etc. They have not asked my advice (key point here, I know!). But this is giving me the willies. I was looking out here to find a thread that explained why the federal loan program is better than private loans in terms of protections for the student. I know they may pay less interest, and there are some foregivness options for the federal loans. But I couldn't find a thread that summarized it, and it isn't in the FAQs that I could find. Does anyone know of a thread that gives this summary with the blow-by-blow benefits and downside of each type of loan?</p>
<p>I figure they could at least go back to the schools to see if it is too late to fill out FAFSA & CSS Profile for possible loan options (even if unsubsidized). Or confirm if they could apply next year if they didn't this year.</p>
<p>It seems obvious this kid should (1) pick the cheaper school, and (2) apply for aid this year if possible and going forward, just to get better terms on her loans if possible. She is D's best friend. I hate to see her get into this situation...</p>
<p>I know there are threads with more info, but don’t know where.</p>
<p>Regarding FAFSA - you can fill it out anytime - and this makes you automatically eligible for the Stafford Loans. She should at least do that. Are they FAFSA or CSS Profile schools? </p>
<p>Of course the less expensive one is the better choice - especially if her parents aren’t paying anything.</p>
<p>It is never too late to apply for federal loans - this can even be done during the school year. And all they’d need to do is complete the FAFSA. Profile wouldn’t be necessary.</p>
<p>As for a good explanation of the different federal loans, I’ll leave that to someone else to find for you.</p>
<p>This kid’s parents are idiots, though. They want her to have “skin in the game,” but they’ve prevented her from applying for the only loans available that wouldn’t require them to cosign. So, sure, she’ll have “skin in the game” . . . it’ll just be their skin!</p>
<p>Ah, after they woke up this morning I talked to her some more. Her dad had told me a while ago that they weren’t applying for aid (and I had mentioned the loan point to him). Apparently he decided they SHOULD have done the CSS Profile & FAFSA, and they did it at that time. So apparently she does have some options for Staffords, PLUS loans, etc. But still… the loan differential is huge (85K total vs 30K total).</p>
<p>I mentioned to her this morning that a rule of thumb often used is taking out loans that are about 50% of your expected first year salary out of college. I told her what my older D with a similar major made in her first year, so half of that is X. Even her cheaper option has more loans that that, but something to consider. Also gave her an estimate of the monthly difference in payments over 20 years. She was listening.</p>
<p>She went home a little while ago. D2 told me after she left that the reason D2 had suggested the sleepover was hoping I could help her friend think through her options and understand some of the implications (um… D2 might have mentioned this ahead of time!). I was trying not to step over the line in advising her. D2 said she thought I had handled it fine, and her friend was definitely interested in the advice. I guess we will know in a couple of days what she decides.</p>
<p>From what you’ve written it looks like you may have provided some invaluable advice. Well done.</p>
<p>Mmm… a big problem is that the less expensive school is not as strong in her intended major as the more expensive one. But I don’t think the more expensive one is better to the tune of a $50K cost difference. They may feel otherwise… But I feel better having at least talked with her.</p>