Loans for Son or Pay As We Go

<p>I have two sons. My older son is a sophomore in college who is an interest in entering the medical field. My wife and I plan to pay for our sons' undergraduate educations...after that they are on their own. We do not qualify for need-based aid and are paying through savings, income and a home equity loan. </p>

<p>My older son should be able to apply for graduate school with no existing loans or debts to his name. I'm wondering whether this debt-free status will actually hurt his chances of obtaining financial aid at the graduate level...or at least hurt his chances of obtaining grants and scholarships as opposed to loans. We did not apply for unsubsidized Stafford loans but he should be able to obtain these loans for his junior and senior years ($7,500 per year). For us, there are benefits to a home-equity loan versus a Stafford loan (lower rate and deductibility). If, however, his chances of getting grants or scholarships for graduate school will be increased, we can have my son take-out Stafford loans in his name which my wife and I repay at some time after he is in graduate school. So my question is: are graduate schools more likely to give grants and scholarships to a student who has existing debts than to one who is debt-free? Thanks for any advice provided.</p>

<p>Your son’s debts or lack of same will not even be KNOWN to the med schools or grad schools. I can’t imagine it would have an impact at all. One thing you parents should be aware of is that some medical schools DO require the parental information of the FAFSA even though technically the student in med school would be considered independent.</p>

<p>Thumper, thanks for the response but I was probably unclear in my question. Assuming that one day he is accepted into a med school and then applies for financial aid, he will fill-out a financial aid application disclosing his financial status. At that point, his debts will be known to that specific school. My question is whether pre-existing student loans will affect what kind of financial package he is offered (grants versus loans). If a student has existing loans, may the school try to balance that out with some grants or do med schools today only offer loans. The answer may be that there it makes no difference and schools give the same financial package to a student with $20,000 in loans as to one with no loans. I’m just trying to figure out if it matters or not.</p>

<p>

</p>

<p>My son just finished grad school. When he completed his financial aid form (FAFSA only for his school) there was NO MENTION of previous debt. There is no place on the FAFSA for that information. I’m not sure where you think this information would be put. But it’s not on the FAFSA.</p>

<p>If your son applies for loans in his name, (not the Staffords but other loans) he would likely need to put other debt on his loan application. BUT you say he will have NO DEBT. If that is the case, this will work in his FAVOR…not against him as he would have no other debt and would be a better loan “risk” than someone who is knee deep in loans already.</p>

<p>I honestly do NOT see how him having or not having a loan balance would have any affect on scholarships or grants in professional school. Most of these grants are given based on MERIT not need. The school might award him a grant/scholarship if he meets a certain threshold of merit entering their program…nothing at all to do with previous debt.</p>

<p>Might I recommend that both sons take out a small amount of Stafford Loans…which you can make the payments on, if you so choose. While it has no bearing on grad school FA, it will help them to establish good credit for their adult years.</p>

<p>Thanks for the replies. I have never filled-out a FAFSA application. After my son was accepted in college, I went through several internet-based calculators and they made it clear that my family would not qualify for any need-based aid. In asking my question, I forgot what criteria was used on FAFSA…only remembering that I did not meet it. Well, it will save me time and dollars if I just continue as I’m doing. Though Nikkill, your idea regarding taking out a Stafford loan to help establish his credit is sound advice and I will definitely consider this.</p>