Massive Amounts of Student Debt

Paying for College
1

<p>So I'm only a junior in HS, but I've been thinking ahead to financing my education. I think my stats are pretty solid and my family's not swimming in pools of money, but we're not poor either. As for the caliber of school I would like to attend, I am not particularly picky; while I wouldn't mind going to a private school I'd much rather go to a public school in-state to save my family $$. </p>

<p>I've been browsing this forum in particular and reading all of the warnings of those who advise to avoid loans as much as possible. I am just wondering, is it really all that bad to take out big loans to pay for college? The reason I ask is because I was talking about this with my parents the other day and they said they expect us to pay for college mostly on loans, which I think is crazy! Because if what all of you said is true, now I'm scared I will be screwed for life if I take on big loans.</p>

<p>My dad said that today, no one actually pays for college straight up; it's all in loans. But I'm not so sure anymore after reading what you all have to say.</p>

<p>Any insight/input would be greatly appreciated, because if my parents are wrong, I would like to notify them. Thank you.</p>

2

<p>Nobody here is speaking from facts, just generalizations. Yes, the majority of students do take out loans to finance their education. However, if you look at the numbers, there is no way you can take out enough “conventional” loans (Stafford/Perkins) to finance an education.</p>

<p>You all need to sit down with real data (COA for a variety of schools including your local bi-directional state U) run a FAFSA Calculator (and a CSS Profile calculator for those schools), look at the statistics for how much of need is met (this data can be found online believe it or not) and by what means (grant vs. loan) and look at what it actually costs for a variety of options. Remember, the data out there may or may not apply to your specific case, so a financial safety school is ncessary in your college planning and that may be your local bi-directional state U or even a community college.</p>

<p>However, you parents are probably typical in thinking that you should bear a piece of the burden by taking out loans. It gives you skin in the game so to speak and should align your priorities with doing a good job at school. Doesn’t always work that way as students have a way of acting irresponsibly. I’ve always wondered if this incentivized thinking actually influences behavior or whether responsible students behave repsonsibly (and vice-versa) regardless of incentives. </p>

<p>Regardless, take this opportunity to talk about the whole financial picture with your parents. Understand that they may not want to dicuss the whole picture with you. That doesn’t relieve you of the responsibility for the end results, however. You need to find out how much they can afford to front you for the education, learn how much grant/loan aid can be guaranteed to you at schools and find a financial safety school (first) where this will work. Remember to factor in things such as work-study in your equation.</p>

3

<p>My dad said that today, no one actually pays for college straight up; it’s all in loans. But I’m not so sure anymore after reading what you all have to say.</p>

<p>No offense to your dad, but he may want to believe that because he’s not prepared to help you much with your college costs. Many students take out fed loans, but those are small and do not cover much of college costs. Some parents take out Parent Plus loans to help cover costs, but they need to be responsible for payback, not the student. </p>

<p>The truth is that most people do not borrow all of their college costs - because young people can’t borrow much on their own. And, it’s not a good idea to get co-signers to borrow larger amounts because you won’t likely be earning enough once you graduate to afford to pay all that back. </p>

<p>Federal student loans are limited to $5500, 6500, 7500, and 7500 for a reason - because it is understood that people cannot afford to pay much more than that back once they graduate and are working. So, the most you can borrow for 4 years in fed student loans is about $30k total. </p>

<p>Obviously, those small amounts won’t cover your college costs - unless you commute to a very inexpensive state school. </p>

<p>So, if your family isn’t low income, then they are expected to contribute. </p>

<p>You need to ask how much your parents can contribute each year. If they can’t contribute much (even though their income is high enough that you don’t qualify for aid), then you need to strategize and apply to appropriate schools, such as…</p>

<p>1) state schools that you can commute to.</p>

<p>2) schools that will give you big merit for your stats.</p>

<p>3) start at a CC and then transfer.</p>

<p>you need to get some firm financial info. You need to find out what your family’s likely Expected Family Contribution is and whether they can pay that much. That will also determine where you should apply.</p>

<p>FA Calc<br>
[FinAid</a> | Calculators | Expected Family Contribution (EFC) and Financial Aid](<a href=“Your Guide for College Financial Aid - Finaid”>Expected Family Contribution (EFC) Calculator - Finaid)</p>

<p>Do both the federal methodology and institutional methodology. Many privates use the both methods. If there is a non-custodial parent, then their income (and step-parent incomes) might also be included at some schools.</p>

<p>Parents and student need to decide NOW, how much each is willing to borrow each year (and total for four years). Keep in mind that for a student Direct loan, the monthly payment will be about $115 for ten years for each $10k borrowed, and for a Parent Plus loan the monthly payment will be about $135 per month for ten years.</p>

<p>Sometimes, students (and parents!) can be rather naive about the future negative impact of large student loans on their young adult lives…especially if their future career doesn’t pay much during the early years after graduation. Students also need to borrow as little as they can for undergrad if they will need to borrow for med/law/business/grad school. None of those professions pay enough during the early years to pay back huge loans.</p>

<p>Once you’ve found out your EFC, then discuss with your parents about what they can pay.</p>

<p>Keep in mind that the term EFC is misleading. That is not the most your parents will be expected to pay. Most schools do not have the money to help students cover much of college costs.</p>

<p>What are your stats? What is your GPA? What are your ACT/SAT scores. If you haven’t taken both, then plan on it. :)</p>

4

<p>Wow, to both posters above me, thank you for all the helpful information! I will be telling all of this to my parents for sure because I do think they have somewhat misunderstood the purpose of student loans.</p>

<p>Here are my stats:</p>

<p>GPA: 3.7 UW, 4.1 W
SAT: 690 CR 650 M 700 W</p>

<p>I have not taken the ACT yet but I may do it fall of my senior year. I am also contemplating retaking the SAT come fall but I’m not 100% sure yet.</p>

5

<p>Definitely retake the SAT early in the fall (so you can retake again by Nov/Dec if necessary.)</p>

<p>Also take the ACT at least twice by December (or earlier).</p>

<p>You’re close but not high enough to get good merit money from some schools - that is why you need to retest. Otherwise, you’ll end up paying full freight and it doesn’t sound like your parent can afford that.</p>

<p>Get some practice books for both tests and spend some time this summer going thru them and doing the practice tests. </p>

<p>Keep the books by your bed at night and read a few pages at the beginning of each book to learn their helpful hints. </p>

<p>I will be telling all of this to my parents for sure because I do think they have somewhat misunderstood the purpose of student loans. </p>

<p>Yes, they have misunderstood. Students cannot take out student loans to pay for all/most of their college costs anymore because the cost of college has risen too high for such loans to be affordable to a new grad to pay back.</p>

<p>Your parent also seem unaware that student loan lending has changed in recent years. They can’t rely on their own loan experiences, and they can’t rely on stories from colleagues about what their kids have done (since so much has recently changed due to recent bank failures.)</p>

<p>After your parents have told you how much they can contribute each year to your education, and after you’ve figured out what your EFC is, then come back and we can properly direct you to the right schools that will be affordable for you. :)</p>

<p>What is your likely major and intended career?</p>

<p>Encourage your parents to read posts here on CC and maybe even post some questions. :)</p>

6

<p>Wow, merit money would really help out a lot. I guess I’ll definitely be studying for the SAT this summer and retaking it in the fall.</p>

<p>They haven’t exactly told me about how much they can contribute yet, since they don’t anticipate contributing anything (relying on loans instead). So I have to discuss the repercussions of student loans with them and then hopefully I can get an estimated contribution.</p>

<p>As for major, I’m not completely sure, but I am thinking of either law, business, or possibly English… but I don’t know about the latter because I do not believe an English degree can get me very far.</p>

7

<p>Look on youtube for the song “what do you do with a BA in English”. And my DD1 i majoring in that.</p>

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<p>Read the threads by Momfromtexas who found full ride scholarships for both of her kiddos…with stats similar or lower than yours. There are some schools out there that are not famous names that would be delighted to have a student with your current stats. You just need to do some research.</p>

<p>Four years ago, my DD received a great scholarship offer from U of South Carolina with a combined SAT CR/Math of 1230…it would have cost us less than $10K per year for her to attend college there (her scholarship included a reduction to the instate tuition rate…plus $2000 a year scholarship). Your combined CR/Math is 1340 which is much higher than hers. She was a very very good student in high school (high GPA, high class rank). </p>

<p>As noted by others…YOU (the student) will not be able to take loans in the amount to fully fund your college education. Beyond the Stafford loans in your name only…you will need a cosigner for any other loans. Typically parents are the cosigners for these loans…if they take them.</p>

<p>Most colleges assume that your costs will be met through three things…past earnings (savings), current earnings (income) and future earnings (loans)…a combination of these…not just loans.</p>

<p>Using a conservative amount…if your instate university cost $20,000 a year (tuition/room/board/expenses)…it would be $80,000 for four years. The Stafford loans will cover $30K of that leaving a $50K balance to be paid over the four years. Can your parents help you with ANY of this cost of $12.5k per year? YOU will not be able to secure loans without them as cosigners (or someone else as a cosigner).</p>

<p>As suggested, sit with your parents and an online financial aid calculator. Put their info in and it will give an estimate of what colleges will likely be expecting the family to contribute (EFC). This should be viewed as a MINIMUM your family will be paying as most colleges do not meet your full need.</p>

<p>In the meantime…do some research into schools where you might garner some merit aid to help with your college costs.</p>

<p>Good to be looking at this NOW.</p>

9

<p>*Wow, merit money would really help out a lot. I guess I’ll definitely be studying for the SAT this summer and retaking it in the fall.</p>

<p>They haven’t exactly told me about how much they can contribute yet, since they don’t anticipate contributing anything (relying on loans instead). So I have to discuss the repercussions of student loans with them and then hopefully I can get an estimated contribution.*</p>

<p>You need to find out your EFC, and then talk to your parents about that. </p>

<p>You need to explain to them that you can only borrow about $5500 for freshman year, 6500 for soph year, and 7500 each for your junior and senior years. So, about $30k total (including some small Perkins loans if offered by your school).</p>

<p>What state are you in? </p>

<p>State schools that you can commute to can cost anywhere from $5k per year to $17k+ per year - depending on your state.</p>

<p>IF you’re going to live on campus, you need to add about $10k-15k on top of that.</p>

<p>Private schools can cost anywhere from $30k per year to $55k+ per year. </p>

<p>Obviously, you can’t borrow tens of thousands per year, nor should you. You wouldn’t be able to pay the loans back.</p>

<p>And, if law school is in your future, that’s even more reason not to borrow much for undergrad since you’ll have to borrow a lot of law school (you’re allowed to borrow larger amounts for law school). But, since new lawyers don’t earn a lot, you need to be very careful with what your payments will be after graduation. </p>

<p>I think your parents are operating under the old rules of when they were in school, when costs were MUCH lower and a student could borrow all of the costs and still have a manageable debt load.</p>

10

<p>

Absolutely true. Many parents are very surprised by the current cost of a year at college.</p>

11

<p>FYI concerning merit scholarships. Look at Miami of Ohio or Indiana University-Bloomington’s websites for examples. </p>

<p>With the stats you quoted you automatically qualify for a $9,000 / year renewable scholarships at either school - I’m sure there are others that I am not aware of. My S was accepted at both schools with automatic scholarship offers.</p>

<p>You need to apply in the fall by the priority deadlines. Indiana bases its decision on stats submitted (6 semester) and won’t update GPA for seventh semester. Miami will allow you to update your GPA and provide 7th semester grades. You can use the weighted GPA at either school - I know, my son qualified for his scholarships based upon his weighted GPA. He will be attending Miami in the fall. </p>

<p>Of course, if you are OOS the costs are higher, but a scholarship of that size bring OOS costs very close to in-state costs - at least us when looking at UIUC.</p>

12

<p>Yes, IU has auto scholarships and the student would get $9k.</p>

<p>However, if he’s OOS, then the COA is about $38k per year. Since his parents aren’t paying much (if anything), he couldn’t afford the rest and IU doesn’t help OOS students meet need.</p>

<p>This student needs to look at schools that will give him HUGE merit for his stats…like full tuition (and maybe more). Then he might be able to cover the rest with a fed loan, some work-study, a summer job, and maybe some help from his parents.</p>

<p>AUTO SCHOLARSHIPS…$$$ CC Important links to Auto Scholarships…
<a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/848226-important-links-automatic-guaranteed-merit-scholarships.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/848226-important-links-automatic-guaranteed-merit-scholarships.html&lt;/a&gt;&lt;/p&gt;

<p>The problem is that this student can’t even afford “instate costs” if room and board are needed - which would be if he goes OOS to a school who gives merit just to remove OOS costs. He needs much, much more than that. </p>

<p>however, if somehow his parents’ income is low enough to be Pell eligible for a good amount (which their income doesn’t sound like it is that low), then he could get more free help.</p>

<p>If he can’t get enough merit to make things affordable to go away to school, he may just have to commute to a local school.</p>

<p>OP…what state are you in? </p>

<p>Have you determined your parents’ likely EFC yet?</p>