<p>How are you supposed to take out and handle loans from private lenders? Do you take out what you need per semester and reapply every semester, or every year, or just take one big loan out for all four years? I suddenly realized that other than interest on federal loans, I know nothing about student loans so help is appreciated. Thank you:)</p>
<p>All of this would depend on the creditworthiness of your co-signer, and how that person and his/her lending institution sort things out. Some parents prefer to set up a HELOC through their bank or credit union and use that for college expenses, rather than taking out separate parent or personal loans.</p>
<p>I have to have a co-signer?? Oh gosh…
Thanks:)</p>
<p>The only loans you can take out on your own, are the ones you qualify for by filing the FAFSA. This includes the Stafford Loans, and the Perkins Loans if you have a very low EFC and the college/university offers them. Most students only qualify for Staffords. The limits are:
$5,500 Freshman year
$6,500 Sophomore year
$7,500 Junior year
$7,500 Senior year</p>
<p>If your parents apply for a Plus Loan, and are denied because of bad credit, you are eligible for a bit more. For fun reading on this topic, see [FinAid</a>! Financial Aid, College Scholarships and Student Loans](<a href=“http://www.finaid.org%5DFinAid”>http://www.finaid.org)</p>
<p>Yes…you’d need a QUALIFIED and willing co-signer to borrow amounts beyond federal loans.</p>
<p>That person would need to qualify and be willing to co-sign for all 4 years worth of loans…each and every year. Many find out that they won’t qualify after co-signing a couple years and can’t continue co-signing.</p>
<p>Co-signing is a risky business.</p>
<p>From Clark Howard:</p>
<p>Subsidized Stafford loans are the single best source of money you can borrow.
The interest is picked up by taxpayers while you’re in school. </p>
<p>Once you exhaust your subsidized Stafford stockpile, you want to move on to unsubsidized Stafford loans. </p>
<p>As a third option, parents can take out PLUS loans.</p>
<p>One category of loans to avoid is private student loans.</p>
<p>Finally, remember the consumer champ’s rule of thumb when it comes to determining what level of borrowing you can comfortably handle: Do not take on loans that exceed the likely first-year earnings in your field.</p>
<p>Very helpful, thank you:)</p>
<p>beolein, I’m a parent (this is all very new to me) and can you please tell me why a student should stay away from a private student loan? Is it better for my dh and me to take out a ParentPlus loan for the remainder of what we can’t pay?
My dh and I plan on paying back the loan, no matter if it is in my dd or our name but why would I want to do one over the other?
Are the private loans for students at a higher interest rate? I think the ParentPlus loan is about 7%.
Thanks so much!</p>
<p>lovestotravel -</p>
<p>You and your husband really do need to investigate your options. Some parents find that the cheapest and easiest way to get money is through a HELOC. Others prefer to keep college finances separate from their homes, use Parent Plus or a private loan. There are many factors to consider and each family has its own particular financial situation. I would suggest starting with your own bank or credit union.</p>
<p>In my list, the first costs the least and the last costs the most. Go to Clark Howard’s web site and search.</p>