<p>While most of teh families are still waiting for their admission results, I am alreadying starting to think about how to pay for it.</p>
<p>With a great FA package, hard working DD and changes to our living style, we managed to cover DD's school cost by mostly from current income. Next fall, DS will be going a college and more than likely we will "HAVE TO" get loans.</p>
<p>I have done some basic research into subsidized loans but I still have many questions. Here are what I learnt. Please point out if they are not correct.</p>
<p>All Federal loans have a fixed rate from any and all lenders. The differences are about some incentives such as rate reduction and fee reductions. </p>
<p>Some schools have direct loans program where a student just sign paper and get the loan directly. Some will let you shop around yourself. Each has pros and cons.</p>
<p>My questions are: When and where to start shop around if we know we will need and qualify for those loans for sure.</p>
<p>In my experience, subsidized loans (gov’t pays interest until school completed) had to be offered by the school, and were based on need. </p>
<p>Unsubsidized Stafford government student loans were also "offered " through the school. They have lower interest rates than the parent plus loans, but are limited in total value per year.</p>
<p>The unsubsidized parents Plus loans that we have were done through the school and their ‘suggested’ lenders. Loan applications weren’t even available until the July before the academic year.</p>
<p>As you have noted, interest rates were the same from all of these suggested lenders, but there were terms that made some more attractive than others (such as…“pay on time, and we’ll forgive the last payment”, “pay by electronic account deduction, and we’ll payback the origination fees” etc.)</p>
<p>There have been issues with Financial aid offices getting perks from the “suggested” loan companies. Even if this practice goes on, I’m did not find any better rates or deals from non-suggested lenders.</p>
<p>Perhaps others on this site can tell you how to get Stafford and Plus loans some other way than through the school.</p>
<p>Please do the taxpayer and you a favor by borrowing FFEL (Stafford, PLUS) from the Government. The direct cost of these loans is the same to the borrower but the taxpayer pays more if you borrow from a private lender. </p>
<p>Yes, Virginia, A private lender is NOT more efficient.</p>
<p>^^actually, the direct cost is NOT the same. Some lenders discount origination fees. The government will not. Even 1% saved, is 1% earned (to paraphrase some guy named Ben Franklin).</p>
<p>There is not always that option. My daughter’s school is a direct lender. My son’s is not. He has to borrow his Stafford loans from a private lender. Does not have any other option.</p>
<p>An as bluebayou said - My daughter’s direct loans have origination fees. My son’s private loans do not.</p>
<p>Dad II…good that you are exploring the “options” early. However, I think you really can’t make a decision about which loan vendor, etc…until you KNOW which college your son will be attending. In our experience, schools vary…and anyway…your son will be the one to complete a master promissory not that also details the school to which the money will be dispersed. </p>
<p>So…get your info…but I don’t think the decision can be made yet. unless, of course, your son was accepted ED and he has already made a matriculation decision. If that is the case, the folks you need to get this information from are the finaid folks at the school to which your son is matriculating.</p>
<p>As Swimcats pointed out…things vary from school to school with regard to those Stafford loans.</p>
<p>So, it is too early to act on those loans now. The application starts around July. Some schools will have direct loan only - simple paper work but lost the benefit of shopping around. </p>
<p>I got it. Thanks. </p>
<p>T1, no matter which college DS will be attending, we are pretty sure we will need some sort of loans to cover the expenses.</p>
<p>DadII-
Also, check with YOUR home state higher education dept…
NJ has a website for NJ students attending college in any state. We obtained fixed rate loans through them (as parents) to pay son’s tution a few year ago.
This is the NJ website:</p>
<p>*your son will be the one to complete a master promissory not that also details the school to which the money will be dispersed.
*</p>
<p>I get the feeling that Dad II’s son won’t be doing the borrowing because that wouldn’t be fair. Dad II has been paying for DD’s schooling, therefore the loan is for DadII to cover the additional expenses the DS’s cost will bring (so, technically - half the loan is for DD and half is for DS). However, if the rates are better for the son (or daughter) to take out the loan (with the understanding that Dad II will pay for it), then … :)</p>
<p>mom2collegekids…Dad II is looking at direct loans which are Stafford loans. He cannot take those out in HIS name. Those are loans that are in the student’s name. And Direct or Stafford loans cannot really be taken until the child chooses a school at which to matriculate. The “rules” regarding the vendors and choices for these loans vary by school as noted by Swimcatsmom.</p>
<p>I thought that the rates might be better if the loan is in the son’s name, or actually the loans could be in the daughter’s name, too, since the “money shortage” is because both of them will be in school. I mean, whatever DAD II can pay out of his own earnings is technically split between the kids, therefore the loan is money to pay both kids’ shortfalls (so to speak).</p>
<p>And, since it’s already known which school the daughter is at, perhaps that would be the road to pursue now.</p>
<p>mom2collegekids…Stafford loans, which are what Dad II referenced in his FIRST post on this thread (Direct loans are stafford loans) CAN NOT be taken in the parents’ names. They can ONLY be taken in the students’ names.</p>
<p>It is up to their family to determine who will take the loans in the students’ names. Perhaps they will have each of their kiddos take a portion of the Stafford loans.</p>
<p>I’m with Swimcats…I’m not sure what your post means.</p>
<p>DD has excellent FA and makes good money working at school. DS could possibly attend a school w/o as good FA nor as good jobs for students. In other words, the COA for DS could be 2~3X of that of DD and far beyond our current income capability. To cover that gap, DS would have to take Subsidized loans. There is not a fair or not fair question here. </p>
<p>I am just trying to find out how to go about getting those loans ahead of time for planning purpose.</p>
<p>D2…thanks for the clarification. So…back to my initial response which agrees with Swimcatsmom. You can gather information from EACH school to which your son has applied… but you will not be able to do anything with it until he makes a matriculation decision. Stafford and Direct loans are made to the student and are dispersed to the specific school that student is attending. Schools have varying ways of dealing with this. In our case, for example, neither of our kids had a choice at all about the vendor for these loans.</p>
<p>The interest rate for Staffords is set by the federal government. The variation you might see is with origination fees. But even that isn’t going to be a HUGE amount of difference.</p>
<p>So…check with the schools to which your son has applied. That way you’ll have the information,</p>
<p>I will add…I don’t think the college “decision” should rest on the cost of the origination fee for these loans. That being the case…you may want to just wait and get the information from the school your son chooses.</p>
<p>"To cover that gap, DS would have to take Subsidized loans. "</p>
<p>Just to clarify for you…the school and the federal gov’t decide if the loans will be subisdized (“subsidized” means the gov’t pays the interest on the loan while your child is in school.)</p>
<p>Even with 2 kids in school, your income may not qualify your child for subsidized loans.</p>
<p>If not subsidized, your S (or D) may still be able to get a Stafford loan, but interest will accrue (or will need to be paid) while your child is in school. </p>
<p>Keep in mind there are $ limits on how much can be taken each year in a Stafford Loan </p>
<p>Parent Plus loans are usually only limited by the cost of attending. I don’t think Parent Plus loans can be subsidized…but I might be wrong!</p>
<p>Correct…the school will determine whether your kiddo will get a subsidized or unsubsidized loan…and that too will vary by school.</p>
<p>If the kiddo has no demonstrated need, he will not be offered a subsidized loan.</p>
<p>FYI…even when we had TWO kids in college, DS (the older) was never offered full subsidized loans.He was offered part sub and part unsub loans from his university,</p>
<p>DD, OTOH, has had subsidized loans for the full four years.</p>
<p>mom2collegekids…Stafford loans, which are what Dad II referenced in his FIRST post on this thread (Direct loans are stafford loans) CAN NOT be taken in the parents’ names. They can ONLY be taken in the students’ names.</p>
<p>I totally “get that.” </p>
<p>Maybe I wasn’t clear. The daughter’s school is known. So, I was suggesting that the dad look at student loans thru her school at this point (which would be in her name).</p>
<p>However, now dad says that DS’s costs are much, much greater than DD’s. That was a missing piece of info. From his earlier post, I thought that he had scrimpted to pay for DD’s COA - now i realize that his portion of her costs were much less than COA, and his cost for DS’s COA will be large.</p>
<p>What I meant about “fair”…If the costs for the 2 kids were about the same (say $30k each) and dad could pay $30k, but not $60k, then it would make sense that the shortfall be split. However, with the new info, I see it’s a different situation. :)</p>
<p>However, he’s in a situation a bit like mine. One of my kids has nearly a full-ride scholarship (only costs us about $3k per year), while the other has less scholarships (so he costs us more money). </p>
<p>So, now I understand. Sorry for the misunderstanding. :)</p>
<p>For a freshman the maximum Stafford loan is $5500. Of this up to $3500 may be subsidized if there is financial need (as determined by COA less EFC and any other aid/scholarships). The amounts change based on the student’s year in college: sophomore $6500 max of which up to $4500 may be subsidized; third year and up $7500 max of which up to $5500 may be subsidized: cumulative maximum (for a dependent undergrad student) $31,000 of which $23,000 may be subsidized.</p>
<p>Interest rates for subsidized Staffords are lower than for unsubsidized. Unsubsidized are 6.8%. Subsidized will be 4.5% for loans for the 2010-2011 school year and 3.4% for the 2011-2012 school year. The reductions in rates for subsidized are currently set to expire for the 2012-2013 school year and revert back to 6.8%, the same as unsubs. Hopefully the govt will change this.</p>
<p>As mentioned by thumper and boysima, the school(s) will determine the amounts of Stafford that are subsidized or unsubsidized based on whether there is ‘need’ as determined by their COA and your son’s EFC.</p>
<p>There was some talk last year of changing all future Stafford loans to direct loans. I don’t know if this is still on the cards or not. We have both in our family. The direct loans my daughter has do have an origination fee. but once she signed the initial MPN her first year all she has had to do is accept any loan amount each year. The private loans my son and I have we have to find a lender and apply for the loan. Some lenders stopped doing student loans so my son has had to find a new lender twice I think. And they do sell your loans on to other people. So his loans are strewn all over the place. I think the direct loans will be a lot easier to deal with in the long run.</p>