Parent seeking basic information about loans

Parents Forum
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<p>I'm at a point where I feel that everyone who is sending their kids to college is either way poorer than our family, or way, way, richer, or has tapped into some sort of money (a relative; an great investment that paid off big time; a lottery win) to make paying for college possible. At the same time, I'm stupified to hear recent grads talk about being $50,000 or $80,000 or $100, 00 in debt -- for an undergrad degree.</p>

<p>So, here's my basic question -- based on the "award" letters my son received last year (which were all offers to take out loans -- an undergrad can only take out $5,500 to $7,000 (roughly) in loans each year. Parents, if they qualify, can go into larger debt. So, a student has a max they can go into debt on their own over four years, right? about $25,000? So, how do some students get in so far over their head? Or, are these stories of multi-thousand dollar indebtedness a case where someone has co-signed a loan, in which case the new grad really isn't ultimately on the hook if the only job she can get is at Starbucks -- but some well meaning older adult is on the hook?</p>

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<p>The loan amounts you mention are federal loans only, and yes, the maximum a student can get from that source is $27K-ish (I forget the exact amount).</p>

<p>But students can also borrow from private banks, up to the total cost of college, less any other aid (including federal loans). That’s how they can run up debt of $100K or more. Private loans usually require an adult co-signer.</p>

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<p>Some students have posted in recent years that they had no trouble being approved for private loans without cosigners. If you read the stories posted on the Project on Student Debt website, I think you’ll find that many of the original loans ballooned into the $50K+ range due to late fees and deferred interest charges. I wouldn’t be too complacent about a $25-30K debt for a new grad, unless the parents can afford to help out if the kid doesn’t land a job right away.</p>