Perkins Loans?

Paying for College
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<p>My kids have done the same, Dungareedoll. Three jobs,and my son was told that we could only pay so much for college, so he took the privates with no merit right off the table. Hurt me terribly, as I really wanted to say, “honey, just pick the school you like best and we’ll make it work.” But couldn’t do it. </p>

<p>But where is the money coming from so that he could afford a private school full price if not from me? From the family making less? If it makes you feel any better, the interest rates for the subsidized Staffords are going to go up to the unsubsidized rates this year if Congress doesn’t renew that subsidy. It’s not as though any of us are going to get more, but just those who make less, get less, unless some major reconfigurations are done.</p>

<p>It’s the opinion of many that the prices have been rising, in part or in many cases, in whole, because of the federal backing of the loans which make it possible for students and parents to borrow so much. I don’t think any number of these schools could ask what they are in costs without those loans and in that sense ANYONE who is borrowing is subsidized with the subsidy going right on over tho the colleges who have their mouths firmly latched on the federal teat. We just give it the squeeze. </p>

<p>For my son it was an option to take the loans or not. He could have gone to a local school, private even for free, if he commuted and if worked part time, he could have had his car and been flush with the bucks. Got a merit award for the amount. His brothers got the same from a local state/city school. But they wanted the sleepaway experience. Again, we could have paid for the state school in full with sleepaway option included, or a good private school if they commuted. One of mine did take the state option. But an OOS public meant, not only our contribution, but some money from him too. Even so with what he saved and made and could make during the year, he was able to just take some loans and is already planning on paying them back. But he is learning how it feels to be squeezed and how unforeseen things can make the best of plans on paper go awry as he wasn’t going to borrow at all. But the choices are there, and now that local commuting option is looked at with a whole different set of eyes.</p>

<p>But where to draw the lines where people should pay and get subsidized and get full aid? At $25K a year, no way a family can squeeze out the money to pay for any college. A hundred bucks is a lot for families there. And they still don’t get an auto zero EFC for a full PELL! Bring the level up to $50k and what should a similar family pay? How about at $100K? The money’s done run out by then. </p>

<p>Anyone who has the income and assets by the way, can get rid of that impediment and can try getting all of those benefits out there. I have no desire to do that, thank you. I’ll keep what I have and deal with the system at hand. But really, is that what you would recommend some to do? Ask for a pay cut for that first financial aid year and thereafter, and donate ones assets to the level one thinks one can get the best financial aid deal? I don’t think so.</p>

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<p>First off I’m not even talking about pell. My gripe is strictly with the Stafford loans that everyone gets. I don’t find it at all unfair for kids to all pay the same interest rate, regardless if they are going to a public or private school. The loan is for students, students can opt to take it or not. And it should just be the same for everyone across the board.</p>

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<p>We have paid Fafsa EFC for both our kids.
Oldest had Stafford loans & Perkins as well, both subsidized as part of her aid package, the rest was a grant as her school met 100% of need.
She also volunteered after high school with CityYear and earned an education stipend that was about enough to pay off for one year of Stafford loans.
Her summer job met her student contribution to EFC and her school year work study job went toward paying personal expenses and books.
If she didn’t have a Perkins loan, she would have had to take out a loan with a higher interest rate.</p>

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<p>Dungareedoll, you draw the line differently from where it was drawn. That’s what it comes down to. So you think those with more need than you should also have to pay the interest on these loans as well as the higher interest rate? Well, you may be getting that interest rate differential erased. </p>

<p>Do understand that these loans on a subsidized basis (and often on an unsubsidzed basis as well) are being give as FINANCIAL AID. They are not getting grants but just loans, and really the subsidy is really all the should count as aid, but the whole dang loan is being counted dollar for dollar as aid. The same with work study. It’s considered AID. I find it terrifically unfair that a student who comes from a family with an EFC that cannot meet the cost of a college is given the same loans as someone who can easily afford the cost (as well as all shades of the spectrum to that level) and by getting those same loans is told that it is dollar for dollar aid, when all they are getting is subsidized interest on it. Think about it in an extreme. The kid with a $5500 EFC who is given that loan in his package still has to come up with that EFC. Another kid with the same $5500 EFC who gets all of his need met by grants, can take that $5500 loan, none of it subsidized either, by the way since his need is now zero, and use it pay that EFC so the family and he does not ahve to come up with anything. That is where I see the problem, Not so much for a family whose EFC is 99999 and taking out that $5500 is so that it’s “skin in the game” or because the family has locked into a standard of living that they don’t want to give up. And believe me, I know that it’s painful to give up a standard living for which one has worked long and hard to get. </p>

<p>I have no idea what your income/asset situation is or what your EFC is and what the choices are that your children have had, so it 's hard for me to address it directly. But what it all comes down to with the financial aid system is that certain lines and fade areas are in place at certain income levels, and we’d all love for those levels to be raised to include us. </p>

<p>My close friend whose very hardworking DD was accepted to a number of great LACS, and couldn’t go because her NCP father refused to pay due to the divorce war going on, was aghast that this could happen, when someone whose parent could not pay and with the same acceptances could get a nice aid package. That there was a Son of a Mule father involved who was being plain ol’ vindictive could wreak so much damage on his child’s college choices was truly painful Yet, to make that an exception would mean that it would become part of the financial planning for college landscape. Refuse to pay and your kid gets the money.</p>

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<p>Dungareedoll, you’ve explained your antipathy to Perkins loans, could you explain again why your son isn’t accepting work study & the attached scholarship,if its difficult for him to scrape together expenses?</p>

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<p>emerald: I haven’t ever mentioned my antipathy for perkins loans. My problem is with Stafford loans. My son was never even offered a Perkin loan. My son is not offered work study and he isn’t offered any scholarships. So its not as if he is snubbing his nose at those things. They simply aren’t available. And of course, I know that people are going to say that thats because I’m lucky and I get to pay. Thats fine. Again, I’m not complaining about paying my portion. But when the finaid package that we receive states that his expected contribution is 5K for summer employment and 5500 from stafford loans then yes I expect his financial aid to be just like everyone elses his age (Meaning a portion subsized and a portion unsubsized). But instead its all unsubsized.</p>

<p>Cptofthehouse: Yes, I expect that all students should pay the same accrued interest and interest rate. I can’t say it any clearer than that. If you are too poor to go to an expensive college than go to a less expensive option. Thats what my well to do son would have to do, if I weren’t willing to pay the EFC.<br>
Im not asking for them to fade out income levels to accommadate me. Yes, that would be wonderful but thats not my complaint. I accepted the financial burden, so thats my problem. I just don’t see why my son’s financial aid/expected contribution according to the schools should be penalized due to my finances.
Cptothehouse you keep going back to my finances. But thats just the point, my finances shouldn’t have anything to do with his burden. They should just be my burden. My money, my problem. Now once the school is going to stipulate his burden then it should be solely based on his finances. He doesn’t have a trust fund. He doesn’t have any cash in the bank. So he is no different then Joe Poor and thats why at the end of the day they should both be given loans with the same interest rate and accrual rate.</p>

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<p>Cptofthehouse: I’m a bit confused by your examples and the funny thing is that we may actually be saying the same thing. So lets use a real world example:</p>

<p>College A costs -$57000 (both kids are attending the same school)
Poor kid (family income is 50,000)
so the finaid package is:
$47000 in financial aid scholarships, grants etc…(none of which has to be repaid)
3500 in sub’d stafford loan
2000 in unsub stafford loan
1000 in perkins
3500 in parent contribution</p>

<p>Rich kid (family income $180,000)</p>

<p>Stafford unsub loan for $5500
summer work contribution of $5000
parent or EFC-$46500</p>

<p>I know people are going to jump on the fact that the $180K is 3x plus, more money than the poor family, but expenses and cost of living are going to be signifcantly different too. People live with in their means. Not to mention that the rich kids parents are paying 10x plus, more money for their EFC. Again, the parents EFC is not in question. Its the kids. Both are students, both are 18 years old, both are going to college for the first time. Why should one come out with higher interest rates and accrual rates than the other. They are both going to the same fantastic private school. Lets even assume they are both going to major in the same high paying area. So now they finish college in four years. The poor kid owe’s less and hasn’t even had to get a summer job, or workstudy. As a matter of fact, if the poor kid wanted to he could work and not even have to take out a loan. The rich kid has to do both and the same loan amounts are now valued higher.</p>

<p>Thats fair? No way. I understand that things aren’t fair, but thats my gripe!!!</p>

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<p>It’s not just your son. All kids are expected to pay according what their parents make and have. To change that would be turning the entire system around and other than the trust fund kids, and those who slip the money to the kids, no one would be able to pay. There is absolutely not enough money there. Not that it matters that much to pour more money into the system means the colleges will just lap it up and put their mouths back on the faucet. You are asking for multi billions of dollars in change </p>

<p>So I disagree with you as does the system that says your son and those who do not meet need and COA definitions do not get a part of their loan subsidized which is a pittance that is given to those who qualify. Your son does not. THough I do not see how he does not if that $5500 Stafford loan is truly financial aid unless he is at a school that defines need more generously than the usually more generous FAFSA formula. School COA-EFC = Need, and anything that falls into that need can be met by the part of the Stafford loan that can be subsidized. Otherwise the Stafford is not financial aid and your son can take it to pay the EFC. </p>

<p>The fade includes subsidy of loans and availability of them. Perkins, Seog and WorkStudy programs are those that an individual school buys into with some of their funds so not all schools have that money, and it varies how much of it they have. </p>

<p>Dodgermom, it’s safe to hold your breath, and Dungareedoll, you may get your way. Grad students no longer get the subsidies for loans or it’s greatly reduced as of recently. So now, when our kids are truly idependent, they don’t get that subsidy any more for future education loans. The Pell borders have been moved DOWN to $23K income when a few hundred dollars were added to it. Now it is possible that the interest rate for the subsidized portion of Stafford will be jacked up to the same as the unsub. So, you may well get your wishes. When you want equality that way, it’s the bottom that gets cut most of the time–not an expansion of terms of those who have more. </p>

<p>If I could reform this entire system, I would take every bit of federal loan, grant, etc and move it to the state systems and get them to flourish and become more accessible and affordable. I’d love to see those systems be based on the student’s ability to pay not the parent’s which pretty much means free for all kids except the very few trust fund kids. You really think anyone is going to let any money show up if it’s based on a 17-21 year old Dependent kid? That’s why the age was moved up to 24 for independence. Just about 100% of the kids will need 100% of financial aid. Well, if the state systmes are revamped and given the current federal money that the privates are availing themselves of, maybe this can be done. But that means it’s up to the private who can do what ever they please, and they do to a great degree, to fund their students without that government money. </p>

<p>You have some ideas that everyone would like but how will the bill be paid? The old expression, “no one but his own mother” holds so true with the college situation. With the exception of those who a school wants who the heck wants to pay for 17-22 kid? Especially the amounts that private colleges, and any sleep away college costs? Only his own mother, and sometimes not even she.</p>

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<p>The reality is that in the vast majority of cases, those kids who come from a family with a low EFC are much, much less likely to be able to come up with any student contribution, make any money towards summer earnings and pay off their loans. A lot of kids, as one moves up the family income scale, do get help from their families for that summer contribution and payment on their loans. Read on this board on how parents that can afford it are calling it “skin in the game” for their kids and “good for them”. All well and good, but the skin is a lot thinner for those families with lower income.</p>

<p>When students and/or parents are contemplating the loan route, and are asking for advice, I always stress that the family finances are something to take into account. There is a big difference between a kid taking out a loan with a family that is solvent and has some leeway as opposed to one who is not making ends meet already. Can’t find a decent job after graduation or a job at all, which is not uncommon these days, the family making $180K can usually offer a lot more help than the one who is PELL eligible. That’s a fact of life. There is really no way to equalize the impact that the vast majority of parents have in terms of advantages they bestow upon their kids because the can, and subsidized interest is really a drop in the bucket towards trying to do so, but that’s one of the few things out there does distinguish. </p>

<p>Again, any family that is making $180K can give up that income level, donated their assets and give it a go with the financial aid system for someone that is “poor” and see if it 's worth it. The person on the lower end of the scale cannot go the other way around the vast, vast majority of time. </p>

<p>I have a friend who because of divorce went from riches to rags very quickly. A very close friend. Yes, her kids were eligible for those subsidized loans and PELL and SEOG and Perkins. She would have loved to have been ineligible instead. </p>

<p>Honestly, I would love to see a challenge of that age 24 rule in terms of dependence for college financial aid. Can’t do anything about private schools with their own funds as they can make any rule they want, but I wonder what the true legality of this is? Our kids can marry, sign a legally binding contract, go to war, are legally adults in every single way except for in terms of drinking alcohol and college financial aid. I would love to see how this would work on a true challenge. Why should a kid who is kicked out of a family, sometimes for reasons that are just plain mean spirited, still be legally bound to that family’s financials until independence rules come into play? The reason is the same reason that robbers target banks–the money is there, not in a young person’s account but the family’s and that is something and college education for the vast majority of families is something that parents pay to some extent, and the stats bear it out heavily that those with parents that make more, get more, so a kid with less flush parents has fewer alternativies. That is a fact, not something for every single kid, but a fact that pretty much is true over the vast, vast majority. Yes, some of the smartest kids with the more savvy parents do get some of the financial aid goodies and we hear about the poor kid getting the full ride and can drink coladas in his lounge chair, while his middle class counterpart is pounding salt with three summer jobs (yeah, my kids) and his parents are scraping up every cent and the kid is borrowing up to the kahooie too, but that is a very small slice of the whole picture, and is usually the scenario one sees at private and away schools. Those kids in such situations won a lottery with small odds and there are not that many of them. It’s just that when we are in that world, we see those lucky ones, and it makes the steam come out of our ears. </p>

<p>There is a lot of unfairness in this system but the subsidy of loans for those that have need is a very small gesture to those who have need, to try to level the playing field for those who come from poorer families Remember that they are given the loan dollar for dollar for the cost, when all they are getting is the interest subsidy on those Staffords. Really the subsidies alone should be considered the aid, IMO since those who have no need can take the loan too.</p>

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<p>Geez, DungareeDoll, I hadn’t realized I was poor (by your definition). Kind of cracked me up. I prefer the term “modest income”, but maybe that’s because I live near and work in an area that has a lot of the truly poor (by my definition). Poor to me means not having enough money for food, clothes, the extras in life; living in sub-par housing in unsafe areas, etc. I suppose it’s all relative. I also live fairly close to a pretty wealthy area.</p>

<p>By the way, I’m proud of my daughter’s perspective on income, too. Through very generous grant aid, her hard work in obtaining a merit scholarship, and yes, loans, she is able to attend a school where many of the students are truly wealthy—as in far, far more than $180,000. Millions, even. In fact, it was an aspect of the school we discussed when thinking about where to apply. I wanted to be sure she would feel comfortable there. Like I said, it’s all a matter of perspective. She thinks it’s funny when she hears classmates talking about how they were “forced” to go to Germany over spring break (she would kill for that opportunity), or, like one of her classmates when they got snow recently, complaining that her parents bought her a car that was not good in the snow (my daughter will not have any car during her college years).</p>

<p>Gosh, I just re-read what I wrote and I hope you don’t think I am bashing you, because that is sincerely not my intention. I just was amused by your definition of poor, particularly because years ago, after my divorce, I was close to poor, and now, even though some would consider me poor, I feel truly blessed and grateful for everything I DO have. Sorry to sidetrack the discussion. And, I do see your point, btw, but that’s just the reality of the situation. I hope your son has a truly amazing college experience, wherever he goes.</p>

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<p>Just had another thought. I was under the impression that every student was expected by colleges to contribute summer earnings, which in itself is kind of unrealistic given this economy. Dungareedoll, you mentioned that the poor kid might not be expected to—is this correct? In any case, even if not expected to, I would suppose most of the lower income would WANT to try to get a summer job. I think this may be harder for lower income kids, for several reasons.</p>

<p>First, lower income kids do not always have “connections.” Maybe the higher income kid’s dad knows someone who owns a company, and he needs a helper for the summer. I just think, anecdotelly (gah! I murdered that spelling) it may be easier for a higher income kid to find a summer job through family and business connections. </p>

<p>Second, there is the transportation issue. A lot of lower income families don’t have cars and must rely on public transportation, or, like our family, only possess one car. For example, my daughter was very lucky to get a summer camp job last summer. This was our game plan, since we had to share the car. Her hours were approx. 9-4, mine are 8-3. She would have had to get up early to drive me to work, then drive a half hour in the opposite direction to get to work. I generally arrive at work a half hour or so early to prepare for the day, so she would have ended up arriving at work by 8 and cooling her heels for an hour. It would not have been worthwhile for her to return home. Then, I would have had to stay at work an extra hour and a half every day (unpaid and alone) until she could pick me up at 4:30. Would have stunk, but we were willing to do it. In the end, a friend of hers also got hired for the same camp, and she got a ride with him (and of course contributed toward the cost of gas). I guess my point is, sometimes the grass seems greener on the other side of the fence. In our family, we prefer to water our own grass, and to be truly hokey, when life hands us lemons, we make lemonade.</p>

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<p>Ctinct: I don’t think its poor either. Thats my point. I think a person living at a 50K salary is living within their means and probably doing fine. Unfortunately, people don’t see it both ways. The person making 180K is also fine and again living within their means. Yet, the person making 180k has to feel “lucky” and willing to pay more so that others that make less can be equal. I have no problem with everyone being equal. Thats what I’m asking for too and again I’m not complaining about paying the lions share of the tutition, just the fact that the kids should all be equal, which it comes to the loan interest. If I have more money I certainly should pay more, but not the kid.</p>

<p>For the record, I don’t think your bashing me at all. I also agree that 180k is not rich. I used that number because its ‘usually’ the cut off for zero financial aid, at the pricey sleep away private institution, as was 50K for the full finaid package. </p>

<p>I’m also very happy for your daughter. I respect and admire kids who are willing to work hard, accept others for who they are and what they have, without feeling a sense of entitlement. So kudos to you for doing such a great job. We need more youngs kids out there like your D. </p>

<p>Lastly, I don’t take anything that cypothehouse says as bashing either. I don’t think we are going to see eye to eye, but thats okay. At the end of the day, neither of us have any ‘real’ say over what happens. I’m just voicing my opinion and enjoy hearing what others have to say.</p>

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<p>ctinct: just read your second post. From what I have seen on the finaid packages that I have worked with they don’t require the poor kids to get a job. I agree that it might be tougher for them, but again, my example is not that of a kid whose parents are earning 500K+. The family making 180K is probably going to have ‘fairly’ similiar issues to deal with, when it comes to getting summer employment. Like you said yourself 180k isn’t rich, so not too many people I know have connections in private corporations that can hire kids etc. Thats exactly the problem with this situation. People think because the govt. has stated that people in this salary bracket are rich that everyone is living like a Kennedy. Not happening. As a matter of fact, people in that bracket are really being squeezed from both ends, when it comes to taxes, tutition, etc. Its not the glamorous lifetstyle just because its labeled “rich”.</p>

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<p>Peace Corps cancels 15% of your Perkins loan for each year of service. Most PC appointments are for two year (30% canceled) but there is an option to apply to extend for a third year (45% canceled).</p>

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<p>They will never start on a level playing field. The poorest parents can’t help their kids in ANY way after college (assuming the kids get enough aid/loans/jobs/whatever to afford college at all). They can’t provide a spare room to sleep in while getting a job and apartment deposit together. They can’t help with a home down payment. They can’t help get a car. </p>

<p>There is nothing “level” about the playing field for a kid coming from a poor family and a kid coming from an upper middle class family.</p>

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<p>^^^^^^^^^cptofthehouse you win the prize of the day! While I appreciate the loans, it would make schools lower costs/tuitions if parents didnt have access to government back loans. I am all for the student loans, and I think $30k(which is the max) is definitely manageable. The problem lies with the PLUS loan. The credit requirements are very lax, and they only check your credit score, not your debt to income ratio, etc. YOu can have a great credit score, yet be totally overextended. I think they should either up the requirements, or cap the plus loans as well. Schools would start paying attention if a large percentage of parents couldnt pay.</p>

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<p>*They will never start on a level playing field. The poorest parents can’t help their kids in ANY way after college (assuming the kids get enough aid/loans/jobs/whatever to afford college at all). They can’t provide a spare room to sleep in while getting a job and apartment deposit together. They can’t help with a home down payment. They can’t help get a car. *</p>

<p>Ive made an analogy of two kids who tie in a bicycle race even though one has a brand new bike that cost $2,000 and the other a free beater bike, before to parents who cant wrap their heads around the idea that the “* most prestigious schools*” do not offer merit aid, only need based aid.</p>

<p>Bartholomew Cosby has grown up in a family with expectations and support from birth that he would earn a college degree. His family was fortunate to live in an area with excellent & well funded schools, he had his interests & talents supported and his challenges mitigated.</p>

<p>Whereas J.T. Thorndyke didn’t. </p>

<p>However they both earned admittance to the top schools in the land. Bart will do well at superlative country day. However he will do so with all the supports and advantages he has grown to depend on.</p>

<p>J.T., on the other hand has reached a similar level of accomplishment without any of those perks , give her an environment that has greater resources and her potential exceeds that of her privileged classmates.</p>

<p>Which could explain why some schools only give need based aid.
It isn’t like they have a dearth of applicants available to pay full price.</p>

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<p>While I understand the Perkins loan forgiveness for participation in programs in the United States (U.S. gets the benefit), I don’t understand why Peace Corps participation (benefitting OTHER countries) should trigger Perkins loan forgiveness.</p>

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<p>I’ve read a few recent items about how the credit standards for PLUS loans for parents have become much more strict, starting a year or so ago. People who were eligible for PLUS loans last year may find they are ineligible this year.</p>

<p>The Peace Corps Program was not only designed to help persons in Third World countries. It was also designed to improve the image of the US in those countries, as part of US foreign policy. The Peace Corps volunteers are not sent to poor countries that are hostile to the US.</p>

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<p>OHMOMof2: I guess I’m making the assumption that neither the poor nor the upper middle class famiies, should have to provide anything for the kids after college. Although I’m pretty sure a family making 50K would be able to atleast put up a spare cot for their child to sleep on, while he or she is looking for a job. Once the graduate gets an apartment that would only occur if they have a job. So the deposit is their responsiblity. As Ctinct stated, she didn’t think 50k was too poor, so a spare room, or bed can be accommodated. </p>

<p>Once again, I think people assume that a six figure combined income, means that a student is living the life of luxury, with maid service and a BMW for their 16th birthday.</p>