Please help me explain the Parent Plus Loan...

Paying for College
1

<p>Hi,</p>

<p>So let say if I ask my mom to borrow $7000 my first year (assuming that it is not denied), the fixed interest rate is 7.9%</p>

<p>So do I have to pay 7000*.079= 553/month or is this the total interest of what I have to pay by the end of the year which means 553/12= $46/month. And I think I don't have to pay back the full amount until I graduate, is that correct?</p>

<p>And can I use parent plus loan the first year and seek for other methods next year? since my mom doesn't want to have anything to do with my college tuition.</p>

<p>Thank you very much.</p>

2

<p>Loan Calculator</p>

<p>Loan Balance: $7,000.00<br>
Adjusted Loan Balance: $7,000.00<br>
Loan Interest Rate: 7.90%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $0.00 </p>

<p>Monthly Loan Payment: $84.56<br>
Number of Payments: 120 </p>

<p>Cumulative Payments: $10,147.18<br>
Total Interest Paid: $3,147.18 </p>

<p>The above isn’t exactly right, because if you choose the option of delaying payments until after graduation, that $7,000 will have grown to a larger debt.</p>

<p>Are you ALSO borrowing the max federal student loans? If so, your first year is 5500…and total will be 27,000 (not including Plus)</p>

<p>Loan Calculator</p>

<p>Loan Balance: $27,000.00<br>
Adjusted Loan Balance: $27,000.00<br>
Loan Interest Rate: 6.80%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $0.00 </p>

<p>Monthly Loan Payment: $310.72<br>
Number of Payments: 120 </p>

<p>Cumulative Payments: $37,285.87<br>
Total Interest Paid: $10,285.87 </p>

<p>*And can I use parent plus loan the first year and seek for other methods next year? *</p>

<p>What other methods? it’s not likely you’ll have other methods to come up with an extra $7k per year (plus any school increases). </p>

<p>Do you have any other more affordable options?</p>

<p>What school is this?</p>

<p>What is the COA?</p>

<p>What is in your FA package?</p>

3

<p>Hi mom2collegekids,</p>

<p>Thank you so much for your time. This is for Virginia Tech. I asked about other method is because my mom only agree to borrow the money the first year. I am under 18, so I could not use private loan (bad, I know). </p>

<p>The cost of attendance is $23,900 and the FA package is $16,800 (including work study).
The reason I didn’t receive more because I missed the general scholarship which most students would receive if they have the right GPA ($3000-4000) (I applied to too many schools and I missed this one, how stupid I was). And all first year require to pay $2500 computer allowance fee. So the first year, I paid $5500 extra. Even if school tuition increase, I don’t think it would be that much next year. And Second year allow to borrow an extra $1000 from Stafford.</p>

<p>Again, thank you so much for your precious time.</p>

4

<p>Even when you’re 18, you can’t take out a private loan without your mom co-signing.</p>

5

<p>I think she is fine with cosigning. She just doesn’t like the fact that she is getting my bills. If I use private loan, as long as I pay my dues on time, they won’t bother her, I hope.</p>

6

<p>Is your mother going to pay the PLUS when she takes it this year? Payment are due soon after the loan funds are dispensed unless they are deferred. At 7.9% interest, even $7K starts ballooning up there.</p>

<p>Nest year , you will be able to borrow $6500 from the Staffords. A lot of schools adjust their aid each year so that the student has to take on more responsibility for the payments. Are you sure you will get the general scholarship next year? Also any loans you take outside of the federal ones, will have to be cosigned by a credit worthy adult and they tend to be even more than the PLUS from what I have seen.</p>

<p>I think you got a very good package from VT, but you need to be aware of your financial options for the future. Though sometimes you may get additional monies, that usually is not the case. The gap tends to widen. Hopefully, you are working this summer to pay some of your costs. </p>

<p>With maximum Staffords and that $7K this year, if you are going to take on the responsibility of paying it, you will owe more than $35K with the unsubsidized loans growing if you don’t pay them down. That $7K will be about $9K in 4 years, for instance. Be aware of this growing debt burden, because a lot of kids take this upon themselves and then cannot repay these loans upon graduation because they can’t get jobs that pay enough. Your mother will be responsible for the payment of anything she takes like the PLUS and any cosigned loans if you cannot pay them. She is completely responsible for the PLUS. But both it and any private loans cosigned will be on her credit record.</p>

7

<p>A good friend of mine is struggling with loans she cosigned for two of her kids who simply can’t pay them. Friend can’t pay them either and they are coming after her full steam. Be aware that this is a growing problem.</p>

8

<p>No, she will not be paying the money, just the interest. If the parent plus is not denied, we will defer it. I will try to work during school also. I worked 40 hrs/week during school year for 2.5 years straight before. If you wonder where all that money go to, it goes to our house payment. Considering the college level course load, I think 20 hrs a week should be fine</p>

9

<p>IHateTests,</p>

<p>If you have been helping your mother make her house payment, maybe that’s why she isn’t being helpful now. She might not have a solid plan for making ends meet without your income.</p>

<p>VT is going to really stress you financially. Do you have any other options? Check out [Richard</a> Bland College](<a href=“http://www.rbc.edu/]Richard”>http://www.rbc.edu/) it is a VA community college that has residence halls. It might be a bit less expensive than VT, and you wouldn’t have to live at home.</p>

<p>Wishing you all the best!</p>

10

<p>College is often a lot more demanding than high school, so don’t plan on working THAT much at least at first.</p>

<p>You don’t want to undermine your grades or your goals. </p>

<p>It’s better to work no more than 10 hours per week at first, and then see how it goes. You can work full time in the summer. :)</p>

<p>Can your dad help with any of your college costs?</p>

11

<p>happymomof1 and mom2collegekids,</p>

<p>Thank you so much for all your advice. I will definitely check out the Richard Bland College. I made it through high school, another check to my todo list, so I hope money won’t be the hurdle to check my next one :slight_smile:
And I haven’t seen my dad in years, so he is not part of the picture.</p>

12

<p>I worked 40 hrs/week during school year for 2.5 years straight before. If you wonder where all that money go to, it goes to our house payment.</p>

<p>How will your mom make her house payment after you leave?</p>

<p>Was any of this money a loan to your mom?</p>

13

<p>Well, my mom has other plan. She’s gonna move to Florida to live with her sister. That is the reason why living at home after graduation is not an option for me.</p>