<p>Hello Everyone,
I have no idea what I should do with my financial situation. From my financial package, I get about 8k in loans from college, and I have to either get a PLUS loan for 14k, or get a private loan. PLUS loan is at 7.9%, which doesnt make it any more appealing, and I've used studentrate to find some loans by banks that are at 2-5% APR. I have heard mixed answers about which is better, but I don't know much about financial aid to make a decision. I also want to know if I should decline the 8k loans from school, since the lowest % is the perkins loan at 5%. My family is very poor, we are at 11k income per year. We have a very high credit rating though, and our house is fully paid off. So should I look into getting a private loan, since interest is so high on PLUS loan?</p>
<p>Also, should I take out loans per semester, and reapply for another loan with my parents cosigning every semester? or take out loans yearly, or take out the full tuition loan for all four years? Any help is much appreciated, thank you very much!</p>
<p>First of all, PLUS loans are for parents to take out, not students, so your parents would have to apply for them. Parents and students can have a private agreement that the student will make the payments, but the parent remains legally responsible if the payments don’t get made.</p>
<p>Second, I doubt that with an $11,000 family income you’re going to get a private loan of any size, even with your parents co-signing. A lender wants to know that a co-signer has assets and/or income that can be seized or attached if the loan goes into default, and it doesn’t sound like your parents have much. They might be able to put up the paid-off house, but the lender is still going to look very closely at that income figure.</p>
<p>So it may be that a parent PLUS loan is your only option, since the PLUS approval process does not consider income.</p>
<p>However - if I were in your position, I think I would think very seriously about the implications of borrowing $22,000 a year for an undergraduate education. How would you plan to pay off a debt of nearly $90,000 once you graduate?</p>
<p>I think you should look for a cheaper school - start at a community college, then transfer to a state school you can commute to. The dirty little secret of the college game is that if you are strongly motivated to get a first-class education, you can achieve that almost anywhere.</p>
<p>my parents are intent on me going to Virginia Tech, and I really want to go also…My parents have applied for a home equity line of credit, and have been approved for 65k currently, possibly more to be known in a few days. It is at 3%ish interest. Supposing I get enough from this line of credit to pay for all four years of college, it would be better to take out this line of credit, than to take out a PLUS loan, right? I am aware that I am going to be almost 90k in debt once I am out of college, but I am planning on working while in college at VTech, and during summers too. I also am hopeful that I will be able to find a job since I am majoring in mechanical engineering, which has a decent starting salary provided I find a job. Is this a good plan, or am I not thinking it through?</p>
<p>since I am majoring in mechanical engineering, which has a decent starting salary provided I find a job. Is this a good plan, or am I not thinking it through?</p>
<p>This is a terrible plan…and this is from someone who’s from a family of many, many engineers. Yes, engineer starting salaries are higher than others, but that doesn’t mean that the income is high enough to pay back those loans. Those loans are ridiculous. </p>
<p>Do you realize that employers do NOT pay a VT eng’g grad more than an eng’g grad from another school???</p>
<p>It’s irrelevant that your parents want you to go to VT, because they won’t be paying back the loans.</p>
<p>Also, since this will be a home equity line of credit, how the heck will they be making the monthly payments while you’re in college? </p>
<p>??? Are they planning on borrowing $60k now, even though they don’t need that much for the first year? if so, does that mean that they plan on using borrowed money to make the payments while you’re in college? If so, that’s really nutty. You’re going to run out of funds before you graduate.</p>
<p>I believe the home equity line of credit is just giving you a limit of 65k at the moment, and we don’t have to pay anything as of now. It actslike a fund thats there if I need it, if I don’t then nothing happens. When I start going to school, I will take out enough money to pay tuition for the semester, im not borrowing 60k straight out. I live in NC, am dorming with a friend at VT. No affordable choices really, it was either VT 22k a year or NYU Poly 27k a year. They may not pay me more because I’m from VT, but it is a good engineering program, I am thinking. Like I said, I will be making money on weekends/summer jobs, and I will be doing my best in school to maybe get a more grants/scholarships next year. The home equity loan is only from Bank of America, and im applying for private loans from other banks that I found on studentrate. Community college is not an option, I’ve been talking to them about that and they don’t see how I can get a job or transfer if I go to one when I have the opportunity to go to VT already…at this point i dont really know how, just hopin I can make it</p>
<p>* When I start going to school, I will take out enough money to pay tuition for the semester, im not borrowing 60k straight out. I live in NC, am dorming with a friend at VT. No affordable choices really, it was either VT 22k a year or NYU Poly 27k a year.*</p>
<p>Right…and once you borrow the $14k for the first year (and so forth for each following year), who is going to be making the payments on that debt while you’re in college? (you do realize that your parents will have to make monthly payments while you’re in college, right??? </p>
<p>Your parents income is so low that they probably have little/nothing leftover each month to put towards the monthly loans.</p>
<p>??? What do you mean by saying “no affordable choices.” You have NC State as your instate eng’g school. You’d get paid the SAME after your graduate with little to no debt.</p>
<p>Did you apply to NC State? If not, why not? If you did apply, what was in that aid pkg?</p>
<p>It doesn’t sound like you applied to any financial safeties.</p>
<p>I agree with mom2collegekids…did you apply to NC State? They have one of the top engineering programs around and tuition would be so much cheaper in-state.</p>
<p>I actually applied to state, and got waitlisted. Only two colleges I got into were poly and VT</p>
<p>Can’t I defer payments until I get out of college+6 months? I remember my counselor saying to check private loans to see if they have that option</p>
<p>Yes, payment on student loans is deferred for 6 months after graduation, but that’s not the point. Have you figured out what the monthly payment would be? Run a calculator. I think you’ll be shocked. Even assuming a decent starting salary, that’ll be ten years or more that you won’t be able to save for a down payment on a house, won’t be able to buy a decent car, won’t be able to go out with your friends on a Friday night. Your life is going to be severely constrained for a very long time.</p>
<p>If your parents use the home equity line of credit, there’s no deferral. They have to start paying that back immediately. How are they going to do that on an income of $11K, whether you’re in school or not?</p>
<p>Regarding private loans, the rate for a given loan varies tremendously. They advertise the lowest rates, but those only go to borrowers with stellar credit scores. What they don’t want you to notice is that those rates can go as high as 12 or 13%. </p>
<p>I think you really need to consider going to community college for 2 years, and then transferring. VT is a non-starter.</p>
<p>Can’t I defer payments until I get out of college+6 months? I remember my counselor saying to check private loans to see if they have that option</p>
<p>Not with a home equity loan. You have to start repaying immediately. I’m not sure that your parents will qualify for private loans. They might qualify the first year or two, but once they have those loans on their record, they probably will not qualify when you borrow for years three and four. Then you’d have to come home and graduate elsewhere…with the debt from another school…how crazy is that???</p>
<p>The fact that you weren’t accepted to NC State concerns me. You may not have the stats to do well in engineering. If that were to be the case, then you’d have debt and you wouldn’t have the eng’g degree.</p>
<p>I got 2080 on SAT, 2180 superscored
34 ACT
3.2 GPA Unweighted, took a few AP classes (like 6)</p>
<p>What if I took out private loans for the first two years, and then if they do not approve loaning out for the 3rd and 4th year, I will take out the PLUS loan for the rest of my education?</p>
<p>And I know you don’t want to hear this yet again, but I have a prediction: When you graduate and have that mechanical engineering degree and get your first job, you’re going to be working alongside colleagues who are doing the same job as you are and making the same salary. The big difference will be that most of your salary will be going to pay off your massive student debt, while they will be using theirs to buy nice houses or nice cars or start families or just have a good time - because they made good financial decisions about college and you didn’t. And you’re going to regret not going to a college you could afford.</p>
<p>* but I have a prediction: When you graduate and have that mechanical engineering degree and get your first job, you’re going to be working alongside colleagues who are doing the same job as you are and making the same salary. The big difference will be that most of your salary will be going to pay off your massive student debt, while they will be using theirs to buy nice houses or nice cars or start families or just have a good time - because they made good financial decisions about college and you didn’t. And you’re going to regret not going to a college you could afford.*</p>
<p>Annasdad is singing my song!! :)</p>
<p>Seriously, that is a chorus that I sing here on CC so many times. When you’re finally employed, you are going to be very annoyed to see your debt-free (or low-debt) colleagues moving on with their lives because a huge chunk of their checks isn’t going to student loans for 10 LONG YEARS and ruining their young adult lives.</p>
<p>This may not be something that some don’t want to hear, but here goes. Your parents are low very income (I think below poverty levels). Maybe they qualify for food stamps (i don’t know all the rules). But, certainly they aren’t paying federal income taxes and they may not be paying state taxes either. They probably are getting some kind of “help” …assisted healthcare, etc…maybe the earned income tax credit, help with utility costs, or something else out there. Therefore, you don’t have a good sense of how much it really costs to live when you’re paying for everything (including taxes and healthcare) solely out of income. So, an engineering salary probably sounds like you’re going to have money to burn. </p>
<p>The point is, you may think that a $60k starting engineering salary is going to make it easy for you to pay back big loans. It’s not. You’re a single person who is going to get hit HARD with taxes. 1/3 to a 1/2 of your salary is going to fed, FICA, state taxes, and health insurance, and a few other things. Then you’re going to have rent, utilities, cell phone, cable, food, clothing, car, gasoline, car insurance, etc, etc. Then you’re going to have these huge loan payments. You’re not going to have 2 nickels leftover to do anything else…while your colleagues will.</p>
<p>I suggest that you contact NC State and see if you can get off that waitlist. Do what you can. It looks like you weren’t admitted because of your GPA. Frankly, that GPA concerns me as to how you’re going to do in engineering…whether you’re going to make it or not. </p>
<p>What was your weighted GPA.</p>
<p>Also…do this…contact Mississippi State and UA Huntsville TODAY and find out if they would accept you and offer you merit scholarships for that ACT 34. Both of these schools may do that. If so, with a Pell grant and a Stafford loan, you may not need to borrow anything else. At UAH, you might not even need the Stafford.</p>
<p>Both schools are strong in engineering. UAH is located in Cummings Research Park, the second largest research park in the NATION…STEM jobs, jobs, jobs…and internships…and co-ops.</p>
<p>you said that community college is not an option. May I ask why not? Is it because it is impossible to transfer to 4 year college after completing 2 year degree or because you don’t feel like going?</p>
<p>Can you find out if there is a cooperative admission program between community college and state Us? In my home state, there is such program and all students have to do is to tell community college that this is what they are doing, take required classes for 2 years, maintain 2.5 (!) GPA and then they are guaranteed a transfer to state U (including flagship). I urge you to find out if something like this is available in your state (in addition to what M2CK said)</p>
<p>Not to continue to nag … but I’m going to continue to nag.</p>
<p>I made some assumptions:</p>
<p>Your starting salary will be $60,000
You will have loans of $90,000 at an average interest rate of 7%
You’re going to pay the loans off over 10 years
You’re going to drive a beater a short distance to work and never drive anywhere else
You’re never going to eat out and your home-cooked meals will be modest
You’re going to find an apartment for $800 (VERY optimistic in some areas)
You’re going to live in a state with a 5% income tax rate
You’re going to have employer-subsidized health insurance that costs you $400/month</p>
<p>With those assumptions, do you know how much money you’d have left at the end of each month?</p>
<p>By my calculations, about $300.</p>
<p>If the only route to a mechanical engineering degree was one that required $22,000 a year in debt, maybe you could justify taking on the debt. But it’s not. There are far cheaper options that get you the same place. Yes, VT is a great school, and I have no doubt you’d have a great time there and get a great education at the same time. But you can get just as good an education - though perhaps not have as good a time - living at home and going to a CC for two years, then going to an in-state school, hopefully one where you can still live at home and commute.</p>
<p>Now I’m going to shut up about it and say a silent prayer that you make a good decision. Good luck to you with whatever you decide.</p>
<p>Read Annasdad’s words above very closely because I can tell you that that scenario will not mesh well when you’re a youngish eng’g working for a corporation. </p>
<p>My first job out of college was with a major aerospace corporation. Let me tell you how the days go when a bunch of 20-somethings are working together in that atmosphere. Monday - Thursday lunches involve trips to the local fast food/sub shops. Friday lunches are often (time-stretched…lol) and involve sit-down meals at local restaurants. Friday after work typically everyone heads to whatever popular happy hour bar and eats and has a drink or two. Saturday nights are “date nights” or someone might host a BBQ or party or something. Or, there’s a popular movie out and everyone heads to that…with food/drinks before or after. You have to budget about $150+ per week just for this stuff…and that’s $150 after taxes.</p>
<p>Oh…and the car issue. Once you have your first real job, many grads want a decent looking car “for show” or for dating. I’m not talking BMW here…maybe a Honda or Toyota or something without dents and has all of its paint.</p>
<p>The happy hour stuff continues even in your 30s and 40s, and even if you are married with kids (you and your spouse will just have to take turns).</p>
<p>Not being able to participate in those kinds of group activities can also negatively affect your career, which is affected by your relationship with your co-workers.</p>
<p>I really appreciate all of you helping me out, even though you may not know me in real life, you are putting effort into giving me good advice from experience. I have tried to talk to my parents about going to community college, but my parents do not believe I will have a bright future ahead if I go because of what they have heard and what they have asked about CCs in general, and they are very stubborn about it+they are the ones taking out loans. I understand CCs are a great way to reduce costs, but in all honesty I want to go to VT if I am given the chance to, as it is a great school for engineering and very top school in USA overall. Another thing is I have already paid 400$ for VT downpayment, and I have signed a contract for housing/dining, though that may or may not be binding (not sure) I know I seem crazy to take on 90k of debt once I’m out of college, but my mom is trying to find a smalltime job that will provide income to help me out. I also did some math and since I work as a painter during the summer and plan on finding a job during school, if I work at 8$/hour for both jobs, 40hours/week for summer and 20hours/week for school, I will be at about 30-40k income after four years, so I will have about 50-60k debt left. I will probably live in the city renting an apartment with friends, cutting apartment costs. I will also be able to cook for myself, and living in the city, I won’t need a car, a bike at worst. Also, the interest rates for the loans I have seen on student rate are 3-5% depending on credit score, and my parents have a good credit score. I may have to use up all extra spending money on paying off the loan, but I am okay with that, it will only be a few years, and I can also work extra odd jobs. I am also planning on doing well in college, do my best to get straight As and get a better financial aid deal year after year, hopefully with more scholarship money. </p>
<p>Am I still insane with this mindset? Or am I missing something above? Again, thank you for all your help!</p>
When you’re finally employed, you are going to be very annoyed to see your debt-free (or low-debt) colleagues moving on with their lives because a huge chunk of their checks isn’t going to student loans for 10 LONG YEARS and ruining their young adult lives.</p>