I’ve read posts on here for a long time, so understand that the Federal loan limit for undergrads is actually very low - between $5k and 6k for freshman year. So when adults I know, who would likely not qualify for financial aid, say that their kid has to figure it out and get loans on their own (just like they did), what are the kids doing? Can an 18-year old get a private loan for tuition? Is a school loan treated differently than other types of loans?
Thanks for clarification.
A student cannot get a loan in their own name…in excess of the Direct Loan amount. The student would either need a cosigner, or the parents would need to take out the loan.
Those adults don’t realize that times have changed. Back when they went to college, costs were low enough that fed student loans covered most/all costs. Also, years ago, Sallie Mae loans could be taken w/o cosigners
We used to be able to work part-time waitressing jobs to pay our fees.
Parents, new to the college thing, don’t understand that their children have to earn $40K per year to fund most schools. Most of those parents haven’t set aside one dime in college savings for their kids. It’s so sad.
Generally no, because most 18 year olds have no steady income nor significant assets in their own name. For private loans they will almost certainly need a co-signer.
A student loan is an unsecured loan-- meaning there is no collateral the way there is for a home mortgage or car loan. If a borrower defaults on a home mortgage or car loan, the lender can foreclose on the house or car to recoup its losses. A mortgage or car loan may be dischargeable in bankruptcy…
With a student loan, there is no collateral to seize. The student load is NOT dischargeable in bankruptcy or at death. If you get hit by a bus and die, your co-signer is still on the hook for the student loan.
There is no cosigner for the Direct Loans. These are not discharge lemon bankruptcy. But there is no cosigner to assume the debt if the student dies.
But for private student loans…no discharge in bankruptcy and the loan then is the responsibility of the cosigner of the student dies.
If you decide to take a loan with a cosigner, it is VERY important that both you and the cosigner read the provisions of the loan.
I would say if you are a cosigner, you want the other party to get life insurance to cover the loan. There was just an article about this recently regarding a deceased NJ student and their family loaded down with loans.