<p>My mother is asking me to take out about a $25k loan for her to pay back her debts, since I don't get charged interest as a student and since I'm a student, I'll get the money. However, I'm kind of hesitant because I'm worried about how me taking out such a huge loan will affect my financial aid/schoalrships. :\ I've tried to look it up but I've come up short.</p>
<p>Will taking out this loan negatively affect my financial aid? :| Thanks in advance, guys!</p>
<p>Who will loan you the money?</p>
<p>A bank loan, I think.</p>
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I think you and your Mom are under some huge misapprehensions here. The only student loans that do not have interest are subsidized loans. The maximum subsidized Stafford loan a dependent student can get is $3500 for a year. You can only get that if you have unmet financial need, so if you have financial aid that meets your need you will not be able to get subsidized loans. If your need is met then you may be able to get unsubsidized loans to pay for your EFC. A freshman is limited to a total of $5500 in Stafford loans but may not be eligible to that if it takes the total aid (grants/scholarships/WS/loans) above the school’s COA. Unsub loans that will attract interest from day 1. You certainly will be unable to get anything like $25,000 in subsidized (or even unsubsized) loans.</p>
<p>A bank is not going to loan a student $25,000 without a cosigner which would usually be a parent (with good credit). And banks will not give you an interest free loan.</p>
<p>How are you paying for your college? You can get student loans only up to cost of attendance and if you have other aid and loans, that is taken off of the maximum. It’s not like you can borrow $25K without showing the college expenses to back it up. </p>
<p>My son got a flyer from his bank, Wells Fargo, with an offer of a $25K. All flashy and encouraging, but if you read the terms carefully, it says you will likely need a co signer and it is for education expenses. </p>
<p>So unless you are in a situation where someone else is paying for your college expenses, you aren’t going to get the money, and your mom or other credit worthy adult will have to co sign. True, you don’t have to pay back the loan until you are out of college, but the interest does start accruing immediately.</p>
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oops - I should have said the $3500 is for s dependent freshman. The amount increases a little for sophomore, then for 3rd year and above.</p>
<p>swimcatsmom is right. Taking out a student loan is a horrible way to pay off consumer debts. First of all, your loan eligibility is determined by the cost of the college. If you take out a loan for $25,000, that’s $25k that the college will assume you’ve already covered that amount and reduce any other financial aid they might give you accordingly. You will have to pay interest – often high, variable interest unless you have a great cosigner or a good credit score. </p>
<p>There has to be a better option. Unlike consumer debt, student loans aren’t even dischargeable in bankruptcy. This is a bad idea from every possible angle, even if you managed to get a loan for that amount. Please consider doing almost anything else to help out with family financial situations.</p>
<p>“My mother is asking me to take out about a $25k loan for her to pay back her debts, since I don’t get charged interest as a student and since I’m a student, I’ll get the money.”</p>
<p>I would really talk to your mother about this and try to find some kind of financial advisor to help. Honestly I think this sounds very irresponsible of the mother. She’s wanting you to take out a loan so she can use it to pay her debt? I’m confused. It’s her debt problem, she shouldn’t be putting the consequences on the child. How would she repay you for it? What if she’s not able to? At the end of the day that loan is still in your name and is, on paper, your responsibility. With the loans that you might have to take out for school on top of that, you do not want to have that kind of financial target on your back.</p>
<p>I know of a case like this. A divorce situation with Dad paying for college. Mom’s credit is shot and she is really having trouble making ends meet and that child support check ended at high school graduation, being replaced by the college costs. So the student was asked to take out a private student loans since Mom could not easily get one. For whatever reason, some of these college loans are easier to get than nearly any other consumer loan. </p>
<p>The OP’s mother should look at PLUS before looking at the consumer loans, by the way since the student will need her or another adult to cosign to get a consumer loan, and the PLUS terms are usually more flexible. Also if credit is bad, the consumer loans will really get you for that with the interest whereas with PLUS ,it’s either a yes or a no, and the mom can get a credit worthy cosigner if she does not pass muster herself. But PLUS is pretty lenient in its terms.</p>
<p>The OP’s mother should look at PLUS before looking at the consumer loans</p>
<p>But…the problem is that the mom thinks SHE is going to get her hands on the money…and she won’t.</p>
<p>Any student loan amounts will be based on unfunded COA from this kid’s school. So, the money would go to the SCHOOL. Some (maybe $3-4k) will go to the student to pay for “personal expenses”…but certainly not a large amount. </p>
<p>And…interest will be charged from Day 1</p>
<p>I think this mom wrongly thinks that a student can just take out big loans (in excess of school costs) and they’ll be interest free.</p>
<p>Very wrong.</p>