Release from ED because of financial reasons

Paying for College
1

<p>When they say that you may be released from your ED commitment because of financial reasons, who actually determines if your attendance is not financially possible?</p>

<p>You or the college?</p>

<p>What effect does this have on the RD cycle?</p>

<p>Also, if you were to take the leap and assume the full cost of $60k and end college with say 150-200k$ in debt and tragically die, would your cosigner (aka your parents) be screwed?</p>

<p>Would they pursue the 150k$ from your parents and doom them financially into debt?</p>

2

<ol>
<li>You, in good faith.</li>
<li>Your participation in this admissions cycle for this school is over. RD is irrelevant.</li>
<li>Yes, that’s what it means to be a co-signer.</li>
<li>Of course, that’s the whole purpose of having a co-signer.</li>
</ol>

3

<p>Future…when you take a loan, the loan issuer expects to be paid back…with interest. Students seldom have the collateral to secure large loans. Therefore you need a cosigner who will be responsible for that loan repayment in the event that you don’t pay.</p>

<p>If you need $100,000-$200,000 of LOANS to attend any college, in my opinion that college is NOT affordable for you.</p>

<p>P.S. your parents would have to QUALIFY for those large loans. Do they have the income and assets to even be considered as cosigners on loans in this amount?</p>

4

<p>Borrowing that much is insane.</p>

<p>That said, if your parents do co-sign, they need to take an insurance policy out on you …not only for death, but in case you become disabled and can’t work.</p>

<p>NO school is worth more than about $50k in debt…no school. You won’t earn enough as a new grad to pay the debt off AND still be able to cover your living expenses.</p>

<p>How much do you think you’ll be earning as a newish grad?</p>

5

<p>Even $50K seems very high to me.
That is way more than the average debt at graduation at many state flagships.
U Michigan’s average debt at graduation is about $28K. $31K is the aggregate loan limit for federal subsidized and unsubsidized loans to dependent students.</p>

<p>What’s the average price of a new-ish economy car? That’s the kind of debt load a typical newly employed, recent college grad might be able to shoulder. $200K is more like a mortgage (an amount two people carry for 15-30 years).</p>

6

<p>Well if my cost after FA is around $40k, and my parents can maybe pay $10-20K of that, I’ll be ending up with around $100k debt.</p>

<p>I have no idea how to deal with this and it’s probably going to affect my college choices which is really a shame. And my parents are pushing me to not ED even though it’s my best chance at a top school.</p>

7

<p>Are there co-signing options that protect against tragic death?</p>

8

<p>The co-signing options for tragic death is LIFE insurance for the amount of the debt. </p>

<p>*Well if my cost after FA is around $40k, and my parents can maybe pay $10-20K of that, I’ll be ending up with around $100k debt.</p>

<p>I have no idea how to deal with this and it’s probably going to affect my college choices which is really a shame. And my parents are pushing me to not ED even though it’s my best chance at a top school.*</p>

<p>OK…We’ll give you an idea…Don’t. </p>

<p>Frankly, I’m appalled that your parents would even consider co-signing $100k in loans. Why would parents “help” their child have a miserable after-college life? </p>

<p>You’re so focused on going to a “top school” that you’re not thinking beyond your nose. “Must get in” is your mantra. </p>

<p>Well, have you ever heard of, “be careful what you wish for”? </p>

<p>I find it interesting that you acknowledge that if your parents were left with your debt it would “doom” them, but…you’re ignoring the fact that such a debt would doom YOU.</p>

9

<p>Your parents are RIGHT regarding ED. It sounds like their EFC is higher than what they actually can contribute. You need to have the ability to compare financial aid packages and the net costs to you after aid has been awarded.</p>

<p>Is there a way to deal with debt if there is a tragic death? The only way a cosigned loan would be forgiven in the event of death would be if YOU and your parents had a tragic death. What good would that ED acceptance and loan do you under that circumstance!</p>

<p>Re: the tip in admissions for applying ED. Are you a legacy, developmental admit, recruited athlete? If not, the tip for applying ED isn’t very big. If you are a competitive candidate ED you will be a competitive candidate RD.</p>

<p>$100,000 in debt is very high.</p>

10

<p>$100K of debt is the equivalent of paying a middle class family’s mortgage bill, every month, for 10 years. That’s before you get to living expenses.</p>

11

<p>^^^</p>

<p>I’m not even sure that it’s equivalent to that. With a $100k mortgage, at least you’re getting a good-sized tax deduction each year. </p>

<p>As you mentioned, student loan payments are before paying for living expenses. </p>

<p>I would say that borrowing $100k in student loans is like paying for 5 additional car payments while you’re ALSO paying for your living expenses and the REAL car that you’re driving.</p>

12

<p>

</p>

<p>First of all, you will n ot end up with 100k of debt because no on is going to loan you this money. </p>

<p>The first step would be for your parents to take out a plus loan. If they are not eligible for a plus loan, you will be able to borrow an additional $4k as an unsub loan. If your parents are not able to borrow the money as a plus loan, it would be highly unlikely that they would be in a position to co-sign for you a loan. </p>

<p>Keep in mind no matter what borrowing options you take, you/they will have to be credit worthy enough to borrow for each of the additional 3 years (making it harder to increase the debt year/year)</p>

<p>OP wrote;</p>

<p>

</p>

<p>I think it is in your best interest to apply RD. Unless you have some really significant hook; developmental admit, recruited athlete with a likely letter in hand, applying in the ED round is most likely not going to help your cause. Take your time, make sure that you have an academic and financial safety lined up. In addition, look at a couple of places where you can get some merit $$, since you have already mentioned that money may be an issue. Apply RD, so if you are admitted you will have the opportunity to compare packages.</p>

13

<p>What is the point of applying to the school at all if it is way too expensive after way too little financial aid and scholarships?</p>

14

<p>If the value of certain assets, like the home, is probably over valued, approximately how much will this affect my approximate Fin Aid decision?</p>

<p>Also, quoting the CA early decision explanation: “Should a student who applies for financial aid not be offered an award that makes attendance possible, the student may decline the offer of admission and be released from the Early Decision commitment”</p>

<p>I am by no means banking on declining a potential offer of admission, but certain assets may be over valued which may affect my FA substantially.</p>

15

<p>The assets are over valued, you or your parent over valued them. You can explain this to the financial aid office and see what kind of effect that has on your aid package. For most PROFILE schools, assets over $50K are assessed 5%. IF the asset is a primary home, some schools will cap the value at 1.2 X AGI or 2.4XAGI, no cap , not count it at all, or use some other cap. It depends upon ths school. But if you reported the asset, the home at a value that is too much, that’s your mistake and you had better start gatheing the evidence that this was indeed an error on your, or your parents’ parts. </p>

<p>If you get accepted at the school ,and if the aid is not sufficient, and financial aid refuses to make an adjustment, you can let admissions know that you cannot afford the school. They will release you from the commitment, and then it’s game over for that school. You cannot be reconsidered for RD at that school.</p>

16

<p>Future…you are making it sound like some third party is going to value your assets higher than their true value. You know…the value of those assets needs to be honestly reported. You very well could be asked to provide documentation to support any value YOU assign to assets.</p>

<p>What kinds of assets do you have that you are SOOOO concerned about their value?</p>

17

<p>Thanks for the response @cptofthehouse.</p>

<p>With regards to adjusting financial aid, how realistic is this? My parents’ defining argument against applying early action is that I will “not be able to negotiate” with the Fin Aid office, especially if its still not affordable.</p>

<p>Is this true? Must I have an offer from another competitive college to be able to leverage any amount of Fin Aid?</p>

<p>Thanks.</p>

18

<p>You don’t have to have another offer from another competitive college, and many schools will flat out not “negotiate”. Perish the thought and don’t even use the word. But, yes, if similar colleges have better packages, and you want to know what the issue is and there is one, some things might be worked out. Some schools out and out invite other offers from peer schools. My son did get his meriit award increased when he said he would go there in an instant but because of other less expensive options from highly selective schools, his parents were giving him trouble, and some more grant money would be the deal sealer. So, yes, personally, i’ve experienced this with my kids, and some long time board members have undergone the same scenario. </p>

<p>If you just have one package in hand, you have no idea if it’s reasonable or not. If you have another like school coming up with a better deal, less loans, less self help, more grants, you can let the college know, and ask if something cannot be found to give you a more competitive package. Yes, it does sometimes have some leverage with some schools. It also gives you another alternative. It’s scary to turn down your first choice school with no idea as whether or not the offer was really a good one, or a bad one.</p>

<p>I have friends who did ED, and yes, they could, with loans and substantial squeeze afford the school. They were not too happy to find out that a very similar school that was also on their DD’s list was giving out some nice awards to a number of students they knew. $40-80K over 4 years is a lot of money and had both offers been on the table at the same time, there is no question what the choice would have been, but only School A was there with the package when the ED news was released. They did not know with just that offer in hand whether a like school would come up with more. THey had to decide whether they would go with it and make it work, or take the chance that other like schools would come up with better during RD or that their kid would even get accepted to such school, and oh, yes, the ED school would no longer be an option because when you turn down ED and get released, that’s it for that school. </p>

<p>Early Action is a whole other story from early decision, by the way. You have until May1 to make the commitment, and by then, you will have other offers as long as you have applied to other schools. Some schools do not release fin aid/merit packages fpr EA stidemts until the spring and then give everyone their packages at the same time. Not always the case, but that’s what I’ve seen at our house.</p>

19

<p>So you got in ED? And you want to back out?</p>

<p>Colleges purposefully make it difficult to back out of ED.</p>

<p>If your parents can’t or won’t pay the EFC, the best option is to talk to a lawyer about being declared independent. At many schools, once you are declared independent, your EFC would result in a large aid package available.</p>

<p>That being said, I would never apply ED to a school that did not have a huge endowment = gives mostly grants.</p>

20

<p>Rhandco, your advice is outright wrong.</p>

<p>1) It’s very easy to back out of ED. Just say, so sorry, can’t afford it. That’s it.
2) You cannot be declared independent unless you meet one of a list of conditions. Most of the time, age (24) is a major sticking point. If it were an option, many, many students would be doing this. Doesn’t work. </p>

<p>You apply ED when you are sure this is the school you absolutely want, and you and your parents are willing to give their all for you to go there. That if the fin aid offer is at all doable, you are going to take it with no regard to what else you might get elsewhere. It’s that important to parents and you to get into that school and you all are going to make it happen if at all possible. Parents often feel that way about their kids getting accepted to Harvard, Princeton, Yale, MIT and such school. Those schools tend to be the most generous is financial aid too. But is it really worth every friggin’ cent and maybe more for your kid to get into Respectable Private University A, when there is a chance that Respectable Private University B might give a much better aid package? </p>

<p>It’s best when a family has a dollar amount that they will pay, and that is that. If the offer is over that amount, then it’s no deal. But then you start slicing the salami with things like, what if it’s a hundred over, a thousand over, etc. You get the general idea. But usually when a kid gets into Harvard, even if the financial aid might be less than expected and is going to take some doing, a family is so overjoyed they are on the phone to relatives and maybe even soliciting some help. If it’s Respectable Private University A, they might be happy for you , but they really don’t want to empty the bank to pay for it and Great Aunt Ginny and her husband, might not be so impressed, and be more likely to just ask why you aren’t just going to State U. Might do it with Harvard too, but the chance are better for some donations for certain schools. Not denying that some schools have that name value aura.</p>

<p>So when you apply ED, you have to know where your parents stand on all of this. And to be a good person and not a selfish brat, you might want to ask yourself if they are overextending themselves. If they are having a tough time making ends meet and have credit issues, it’s really a selfish thing to ask them to stretch even more financially, especially when you can tell they are apprehensive and not so thrilled.</p>