School is providing a 1K in subsidized loan and 30K in Parent Plus.

Paying for College
1

We are getting ready to accept at an out of state college and I am trying to figure out when you actually have to pull the trigger on finances. I would like to just pay the enrollment and get the housing. I have about 20K and a college fund. I am starting to do some research and Parent Plus rate is above 7 and looks like getting a cosigned student loan should be much cheaper. I have excellent credit.

Do you normally have to do the loan at time of enrollment or can this be deferred so I can complete my research. The School is ASU if that helps

2

Here are ASU payment options. https://students.asu.edu/payment-plan

You would have to execute on the loan in time to at least pay the first installment, so you definitely have time to do research. Are you the parent?

Yes, Parent Plus loans are expensive 7.6% interest rate and 4.2% origination fee. Just to be clear are you saying you are going to take out $120K in loans for 4 years at ASU? Are there affordable schools in the mix?

$120,000 at 7.6% is a $1,430 payment every month for 120 months (10 years). Use this to run scenarios: https://mappingyourfuture.org/paying/standardcalculator.cfm

3

Thanks mwfan… Totally Missed that link of all the links I have been reading. I will take a look.

Yes I am a parent and i am looking at how to fund college. House is payed off and I have a 50K worth of HELOC loan for home improvement that I am paying off.

Overall I think it is going to be around 100K worth of loans. Yikes. Yes there is an affordable option. Cal State Fullerton right now which is local, but does not given the College experience my son is looking for.

4

Also… The plan is to be splitting the cost between Us and my Son. He will end up with about 50K in student dept and we will be covering the other 50K

5

IMO ASU is not worth $100K plus in loans, especially as compared to CSU Fullerton. Your son can only take out $27K in total thru the federal loan program, you will have to take out (or cosign) the rest.

What type of job could your son get where he would be able to pay $700 month in loans (assuming he does pay for 1/2 the loans)?

6

I’d say you need to give your kid the college experience you can afford, which may not be the one “he is looking for”. I’d like to drive a Jaguar, but I drive the (used) car so can afford. This amount of debt for ASU is ridiculous.

7

Good Points… Computer Science is the Degree he will be looking to Achieve. He is wait listed to UCI, but if we was to attend there we are still looking around the same amount if does on-campus housing. We are in SoCal and I am sure you are aware of the UC crunch that has limited the choices given is GPA, SAT, and Diversity. Cal State Fullerton is very appealing, but not the College Experience or the Level of quality for Comp Sci that ASU is.

The debt is tough and it might mean staying at home a few years after graduating to accelerate the burn down. An entry level computer science based position in SoCal would be around 60K a year.

8

An entry level comp sci position in SoCal will be around $60k a year with a degree from Cal Fullerton too, just without the debt.

9

If you are wedded to ASU, can you take out another home equity loan for your $75K or so in loans? That will probably be cheaper than the Parent Plus loans.

10

I don’t know why the unsubbed loan is only $1000; he can take up to $5500 in loans his first year, with up to $3500 being subbed. If he has nothing in subsidized loans, he can take the whole $5500 as an unsubbed loan. The rate for direct loans will be set on July 1, but should be about 4.5% with a 1% origination fee.

7.5% for an unsecured parent plus loan is not outrageous - look at the rate on your credit cards. If you can take a HELOC or other secured loan, you are going to get a much better rate.

11

ASU is not worth 100k in debt.
Does he not have another choice? Another UC he got into (UCSC? It’ds excellent for C’s, much better than ASU).

I agree that you should look into HELOC.
Are the 100k in addition to federal loans (5.5k)

(Note that CSUs are exclusively GPA+sat score, and UCs also plus essays. Diversity is not a factor at all).

12

Of course we also have no idea the value of your home, which is paid off (with a $50K HELOC outstanding right now). Perhaps re-mortgaging/reverse mortgage would be even less costly than a HELOC.

13

I have 50K currently out on a HELOC of 400K. So I Can definitely use that, though it is variable so I will need to look at where it caps out. Right now it is low. Something for me to look into.

He is wait listed for UCSC, but my guess is costs will be similar as cost as housing is more expensive there. For a white male in UCs and comp sci as a major it is really tough to get in anywhere. Lucky he got into Cal State Fullerton. As for CompSci, I know it is above Silicon Valley but my research seems to indicate they UCSC and ASU in terms of Comp Sci are pretty close, but ofcourse we talking review sites, rankings etc and those can also be played.

Yes Diversity does not play a role in CSUs, My son’s high school experience was more along a UC student. Some lessons learned there and that is why we are where we are at… CSUF…77K applicants for 6K positions and it gets worse from there…

100K is the full college tuition, not first year. First year is 30K as he did receive some scholorship money. I think that was clear. It does not include the unsubsidized student loans. He does not quality for sub as I make too much money and have way too much equity. Never imagined having a house payed off would be a negative for school but then again I did not look at how the game is played this closely 6 years ago when I should have started understanding the system. Lessons learned.

This input is great and much appreciated.

14

Your son can take out another $4500 in loans, which will be unsubsidized but the interest rate will be less than PLUS. i don’t know what the interest rates are for the loans that are co-signed.

It appears that the cost issue is for room and board, even if he had been accepted to the UCs as you indicate that regarding UCI. The room and board costs are high for the UCs. They are not cheap for the Cal States either. Fullerton runs about $18k a year after tuition.

The fact of the matter is that the loans you are contemplating come to close to $1500 a month when they are in full fledged mode. I took out about that amount, maybe more for my oldest son’s College. I started paying on each loan as soon as I took it out and it was still a very long 14 years to repay them. If you are up to paying that kind of monthly payment, perhaps you can pay that now in housing at Fullerton? That he would be away at school gives him the college experience rather than commuting

But, if you are all set for ASU, I understand. It’s an excellent school with great campus experience. You appear to be going into this, knowing what you are doing.

Unless you get a far better deal on those co-signed loans, PLUS has the advantage that it doesn’t stick your sonwjth the loans if you become unable to pay them. The same if your son should die(yes, gruesome thought, and I’m sorry). Those co-signed loans stay as long as either of you are alive. HELOC might be a far better deal, especially if you can deduct the interest

A lot of Computer sci majors do not end up that way. Don’t trust me; check the stats. I have kids that changed majors all over the place. They often do not get jobs that pay s living wage and still owe the loans. Not to mention what the loans can be for us parents. College is for about 4 years. The loans go on for much longer.

I’m a bit puzzled about the comment of home ownership affecting your financial aid numbers. FAFSA does not include the value of primary homes, and both ASU and Cal schools use FAFSA, I thought. It’s income that is the primary driver of EFC. Though these schools often do not meet need, the inclusion $1000 of Direct loans brought into the package appears as though it is done so because the rest of the cost is within your EFC.

We do what we feel is the best for our children. As I said, I went down this path.

15

@WeeJavaDude

This isn’t making sense.

Your son can NOT take out $50,000 in loans in his name only. You will either need to co-sign or take the loans for him.

In terms of Cal State Fullerton…is that one affordable without huge loans? What would be your costs to have him attend there.

It’s a huge gift to graduate from undergrad school debt free. Huge.

Computer science…was he accepted into that major at Fullerton?

Is your son eligible for the Calgrant?

How much CAN you contribute annually to fund his college education, including his college fund.

Personally, I would not fund college with the equity in my house. But that’s my opinion.

ASU sounds unaffordable.

ETA…you wrote this…

The equity in your primary residence is NOT included on the FAFSA at all…not at all. If your son doesn’t qualify for a subsidized loan, it’s because he doesn’t have financial need…and in your case, this would be based on your income and assets other than your primary residence.

What was your FAFSA EFC?

16

UCI is about $33k. ASU is about $45k. you say that if your son clears the WL for UCI, there is still that $25k gap, that you have with ASU after they gave him some money… CSF is affordable because your son would commute, not incurring the $18k expense of boarding.

The thing is, what you are borrowing will result in monthly payments that you’ll have to make that are about the same as making them now. If it’s a hardship now, it’s not going to get easier as you get older. Stuff happens. Trust me, it does and if you are stretched to borrow now, it’s a bigger one paying it back. I did it. Very very painful.

What you are basically saying is that you can’t afford to send your son away to college. You can manage the California in state school tuitions just fine, but notvwhat it costs for your kid to go away to school. To pay for him to leave home ar age 18 through loans is not a great idea. He’s likely to need some send off money when he graduates and you’ll still be paying for his sleep away college experience. Or he’s stuck back home which is no pleasure for you or him after 4 years away. Do not count on high Computer sci graduate jobs as that is very much counting those chickens before they hatch. As I said, things often don’t go as planned with young adults, and that’s when you need financial leeway.

17

Not what you want to hear, I am sure, but I have to ask if it would make best sense for your son to do two years at the local CA CC, then transfer to a CSU or UC? He might have better options two years from now, and the two of you would have time to save up some pocket change to put toward the on-campus housing experience.

18

UCSC is better for CS than ASU and the university is overall better funded (not because UCs aresuper well-funded per student, but because AZ has been cutting university funding).
ASU, without Barrett, is “lots of amenities/cuts on academics”. So, is he in Barrett?
For that much money you want to make sure he gets value for money.

19

He is already in Cal State Fullerton which is local to them and affordable. Accepted to the computer science program so he’ll have an optimal chance of getting the courses for that major. Going to a CC instead doesn’t look like a good move to me, as getting the desired courses mat not be easy and it’s a bit late at this point to get priority in certain programs there. I know some CCs have programs that guarantee entry to certain UC programs but don’t you have to apply to them specifically?

The Cal States are excellent universities, very much overshadowed by the UCs., but in terms of education, they are right up there.

The ASU offer of admissions includes money to make the cost about the same as an away UC, and son is on waitlist for one, UCI

So it comes down to a choice of commuting to a very good state school in program of choice at affordable price without borrowing or going away for college, borrowing $100k+.

That the OP is not eligible for Calgrants or any federal aid beyond $1k of subsidized Direct Loan, means that the family EFC cannot be met out of savings or current earnings. Happens a lot. But can they afford repayment of that much in loans over next 14 years, maybe more? That’s a sobering thought. And IMO, the thought that parent and child need to discuss. Things do not always work out.

20

Sorry, I’ve repeatedly mentioned UCI instead of UCSC. But same stuff stays. Can’t depend on clearing WL and OZp says cost there comparable to ASU deal