Student Loans?

Parent Cafe
1

<p>Parents,</p>

<p>I posted this question in a folder/thread for a specific school, but I am wondering if the question is generic enough, that I can post it here (on the Parents folder) and get more answers.</p>

<p>Student Loans? </p>

<p>Does anyone know how the Student Loans work? Are they above the EFC line, meaning: are they part of what brings the total need DOWN to the level of EFC? (like Grant, Scholarship, Work Study, etc). Or, are they below the line, meaning: do they lower the EFC? </p>

<p>To simply the question:
Assume Total Cost=$44,000.
Assume EFC=$20,000.
Assume College Grant of $22,000.
Assume Work Study=$2,000.
Therefore the parents are expected to pay the last $20,000. </p>

<p>If the student gets a "student loan" of $3,000 (thru XYZ College Financial Aid Office) does that mean that the parents only have to come up wiht $17,000? Or is the Student Loan (above the EFC line) and would have caused the Grant to be $3,000 less?</p>

<p>Also, Do the colleges themselves administer "Student Loans"? Or are student loans administered via Governmental agencies, or private banks?</p>

<p>If it matters, the college is a "private" college in California. (The state probably makes little difference, but the fact that it is a private school probably has some bearing on the answers).</p>

<p>Obviously, I am new to all this. I know that I have heard over the years about "student loans" and I have to admit that I don't know much about them.</p>

<p>thanks</p>

2

<p>for example
the cost of my d school is roughly $43,000
Our EFC is $13,000
We come up with the $13,000 for the EFC
Since the school meets 100% of need- the school makes up the difference
$2,000- work study
$1,000- Perkins loan administered by school
$3,700 subsidized Stafford loan ( interest is covered by govt while in school)
$23,000 private grant
<a href="http://www.finaid.org%5B/url%5D"&gt;www.finaid.org&lt;/a&gt;&lt;/p>

3

<p>Thanks. In your example...
Is the Perkins loan a "student loan"?
Is the Stafford loan a "student loan"?
Or are they both in the names of the parent?
I am assuming that since you said that your EFC is $13,000 (which you come up with), then the other is money that is not your financial responsibility, and therefore when it says loan, i would like to assume that means student loan. But, we want/need to be as clear as possible on all of this. As you can surely appreciate, every dollar, one way or the other, makes a difference. So, we want to be sure where the difference financing options come into play. </p>

<p>Is the term/concept "student loan" a real thing? Or is it just a generic term that has been overly used to denote "loans" in general.</p>

<p>Thanks.</p>

4

<p>Perkins and Stafford are loans made to the student, in the student's name.</p>

<p>These loans are "above" the EFC line - that is, they are how the college meets EFC. </p>

<p>Loans offered to the parent - such as PLUS loans - are used to MEET EFC -- so for example -- if the EFC is $20K and the college costs are $30K -- an aid package which meets 100% need might look like this:</p>

<p>Financial aid: Total value $10K
Student Loans (Perkins/Stafford): $4000
Work Study: $3000
College Grant: $3000</p>

<p>EFC -- $20K</p>

<p>Parents pay $10K out of pocket plus borrow $10K from PLUS loan program.</p>

<p>--
You can see that if this package and financing was maintained at exactly the same level for 4 years, the parents would take on $40K of debt and also pay out $40K; the student would be picking up $16K in loans, $12K in grant money, and would have the opportunity to work to earn up to $12K.</p>

<p>It doesn't really work this way because student loan amounts tend to go up in subsequent years -- so whatever the loan burden is during the first year, it is likely to be more later on. College tuitions also tend to keep going up as well.</p>

5

<p>Calmom,</p>

<p>Thank you. That is an excellent post, it directly addresses my
questions. </p>

<p>I have another question, and your answer (already) starts to
address my next question.</p>

<p>Is there an absolute limit on "student loans" that one student can
receive? (ex: 2k, 5k, etc.).</p>

<p>If there is a limit each year, is it set by some Federal guideline, or
by the school, or due to each family's EFC?</p>

<p>Your answer seems to imply that the amount is increased each year. (Is
that because loan institutions figure that students that last each
addtional year, are more likely, and more able to pay back student
loans?).</p>

<p>I know that the school that my S has applied to listed something on
their website about Stanford Loans (they did not refer to them as
Student Loans). I don't recall seeing any mention of Perkins. Do some
schools offer some, others offer both?</p>

<p>thanks</p>

6

<p>
[quote]

The Perkins Loan is awarded to undergraduate and graduate students with exceptional financial need. This is a campus-based loan program, with the school acting as the lender using a limited pool of funds provided by the federal government. (The Perkins Loan is the best student loan available. It is a subsidized loan, with the interest being paid by the federal government during the in-school and 9-month grace periods. There are no origination or guarantee fees, and the interest rate is 5%. There is a 10-year repayment period.
The amount of Perkins Loan you receive is determined by your school's financial aid office. The program limits are $4,000 per year for undergraduate students and $6,000 per year for graduate students, with cumulative limits of $20,000 for undergraduate loans and $40,000 for undergraduate and graduate loans combined

[/quote]
</p>

<p>this information is from finaid.org- I don't beleive the numbers have been updated for the 2006-2007 year
Federal Perkins funding has been cut back according to what I have read

[quote]
Many students rely on federal government loans to finance their educations. These loans have low interest rates and do not require credit checks or collateral. Student loans also provide a variety of deferment options and extended repayment terms.</p>

<p>The federal loan for students is called the Stafford Loan and has two variations:</p>

<p>Federal Family Education Loan Program (FFELP) loans are provided by private lenders, such as banks, credit unions and savings & loan associations. These loans are guaranteed against default by the federal government.
Federal Direct Student Loan Program (FDSLP) loans, administered by "Direct Lending Schools", are provided by the US government directly to students and their parents.
All Stafford Loans are either subsidized (the government pays the interest while you're in school) or unsubsidized (you pay all the interest, although you can have the payments deferred until after graduation). To receive a subsidized Stafford Loan, you must be able to demonstrate financial need.</p>

<p>With the unsubsidized Stafford loan, you can defer the payments until after graduation by capitalizing the interest. This adds the interest payments to the loan balance, increasing the size and cost of the loan. All students, regardless of need, are eligible for the unsubsidized Stafford Loan.</p>

<p>Stafford Loans allow dependent undergraduates to borrow up to $2,625 their freshman year, $3,500 their sophomore year and $5,500 for each remaining year (independent students and students whose parents have been turned down for a PLUS loan can borrow an additional unsubsidized $4,000 the first two years and $5,000 the remaining years). Graduate students can borrow $18,500 per year, although only $8,500 of that is subsidized. There are also cumulative limits of $23,000 for an undergraduate education and a $65,500 combined limit for undergraduate and graduate. (For independent students and for students whose parents were denied a PLUS loan the cumulative limits are $46,000 and $138,500, respectively.)

[/quote]
</p>

7

<p>my son had a problem in that the SCHOOL limits the amount you can borrow, which I have not heard of since with any other schools I have looked at with my daughter. they do not allow anybody to borrow 100% of tuition, so I as the parent had to take a loan out, which I didn't want to do. we applied for the amount we needed this year taking into consideration his need to rent an apartment (they don't allow upper classman to live in dorms), food, gas, car and other essentials. we did not apply for the maximum amount allowed. they decreased the loan amount without even telling us. I was furious, but there was nothing I could do. now when i go to see schools that my daughter is looking at I always ask if they limit the loan amount (staying within above posted amounts), and they look at me like I'm nuts. one more strike against J and W.</p>

8

<p>AMITH1 - could you explain a bit more what you mean in your ^^post please. Are you meaning that they don't allow the ''student'' to borrow up to 100%??? of tuition/board/etc.....</p>

<p>How can a school limit the amount you can borrow?? and where is this information available - I have a friend who's son will be going to J&W and has not heard about this - has heard otherwise - that is why I ask.</p>

<p>Or are you meaning that your son was not able to borrow the 100% due to the limitatons of sub/unsub loan programs?? - which - yes - do have annual limits. What do you mean they decreased the loan amount without telling you?? which loans??</p>

<p>Sorry - but I don't understand</p>