The gap and other financial pitfalls

Paying for College
1

<p>My daughter got accepted at University of Oregon. I am in construction and haven't worked much since the recession. She is about 29k short of cost for school. </p>

<p>We have just discovered that despite what all the adds say Sallie Mae, Wells Fargo, Discover etc. You have to have a cosigner for a freshman to get a student loan.
This whole we'll help thing by those lenders is nothing but bs a and build false hope and mistrust. </p>

<p>So here's the rub if we cosign the loan , we can't qualify to buy a smaller house than where we live right now. (i've got to cut cost work is scarce, we need to sell) If we don't cosign the loan she doesn't go to school. </p>

<p>It is really sad she worked very hard through high school took AP honors classes. graduated with a 3.75, focused on getting into school. and accomplished it Now NO FUNDING. </p>

<p>We aren't needy enough to get a lot financial aid, she's not a minority, and no one will lend to her without a cosigner, I am open to suggestions. does any one know of any companies that will lend to a freshman without a cosigner. She did get a Deans scholarship and some others but they don't cover the cost of school. She also worked and saved her money and will work in school. </p>

<p>So for all you parents and freshman and high school freshman to seniors get a job get some credit history keep it good and plan ahead way way ahead like 4 years ahead financially even if you have no idea where you are going to school. I am open to advice, help, donations anything.....</p>

2

<p>$29K would be far too much for a student to borrow for their first year of college in any case.</p>

<p>In-state tuition at U of Oregon is under $3K per semester – so allotting $6K for tuition … what is the other $23K for? If its for room and board, do you live near campus? Can your d. commute rather than live on campus? or if you are farther away, can she live off campus in a shared apartment? (at least for off campus housing, rent would be due on a monthly basis, rather than having to be paid ahead like dorm fees).</p>

<p>If your d. is not an Oregon resident… then I think she needs to rethink her plans and opt for a more affordable college. I know that sounds hard, but that’s not nearly as bad as the consequences to her of going through with the original plan of borrowing $25-$30K every year. The absolute MAX she should borrowing for her first year is about $7500.</p>

3

<p>yes that is the part of the problem. she is out of state ( CA) so dorm cost tuition etc is expensive. the problem is when we found out about this she had already made her choice and turned down other instate schools. At this late date I don’t think she can be reconsidered. I would love to hear from anyone who had a similar problems or from lurking deans of admissions who have other ideas.</p>

4

<p>is there anyway she can get into an in state school at this point?</p>

5

<p>If this student received a scholarship of some kind and is still short $29K, they would have to be an out of state student. </p>

<p>U of Oregon is a public university. Their first obligation for funding is to the students who reside IN their state. U of O, and most other public universities, does not meet full financial need and does not provide extra aid to cover the differential between OOS and Instate tuition to it’s OOS accepted students.</p>

<p>Did you WANT your daughter to be able to take $29K in loans per year for college? That would leave her with $116,000 in debt and a monthly payment of about $1200 a month…and that would be with favorable interest rates.</p>

<p>I’m sorry…but I would not want my child to be able to take that amount of loans each year of college. It’s just not reasonable.</p>

<p>And why should any lending institution lend a student with NO collateral money without a cosigner? That is irresponsible on the part of the lending institution.</p>

<p>Is it possible to pursue a less expensive option, or take a gap year and apply to schools where the merit aid awards might be better OR where the overall costs (e.g. an instate public) might be more favorable?</p>

6

<p>The loans are too much. Your D would end up with about $120k in debt by graduation. No school or bachelors degree is worth that kind of debt.</p>

<p>Your D really can’t afford to go to that school.</p>

<p>She may need to take a gap year and re-apply to some schools that will be affordable and/or will give her a scholarship.</p>

<p>There’s a reason why fed student loans are limited to the following amounts…$5500, 6500, 7500, 7500 for a total of $27k at graduation. That’s all a new grad can afford to pay back.</p>

<p>What kind of job/income will your D likely be earning at graduation? It’s doubtful that she’d be making enough to pay back big loans.</p>

<p>What state do you live?</p>

7

<p>the problem is when we found out about this she had already made her choice and turned down other instate schools.</p>

<p>I’m sorry to sound harsh, but it sounds like you’re saying that you just found out that she couldn’t borrow $29k per year on her own, but you were willing to let her do that. Is that right? </p>

<p>If so, that was the mistake. The mistake wasn’t learning that she’d need a co-signer. The mistake was thinking that it was fine for your D to borrow that much money. </p>

<p>Parents, you have to “do the math” and determine what kind of payments $120k in debt would do to a kid’s life after graduation! What new grad can afford monthly payments of $1200+ per month in addition to normal living expenses and maybe a real car payment? That’s like 4 extra car payments. Many new grads are lucky to be earning $40k per year. </p>

<p>When you were fully employed, could you afford 4 extra car payments in addition to all your regular expenses? If not, why would you think a new grad could?</p>

<p>Having a degree is not some magic ticket to economic freedom that provides big incomes that can pay off big debt. </p>

<p>I apologize for sounding so harsh, but it’s time to man up and tell your D that this whole venture was a mistake from the get-go. She needs to find out which state schools she can go to either this semester or next semester. </p>

<p>What were her test scores? She may have to take a gap year and reapply for scholarships.</p>

8

<p>Actually I did have 5 car payments at once and after the first year she would stay there and be an instate residence. MY sons are already well through schools MY oldest has a double degree from cal is finishing his masters at columbia, and is going to law school. my middle son is in his junior year NAU. but things change. There is more financial aid available to juniors and seniors. Yes the 29 k is big a lot bigger than we thought. We had a lot of our aid removed because we don’t fit low income, but with the recesssin I don’t make near as much as I did. that’s the GAP.</p>

9

<p>

This is not generally the case. Most state Us quite specifically say that a student cannot become a resident for instate tuition purposes while they are attending college as an OOS student. A dependent student’s residency is usually based on their parent’s state of residency. If it were that easy to become instate then there would be no point of having OOS tuition. You might want to check with the school for the Oregon rules.</p>

10

<p>Here is the web page for that:</p>

<p>[Residency</a> | Office of Admissions](<a href=“http://admissions.uoregon.edu/apply/residency]Residency”>http://admissions.uoregon.edu/apply/residency)</p>

11

<p>and under the FAQs here</p>

<p>[Residency</a> FAQs | Office of Admissions](<a href=“http://admissions.uoregon.edu/freshmen/residency/FAQ]Residency”>Residency FAQs | Admissions)</p>

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12

<p>You need to relook at in-state options. Maybe a CC or CSU? If those are not workable consider a gap year and reapplying to the UCs this year.</p>

13

<p>The choices your daughter has now are</p>

<p>1) Starting this fall, attend a local California Community College for 2 years and then transfer (preferably to an affordable in-state CSU or UC)</p>

<p>2) Take a gap year, work/volunteer and then reapply as a freshman to in-state CSU or UC. Bonus if she attends one that she can live at home.</p>

<p>3) Take a gap year and armed with all your new knowledge, apply to schools as freshman that she is going to get massive merit aid.</p>

<p>Also, make a plan with your daughter on how much total debt is reasonable to take out over 4 years. Plan college choices based on that ceiling. As soon as that 29K figure popped up (probably around last April for a freshman UO student!) a whole lot of red flags should have went up and an alternative <em>school</em> chosen rather than chasing down this unaffordable option.</p>

<p>There is a lot of denial and finger pointing going on here. There is no lurking dean that can wave a magic financial aid wand and bring that gap-price down or point you to a magic-bank that requires no co-signers for an 18 year old. There may be a dean or two reading these boards but this is not the kind of problem they can solve. And any dean that would suggest having an 18 year old take out 29K in private loans (even WITH a co-signer) for a single year is grossly negligent.</p>

<p>The banks did not fool you with slick advertising. I mean, come on, what would be the point? Lack for foresight and planning by the family is what sunk this first plan for college.</p>

14

<p>*after the first year she would stay there and be an instate residence *</p>

<p>No, that’s not true.</p>

<p>*If you take more than 8 credits per term, in any term, in those first twelve months, the state will presume that your primary purpose for living in the state is for educational purposes, and you will continue to be classified as a nonresident. *</p>

<p>She’d be paying OOS rates while during her 4 years, so every year she’d be at least $29k short (rising as costs go up). </p>

<p>You may have been comfortably paying for 5 car payments at one time but I doubt that your income at that point was ANYWHERE near the income of a new graduate. </p>

<p>Your words…“I am in construction and haven’t worked much since the recession.” This suggests that your income has been lowered for quite some time now, and you’ve known that there would be a gap. Your “solution” was that your D take out big loans all by herself. You’re in construction. Since when do banks give out large amounts of money to young people w/o credit, income, etc, to back it up? </p>

<p>I don’t know where you get the idea that there’s more aid available for juniors and seniors. That’s not typically the case. Often aid stays the same or decreases. A school like Oregon (an OOS public) doesn’t typically give its aid to OOS students…that’s why they charge OOS rates. </p>

<p>Anyway…I don’t know what state you’re in or what your D’s test scores are, but if they were high, then she may need to do a gap year and reapply to schools that will give her a big scholarship for her stats. </p>

<p>Or, be prepared to co-sign loans for the next 4 years for about $30k per year (costs do go up each year). </p>

<p>Again, I’m sorry that this is harsh, but it’s time to have a heart to heart with your D. Decisions were made based on incorrect but important info (loans w/o co-signers and residency and instate rates after one year). </p>

<p>I realize that your D worked hard thru high school. Believe me, many of our kids did, too. That doesn’t change anything. Many very smart kids don’t get to go to the schools of their choices because of finances. </p>

<p>Are you from Calif? </p>

<p>What are your D’s test scores?</p>

15

<p>

Good point. My daughter is at an instate U and has received good need based aid that combined with her merit scholarships have kept her debt very minimal This year (her senior year, though she will end up taking another year because of some additional stuff she is interested in) she did not get offered a SEOG grant or WS, which she has had before with the same EFC, but a larger loan than in previous years. Not too bad as it is still below the max Stafford but will increase her debt to a little more than we had hoped. </p>

<p>She is also a good student and worked hard through high school taking AP classes and had a 32 ACT. But if she had been interested in an OOS school and the financial aid turned out to be inadequate I would have told her the financial facts of life (what 18-19 year old really understands how crushing that sort of debt can be) and would have very very strongly discouraged her. Heck, she thinks she is graduating with “a butt load of debt” (her words) and she will probably have less than $20,000 debt for her entire undergrad. I would absolutely have not let her take $29,000 in loans for a single year. No OOS public is worth going into such huge debt for.</p>

<p>Bottom line is your daughter cannot afford this school. Better to figure this out now than later.</p>

16

<p>I wouldn’t have let my d. take out $29K in annual loans if the school had been Harvard. No private college is worth that amount of student loan debt, much less an OOS public.</p>

<p>My d. did get into her first choice college (NYU) with a gap of that much, on top of Stafford loans – and she turned down the school. Five years previously, my son had gotten into his top choice college, also with a $30K shortfall in aid… and he turned down the school. </p>

<p>It doesn’t matter whether a bank will lend the money or not - it is irresponsible for a parent to allow a kid to borrow that much for undergrad, and it is irresponsible for a lender to front that amount of money to a kid. </p>

<p>If the kid is a California resident and was accepted to a UC or CSU – there may still be a possibility of enrolling in some schools – it depends on the campus. I’d suggest at least exploring that option. </p>

<p>Otherwise, if the kid is dead set on attending U of Oregon and wants to establish residency, maybe she could defer enrollment for a year, move to Oregon, get a job, and support herself – it looks like that might work, provided that she is able to become financially independent during that time.</p>

17

<p>^^^ true - I should have said **NO **school is worth this sort of debt. </p>

<p>I am always shocked that anyone would take on such debt for any school. But somehow it seems even more baffling to even fleetingly consider it when it is for a Out of State State U.</p>

18

<p>You are very wise to see that the gap is too much for a college freshman or for you to take. I’m sorry that you found out so late. You can call the admissions office and the financial aid office and explain the situation. Also ask if there is any reciprocity arrangement with California, or anything that could help.</p>

<p>You are fortunate that this is not a done deal yet. There are many parents and kids who do take out these huge amount in loans, owing over $100K by the time the kid is finished with school. </p>

<p>California state schools are reasonably priced unlike some states. If she stays home and commutes to a state school, perhaps she can work and save enough to transfer to Oregon and finish there after two years. That would be a good goal to have while working. You can also save money towards this goal over the next two years as well.</p>

19

<p>I just want to add that I don’t want to be seen as denigrating the value of a public education – I believe that U of Oregon is a good school, and given California’s budget problems may be a reasonable choice for a California resident who can afford it. </p>

<p>Out-of-state publics are often a very good choice economically for full pay families, because even with out of state tuition, they may still cost significantly less than a private college. For example, the OOS tuition for a nonresident at U of Oregon would generally be under $18K annually – as compared to tuitions of $30K+ for many private schools. (I can only give a rough approximation because Oregon charges by the unit) </p>

<p>The problem is simply that there is a big difference between a family that can afford the money – and is choosing between paying roughly $30K annually for the OOS public (for full COA) and $50K+ for a private education – and the family who must borrow to make it work.</p>

20

<p>UO does not have reciprocity with California. There are other publics in Oregon that do participate in WUE and it is easy to find that information online. The thing to note, though, is that UO is <em>not</em> one of the participating colleges in terms of California residents.</p>

<p>@calmom - the 18K tuition and fees figure for UO non-resident is far too low a quote, you may be looking at an old chart. UO jumped the OOS fees by another 7K or so. </p>

<p>For this fall, a UO student going fulltime can expect to pay closer to 25K - 27K going to school full-time (the range for taking three 5-unit classes or four 4-unit classes per quarter X 3 quarters).</p>

<p>The 25K - 27K is just tuition and general fees at UO. It does not include room, board and books. Thus, what used to be a very affordable option for California students just a year ago has actually become not so great.</p>

<p>UO also gives little to no merit aid. My daughter applied as a transfer to UO this year and was given zilch in merit aid. She also applied to Santa Clara University (private LAC) and was awarded merit aid–it is actually cheaper for her to attend SCU, not to mention she can live at home and commute. </p>

<p>Best option by far these days is to hope the OP lives in a major city area and can use the option of local CCs and universities. Not having to pay that extra 10K/year in dorm fees is just too attractive to pass up lightly.</p>