D has one year of undergrad left at an expensive private school. Up until yesterday, our income was too high for FA, and we were able to pay everything out of our annual income. However, since our income was slightly lower last year, we actually did apply for FA this spring, just for kicks. D was offered a $4,000 Perkins loan and a $5,500 Direct Subsidized loan. We were not planning to take those… and then H lost his job. We’ve already paid part of next year’s tuition; what’s left is $27,000 plus around $10,000 for room & board.
S will be a sophomore at a state school, for which his tuition is pre-paid, so all that’s left is about $9,000 room & board. We did not apply for FA for him.
We’ve never looked into student loans before, and I’m finding it very confusing (plus, I’m pretty dumb about this stuff anyway). What would be the best type of loan to get? H will have access to his retirement fund in 5 years, at which time we would pay off the loans (barring any disaster). We’ve always intended to pay for our kids’ college in full, and hope to continue with that plan if possible.
wow, this is tough…and, to be honest, one of my top fears when considering expensive colleges…yes, we can perhaps afford it now…BUT…
in any case, smarter finance guys than me will jump onto this thread…but one thing that occurs to me is that the colleges are not just looking at income but, of course, assets…and i imagine that your assets are still in place.
is your husband receiving a severance package? That also counts as income.
You might want to call the financial aid office at the schools and explain the change in circumstances. Perhaps you can submit a revised FAFSA/CSS and be reconsidered for aid in light of the job loss.
The daughter should take the student loans that were offered–those are favorable terms at least and you can help with it later, hopefully. She can also take another 2,000 in unsub. The repayment on all of these does not start until 6 mo after graduation. You can pay any interest in the meantime if you want.
For other loans you can always do parent plus it offers some protections that privates dont’. But you might find better rates. Sallie Mae offers private loans you can look at the online page.
The son is also entitled to take out student loan to cover his r&b. So the sub portion is a great deal. Here is the breakdown.
Total loan available/subsidized max amount
freshman 5,500 / 3,500
sophomore 6,500 / 4,500
jr 7,500 / 5,500
sr 7,500 / 5,500
Your son will be a sophomore. Complete a fafsa for him NOW and he will be able to get a Direct Loan for $6500. Between that and a summer job, and work during the school year, he should be able to cover the $9000.
For your daughter…you need to contact the college. It is really impossible for us to speculate here. A couple of things…
Remember, your financial aid package was prepared using 2014 income.
Did your husband receive any severance monies? If so, those are counted as income.
You will be asking for a special circumstances consideration. This means you want the school to review your financial aid award given the new situation with the lost income. These are done on a case by case basis. Some colleges don't do them at all. Some have a "waiting period" when a parent gets laid off, because there is the thought that this parent will get another job.
You need to contact YOUR kid’s college and ask them about this, and find out their procedure for this type of consideration.
Does your daughter's college guarantee to meet full need? Is it a particularly generous school in terms of financial aid? This could play into any amount of money the school might consider giving her.
Still…ask.
You don't mention your income. If you work, is your income such that need based aid would or would not be possible?
You can apply for a Parent Plus Loan for your daughter's remaining costs. Of course, I too would be uncomfortable doing so with no income...but you can do so. If you get approved, you are good to go...if not, she would be eligible for $11,500 worth of Direct Loans...which gets you part of the way there.
All that being said…as noted above…your son should be able to cover his costs.
Your daughter’s school likely won’t want to lose a student who is entering her senior year. It is possible they will be able to help you out. Contact them.
ETA
Nope. The FAFSA for the 2015-2016 school year uses the tax, and income information from 2014. This parent got laid off in 2015. The loss of income cannot be “changed” on the 2015-2016 FAFSA unless there was a mistake entering it…which does not sound like it was the case.
The new, lower income will be reflected on the 2016-2017 FAFSA which uses the 2015 income information.
YOU can’t change the income on the FAFSA, but if you file a change in circumstance FA form (they will ask for either hard copy of the tax forms or a tax transcript, a letter on the circumstances, any amount to be received in unemployment, etc) the FA officer can make the changes and either or both of your children may receive a Pell grant. I have two kids and they received different amounts in Pell, so it’s up to the officer. If your daughter qualified for a Perkins loans, a Pell seems likely. What was her EFC?
Thanks for all the helpful answers! No, he is not receiving any severance. I do work part time, but my income is very low. We are looking into home equity loans, but not knowing when/if he will get another job, we may need to use that for living expenses.
What is the difference between a Parent Plus loan, a Direct loan, and other loans such as the Discover loan (which my mom keeps emailing me about)? And where do you go to apply for the Parent Plus or Direct?
The Direct Loan is in the name of the student only. So is the Perkins loan.
Parent Plus Loans are in the name of the parent.
The Discover Loan could be in the name of the student with the parent as a cosigner…assuming the parents are qualified cosigners. Without income…you might not be qualified to cosign a loan.
BUT most important…contact your older student’s school…and discuss this with them. They will tell you THEIR process, what they require for documentation, etc. This varies from college to college. We almost had to do,this one year (but my DH found a job very quickly) and the things our kid’s school required for a special circumstances consideration were different than what was posted on post #8. The school already had our tax forms as they were required when we applied for financial aid. We needed to have the termination letter from the employer. But since I was also employed, they wanted my most recent pay stub. Our school also asked for bank account balances.
YMMV depending on the school. So contact the school…and ask them!
^^^^ Absolutely! Pick up the phone tomorrow morning, and call the financial aid office at your daughter’s school. Ask what they need you to provide them in order to process the Special Conditions paperwork. If you use the search engine at that school’s website, chances are you will find the forms, but you do want to talk through the details with the people in the financial aid office. And it goes without saying that you may need to move up through several levels to get to the person who actually knows about this.
Happydad was laid off at the end of February in Happykid’s junior year of college. The financial aid office at her big cheap state U was able to change her aid package drastically for her senior year and came up with both Pell and university grant money in addition to the standard direct loans. My fingers are crossed for you and your daughter.
No severance. No non-retirement savings (all has already been used for college). A home equity loan is an option we’re looking into, but without knowing when DH will find a new job, we should probably reserve that for general living expenses.
We have been living very frugally these past 3 years, giving up all but the barest necessities so that D could attend this wonderful school. We were sooo happy to have just one more year of tuition before things were back to normal! And now this. Ugh. I guess we’re now the example of what can happen when you think these things only happen to “other people.”
Just wanted to update you all who were so kind to offer suggestions. D’s school came through with a university scholarship that will cover her entire cost of attendance. Boy, do I love that school. Still waiting to hear from FA from S’s school, but the anticipated Direct Loan should be sufficient for what he needs. What a relief. Thank you all for you help!