I’m really unsure of how to navigate which loans are the best loans. After scholarships, I have about $12k left of annual undergrad tuition to pay, plus living expenses (which my college estimates as $2k, but I worry that sounds low).
I’ve bee offered:
Federal Subsidized Loan: $3,500
Federal Unsubsidized Loan: $2,000
Federal Perkins Loan: $5,000
Work Study: $1,900
I’m presuming these are the best sources of loans for undergrads? If I accept all these sources, I still need a little more, so at least 1 more source. The Work Study is presumably for living expenses, so I would still need about $1,500 for annual tuition. Possibly more if I want to include further living expenses
My college offers $1000-5000 loans. It’s a 8% fixed interest rate rate loan with payment on principal and interest deferred until 6 months after graduation (can be deferred further for graduate school, but I don’t know yet if I’ll be going that route)
I’ve also looked into Sallie Mae. I don’t really have credit yet since I’m just opening up a credit card now and my parents credit might not be the best, so I worry I won’t get a good interest rate.
Which loan sources do you recommend?
Also are there scholarships you’re aware of for first generation college students while they are in college? That is, if I’m not applying while in high school
Are your parents contributing anything? Can they? That’s a lot of loans. You won’t qualify for any additional loans without parental co-signing.
The unsubsidized loan is the worst in the package since interest starts accruing immediately upon disbursement. So if you can eliminate any loans, that would be the one.
Are you an athlete? Can you handle work study along with a sports commitment? At some colleges this is no big deal; at a large D1 it could impact your studies.
Living expenses depend heavily on the college and he location. If this is a small, remotely located, or small town college, then your living expenses could be very low. If it is located in a large, expensive city, your living expenses could be quite high.
And what about travel expenses? Are your parents paying those, or do you need to figure those expenses in as well?
Do you need a new wardrobe (i.e. going from a warm home to a cold climate) or will the clothes you have be fine?
Do you need a computer? Are your books covered?
If you can graduate in 4 years, you could owe upwards of $50,000 under this current loan plan. Are you majoring in something that would likely allow you to pay that back comfortably?
@prospect1 Thank you for getting back to me so quickly.
Should I accept Perkins and Federal Subsidized?
I won’t accept the Federal Unsubsidized Loan. It says the interest rate is 3.760% and origination fee of 1.068%. I guess I should do the math on if this lower interest rate over time is better than a higher-interest rate loan that is fully deferred like Perkins?
That means I’d have $3.5k left in annual tuition. Should I do the one I described through my college at the 8% fixed interest rate with full deferral upon graduation? Sallie Mae? A different source? Yes my parents are aware they would need to cosign for the Sallie Mae.
I realize the $50k of total loans over 4 years will be a lot. With interest, I’m sure that’ll be over $60k. I’m looking at it like an monthly rent money I’ll be paying for many, many years.
I’ll be playing football at a D3 college. I’m planning to major in Computer Science and Economics. The college isn’t located in a major city like NY or Boston, more of a small college town. My parents will help with some expenses of supplies like clothes and computer before I leave for college but nothing with tuition and probably not much in terms of supplies once I leave home. I’ll be 3-hour drive away from home, and I presume my parents will drive be at the beginning and end of the year.
Wait - you owe more money on top of the loans listed above and you are still thinking of rejecting some of them?
No. Take all your federal loans. The Federal Unsubsidized Loans are still a better deal than any private lender will give you. And, you will get federal repayment plan options that will allow you to spread out payments over a longer term without going into default, should that become necessary.
Also, ask your parents for cash rather than a computer. If money is tight, you need money, unless the school’s computer labs are really substandard.
@AroundHere I just did the math. It looks like for about 4 years after college the Unsubsidized Loan is worse but then it starts to become better. I agree with you that I should probably accept.
Then I’m back to the original plan that I need $1.5k still for annual tuition. Should I do the loan program my college offers at the 8% as I described, Sallie Mae, or another private source?
Sallie Mae seems good, but I’m inclined to want to trust my college more. The terms are more certain. And I feel like private bank should only be very last resort?
Some colleges do have their own loan programs, but colleges have also been known to sell their business to a loan company who gives them a kickback. So, read the documents carefully and ask some pointed questions at the financial accounts office about who will actually be holding and servicing your account if you take their loan.
Are you deducting the loans from the full COA of the school or just the billed amount? If from the COA, you’ll have money to cover the billed costs with just the loans, and then you must live very conservatively and only spend what you earn from the work study.
The 3.7% unsubsidized loan is going to be better than the school loan at 8%, and it has other benefits of being able to be consolidated or put into income based repayment upon graduation. If you borrow the full set of Stafford loans that is $28,000, plus interest on the unsubsidized ($8000) brings it to about $30k at graduation. If you also borrow $5000 in Perkins loans per year, that’s another $20k for a total of $50k. That’s really a lot. I don’t think you should be looking for more loans if you need more money, but perhaps a job. Even though you’ll be busy with football, you need to work too.
@twoinanddone I think I remember you from the athletics forums Thanks for your feedback.
Right now, my tuition for the first semester is due extremely soon. Even with Perkins, Subsidized, and Unsubsidized, I have $1.5k more to go, and no source for that money. Work study job will hopefully cover living expenses, but maybe I’ll need more money there too.
What would you recommend for the final source of loan? From the college, Sallie Mae, or another private source?
I agree that I should probably think about paying that extra amount in future years through summer jobs. Though I’m thinking maybe it’s better to over borrow if the sources are trustworthy and the money isn’t accruing while I’m in college. In that case, worst case is that I have money to my name when I graduate and I can start paying off a lot of the loans immediately? Almost reversing the effects of having overborrowed?
I don’t know what the terms of the college funded loan is, if it is actually through another source or will be sold or at least sold for serving to a not-so-friendly lender. I also don’t know what the interest rate is on a Sallie Mae student loan. I’ve heard of a few people getting loans through their local banks or credit unions, but those are going to be pretty small.
Look into the school option and Sallie Mae. Your school might also have a payment plan and allow you or your parents to pay a few hundred per month. It’s going to be tight.
@thumper1 Thanks for commenting. $1.5k for the full year. I’ve been talking in terms of the annual amounts because it seems the terms and discussion of all the federal loans are upfront for the full year
@fbislife, it’s a good sign that you are doing all this planning in advance. Organization and pre-planning are important traits for a student athlete.
If there is really no way for your parents to contribute the $1500 for this year, then talk to somebody in the FA office and ask them to help you figure out how to meet the gap in the most advantageous way. A good FA person might be able to help you decide if the school loan is your best option, or if Sallie Mae is a better option. You said your parents’ credit might not be good-if they have applied for and been turned down for a Parent Plus loan, then you will qualify for additional federal loans in your name.
Speaking of planning ahead, keep in mind that although you will qualify for a higher federal loan amount next year, the cost of tuition/room/board will most likely increase also - and perhaps the gap will grow larger. So now is the time to start planning for a good job over winter break as well as a paying job or internship for next summer. If you have good computer science skills, you can hopefully line up something high-paying.
As someone suggested above, have a conversation with the financial aid advisor at your school. Politely ask he/she to explain in detail your options. Make sure you explain your situation exactly as you have described here.
You are so close. Are you sure your folks cannot come up with 2-3k per year? Or are you reluctant to ask? I am not in your shoes. I do not know your family financial dynamics. I understand independence. Have you had the full conversation?
OP, you do not have to figure this out alone. Your coaches should be able to give you the name of the person to talk to in financial aid. If at all possible, involve your parents in the conversation. It is important that your family as well as you understand the options available to you for the remaining $750 per semester.
Also, I am not sure you are correctly understanding the federal unsubsidized loan. It is a better option than the private ones. Monthly interest does accrue but you or your parents have the option of paying the monthly interest. I recommend you include in your conversation with the financial officer an in-depth conversation about these types of loans.
Also, be sure to ask about the school’s payment plan. Is there any possibility you or your family could cover the remaining $750 if it was broken down into 4 or 5 monthly payments. Could you do the same for the second semester?
As I read this post, my main concern is that you have the finances to be a successful D3 scholar-athlete. How will you pay for or obtain books? Do you have dorm essentials, at the very least bedding and desk lamp? Are your fees covered?
As other posters have noted you do not need new clothes or a computer. There are computers labs on campus including in the dorms, all you need is a thumb drive or USB stick; the standard college wardrobe is jeans. The money your parents would spend on these items would cover the $750 needed to pay your bill for the first semester. What you do need is financial support and a very clear understanding of how all of the various loans work and how work study is arranged for athletes.
You do not have to make all these decisions alone.
My parents are divorced. I spend time living with both parents. My mother filed as the primary person in the FAFSA just because she’s more on top of things and I trusted her more with the paperwork.
She got remarried at the end of last year 2015, but I have no relationship with him. I don’t get a dollar from him for anything. My mom filed her taxes separately.
However, it seems that because she’s the primary person, she’s expected to show tax information from him.
It seems I’ll be losing my federal Pell and federal seog grants. I’m just learning this as I’m gearing up from school. I called the college’s financial aid office to see if my paperwork for the loans was straightened out, and they said they’re reviewing my materials. They’re reevaluating my package. Things are changing, and they’ve already removed those 2 federal grants from my account, which had been in my acceptance letter.
I don’t think the grant I’m receiving from the college will be affected for this year. However, I worry it will be in future years. I also think I’m still getting the full Stafford subsidized.
Is there anything I can do to not lose the pell and seog money?
My dad was ill this past year. 2016. Had significant surgery. Missed time from work. Can I use this information to get additional funding? What information must I provide
Moving forward, I’m worried about my mom filing as the primary. Is there a way I can file as the primary? Is the only way to be emancipated. If so, what are the pros and cons of that?
If my dad is the primary, does my mom’s husband still come into play? How will that affect everything.
I didn’t anticipate all of these complications and how difficult everything would be. The understanding with my parents is that I’m responsible for paying tuition. My mom might give me some money for some basics like a hair cut.
I’ve already signed up for Stafford Subsiized and Stafford Unsubsidized. I am in the process of signing up for Perkins. I think I would have been good before all this changed with the husband. Even though that is a lot of loan money, it would have covered tuition. Now I need more.
The financial aid office told me Parents Plus is not as good as Perkins, but I’ll see if I can bring that up with my mom given how I wouldn’t have had this problem if it weren’t for this marriage.
I understand it’s not ideal to be taking the loans. I would appreciate any feedback to the questions I’ve posed. Thanks
Thanks for your feedback.