|
|
Post by Really Red on Jul 25, 2016 14:16:10 GMT
My college payments are coming due soon. I can pay them, but is it better to take out parent loans to do that? My financial aid went sharply up this year because the value of my house went up a lot and on paper it looks like I have more money (can't do anything with that "money," but alas, colleges don't care). If I take out loans, will that affect my financial aid next year for the better?
FWIW, I asked my financial advisor, but am sorely disappointed in his response. He told me I had to do what felt right to me and he couldn't tell me what to do. Isn't that what FAs are for? To suggest choices?
I just want to hear what options are and I seriously have no idea where to turn.
|
|
|
|
Post by mom on Jul 25, 2016 14:23:26 GMT
This the financial aid for you or a kid?
If for you, personally, then yes. You can take out a loan.
If the loan is for a child, then no. I would not take out a loan in your name. You can make the payments for the kid, but the actual loan should be in their name. There are often programs that will pay back some of your loans, depending on your major, and if the load is in a parents name then they won't be eligible. Same thing about the military paying back loans - has to in the students name.
|
|
|
|
Post by Really Red on Jul 25, 2016 19:44:19 GMT
My kids have loans out in their names, but this is a loan for me, for the part of the payments I pay. I think my kids are at the max at what they are allowed to take out annually
|
|
Peal
Pearl Clutcher
Posts: 2,524
Jun 25, 2014 22:45:40 GMT
|
Post by Peal on Jul 25, 2016 20:02:04 GMT
I was not aware there was a max loan amount you could take out for student loans. Are they federal or private loans?
Your FA probably isn't telling you what to do because all the FAs I have ever known have been very against clients taking out loans to pay for their children's education. The thinking being: your children have years to pay off loans, your retirement is not that far off. Don't jeopardize it.
I don't know the answers to your financial aid question. We don't get any. Thank God DS got a scholarship.
|
|
Deleted
Posts: 0
May 2, 2024 19:27:44 GMT
|
Post by Deleted on Jul 25, 2016 20:53:21 GMT
I hate debt, so as a parent, if I had the dollars to pay, I wouldn't take a loan. I do know there are limits on the government-subsidized loans. But I just am unwilling to pay interest if I have savings/cash that can be used.
I don't think that FAFSA asks about debt, does it? Just about savings/assets. So by paying with current assets, you are lowering assets which might help the amount of FA given in the next year. I do know as our college fund decreased, the amount of student loans offered increased (although not by a huge amount).
|
|
|
|
Post by mom on Jul 25, 2016 21:16:30 GMT
My kids have loans out in their names, but t his is a loan for me, for the part of the payments I pay. I think my kids are at the max at what they are allowed to take out annually So you are the student? |
|
|
|
Post by happymom on Jul 25, 2016 21:57:59 GMT
The maximum for freshman college students for federal loans is 5,500 and the amount goes up a little each year with a max of approximately 25,000 over 4 years
A parent can close the gap by either co-signing a student's private loan or taking a parent plus loan.
Sometimes parents pay back the loan and sometimes the student does. Some use home equity and some halt retirement savings during this time.
We don't believe in loans and told the kids to pick affordable schools so we could pay through college savings. A financial advisor can't make this decision for you
|
|
caangel
Drama Llama
Posts: 5,446 
Location: So Cal
|
Post by caangel on Jul 25, 2016 23:09:09 GMT
If you have the money pay it off. It never makes sense to get a loan for something you can payoff (unless there is some kind of discount only available for financing AND there is no prepayment penalty).
No I would not get a loan in my name to pay for my child's school. If we (parent and child) can not afford to pay with grants/loans in the student's name only and cash then they have chosen a school that is too expensive and need to transfer or figure out how to get more money (work, scholarships).
|
|
|
|
Post by Really Red on Jul 26, 2016 3:02:07 GMT
The maximum for freshman college students for federal loans is 5,500 and the amount goes up a little each year with a max of approximately 25,000 over 4 years A parent can close the gap by either co-signing a student's private loan or taking a parent plus loan. Sometimes parents pay back the loan and sometimes the student does. Some use home equity and some halt retirement savings during this time. We don't believe in loans and told the kids to pick affordable schools so we could pay through college savings. A financial advisor can't make this decision for you I'm not asking the FA to make the decision for me. I'm asking him to give me options. That is it. I fully appreciate that all of your kids have affordable schools and scholarships, but that is truly neither here nor there. I want to help my kids. They are also helping themselves. There is still extra to pay. I just am not sure whether it is helpful to have loans or not. |
|
Deleted
Posts: 0
May 2, 2024 19:27:44 GMT
|
Post by Deleted on Jul 26, 2016 4:48:08 GMT
The maximum for freshman college students for federal loans is 5,500 and the amount goes up a little each year with a max of approximately 25,000 over 4 years A parent can close the gap by either co-signing a student's private loan or taking a parent plus loan. Sometimes parents pay back the loan and sometimes the student does. Some use home equity and some halt retirement savings during this time. We don't believe in loans and told the kids to pick affordable schools so we could pay through college savings. A financial advisor can't make this decision for you I'm not asking the FA to make the decision for me. I'm asking him to give me options. That is it. I fully appreciate that all of your kids have affordable schools and scholarships, but that is truly neither here nor there. I want to help my kids. They are also helping themselves. There is still extra to pay. I just am not sure whether it is helpful to have loans or not.THis is an absolutely personal point of view. No one can tell you if it is helpful or not. As disappointed as you are in the response of the FA, you already know the options. He can't tell you what to do (if he does he potentially takes on some culpability if you don't like the outcome) But you do cloud the issue when you say "My college payments are coming due soon. I can pay them, but is it better to take out parent loans to do that?" Who is the student? You or your kid? What do you mean by "my college payments" is it a loan payment or is it fall tuition is due and you can't decide if you want to use your savings or take out a loan? There is a limit to the amount of federal loans a student takes out. The upside to all student debt being 1)federally backed and 2) in the students name is there are programs that will pay on that debt for the student. There are forgiveness programs, payment programs, deferments, etc. NONE of these are available to a loan taken in the parent's name. No one can predict how this year's loans will affect next year's FA since changes in income and assets will also play a part in next year's fa offerings. **I** preferred to use as much of my savings as I could and minimize the amount of debt I took on. That way my after college income is going to built up my savings instead of paying off loans. Look at the interest earned on savings and the interest charged on loans. Just the amount you pay in interest may tip in you into realizing a loan isn't the best way to go. Save |
|
caangel
Drama Llama
Posts: 5,446
Location: So Cal
|
Post by caangel on Jul 26, 2016 5:52:23 GMT
I'm still unclear as to what your situation is. Do you have the money to pay for the balance that is owed? If so pay it. If not then take out a loan. How else do you plan to pay for it? You either have, or will have, the cash or not.
FWIW my kids are still young. Yes we are saving for their college but where they have the option to attend will be determined by what we can afford. If we can't afford it they will need to choose something cheaper. We highly value education BUT I will not risk my retirement to put them through an expensive school. Not saying you are just that many people do. My kids are only a year apart in school. It will be an expensive 5 yrs (min).
|
|
|
|
Post by Linda on Jul 26, 2016 12:23:56 GMT
If you have the money to pay the parent's share of the fall tuition - pay it. If not, then you have the option of taking a loan or sending your child to a less expensive school.
My oldest went to a community college and didn't end up going to University afterwards because he/we couldn't afford it. Did that suck? oh yes, I hated that we couldn't swing it. But he also only applied to ONE school (UF) and it was not inexpensive. He's in the Navy now and enrolling in classes for the fall with plans to finish up his degree - he's paying cash for this fall's classes (hasn't been at his current duty station long enough for the Navy to pick up the tab).
My middle child will be going to an affordable college - she's already picked it out and based on her grades/test scores, she shouldn't have a problem getting in.
And not to brag, but my kids are both very bright, hardworking kids who had/have the grades/test scores for a good school but ultimately the school is less important than the degree and starting life off without loans is/was important to us/them.
|
|
|
|
Post by secondlife on Jul 26, 2016 12:31:13 GMT
Here's what I can tell you from my perspective - as an adult/nontraditional student.
Some semesters I pay my tuition up front with money from savings. Some semesters the cash flow is better if I pay my tuition in installments and it's better to accept paying a little interest than to pull it out of savings.
My experience is that taking out loans does not affect your financial aid situation for the following year. The only reason to use a parent loan is to spread the payments out better for you.
You have two in school at one time, right? That's a lot to pay for. Don't feel guilty if you need to use a parent loan to cover the difference.
I would try the financial aid office at the school too because they may have more suggestions for you.
|
|
|
|
Post by Basket1lady on Jul 26, 2016 14:39:51 GMT
Here's my thought on the matter. And I do think this is something your FA should have pointed out.
We maintain a certain level of savings for security reasons. If the engine goes in a vehicle, if we need to fly across the country at a moments notice for a sick parent, if the furnace goes, we want the money to pay for that. I want enough money in savings to deal with the unexpected issues of life.
If paying for our kids' college puts that savings in jeapordy, I would take out a loan, assuming the college loan rates are cheaper than a short term loan or CC rates.
If I can pay the school bill and still maintain that cushion, I would pay for college from savings. Why pay more (in interest) if you don't have to? Every year you will have the opportunity to reassess the situation. If you don't take out loans this year, you can next year. But you have to pay interest on the loans while your kids are still in school. So you will have to pay something extra.
**Full disclosure-we don't have any loans out--we are paying for college from savings and with scholarships. But this is my understanding of how the loans work, based on my research (I'll have a second student in the fall of 2017.)
As for the debt counting for next year's financial aid, it probably will, but I don't think it matters much so that you will see a difference. A $5,000 loan isn't going to have the same impact as a $250,000 mortgage. Especially if the payments are relatively small. What makes the biggest impact is adding another college student to the debt load. Basically, FA figures how much a family can pay for college costs. Add another student and the amount the family is expected to pay remains the same, but is then split between two students.
The financial aid people at DS's college told us to apply for the parent loans, as the paperwork would be done if we suddenly needed the money second semester. It was my understanding that you don't pay on the loan unless you actually use the money.
We did not apply for a loan, as it was the first year of about 12 years of college fees and we knew we had the savings for it. But we probably will apply next year when DD starts college, just to be safe. They also advised having as much debt as possible in the student's name rather than the parent's name, as for the reasons stated by others above. You can choose to help the student with those payments if you want and it also gives a good boost to their credit history when it comes time to buy a car or a house.
|
|
Refupea #402
