Getting loan above cost of attendance?

[Crow T. Robot]

I did a cursory search on the forums for this topic, but I only see very old threads discussing it. Is it still possible to get a loan above the COA? I'll be moving my family across the country and need to rent a place. I have just enough money to pay the bills I acquired before I started school (including a house bought at the peak of the housing bust in a very expensive city), but none to cover rent in the new city. I have very good credit, but I will need about $1000/month above my COA. Are there any banks that still do this?

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[RangerBob]

Talk to your financial aid office--some will allow for a budget increase.

In general banks do not give educational loans that are not certified by a financial aid office, with the exception of the residency and relocation loan, which is only given out during your 4th year or internship and at a higher interest rate (usually a couple points higher than a certified fixed or variable rate would be). It's meant to cover interview/relocation expenses.

Have you thought about selling the old house? $12,000/yr is a lot of extra money to borrow, and I'd highly encourage you do do whatever you can to stay within or below the budgeted COA.

 

[DrMidlife]

I did a cursory search on the forums for this topic, but I only see very old threads discussing it. Is it still possible to get a loan above the COA? I'll be moving my family across the country and need to rent a place. I have just enough money to pay the bills I acquired before I started school (including a house bought at the peak of the housing bust in a very expensive city), but none to cover rent in the new city. I have very good credit, but I will need about $1000/month above my COA. Are there any banks that still do this?

The financial aid office will advise you that you're looking at this backwards. Depending on your med school you may or may not have a financial aid office that can deal with nontraditionals.

Your med school budget covers reasonable living expenses for school. Such as rent in the new city.

Med school budgets don't include funds to pay for expenses from before med school, or for car payments, or for credit card balances.

Generally when you do a budget increase request, you are given set categories such as childcare costs and medical costs. You are expected to submit paperwork proving you've paid these expenses. Then after several weeks you get an additional loan.

If you have a cosigner or assets you may be able to get a private loan, but these are very difficult to find and then to manage. You may want to look into the military scholarship.

Best of luck to you.

 

[Crow T. Robot]

Thanks for the info. If I could sell my house, I would in a heartbeat- the market has not recovered in my area enough to avoid a short sale. And I can't even rent it to cover the cost- again, bought it at the height of the bubble...

I understand the purpose and structure of loans. But I cannot turn back the clock, hence the search for private loans. I know they're hard to find and get, which is why I asked if anyone knows of any available. To add, I'm a single parent and too old, so no military. Private loans are my last resort until I can get the house sold, so I'm looking for banks that still offer this.

 

[DrMidlife]

Honestly this sounds like you're so far out on a limb that either taking a short sale or deferring your acceptance, to tidy your finances, would be completely reasonable.

If you're waiting for the market to get better before you sell, and you don't have stable tenants, that house will wreck you. Med school is hard, parenting is harder, and budget panic is the worst. Dump what you can dump, for the sake of your sanity.

I'm not pro-military but it is an answer here. You should look up the age limits before you reject the idea. I have classmates over 40 on HPSP. The age limit can be waived. I think recent numbers were $20k signing bonus and $2500/mo living expenses (about $1k more per month than typical school budget).

Best of luck to you.

 

[a runner]

First off, I agree with the information DrMidlife gave. As far as a private loan to cover the additional costs you will have: you will not likely be able to find one at all, even with good credit, unless you have income. There was a day and time (before 2008) when one could obtain a private educational loan beyond the COA with no income, but alas, these companies went out of business (MyRichUncle was one). Your best bet is if you do have even a small amount of income (>$12,000) you may qualify for a credit card at a company like Discover, but this will only be a short term solution as it will only cover your expenses for a short time and will saddle you with high interest debt, thereby increasing you subsequent expenses by having to service this debt while attending school.

Your only REAL option is to request a budget increase to the COA at your new school under a process called "professional judgment." Your financial aid coordinator may, at their discretion and using federal guidelines, increase your individual COA and the amount of gradPLUS loans you can take out each year. These can only be done for certain expenses, and as DrMidlife said, they can be quite restrictive and require documentation not only that you owe these expenses, but that you have paid them. Some financial aid coordinators are more lenient than others. Your best bet if you have young children is getting an increase for child care expenses. Even the most restrictive coordinator will not deny a request for additional funds for child care. Another option is health insurance if you are paying for your own health insurance. Although many COA's already have an amount set aside for health insurance and you will only receive funds to cover expenses in addition to this.

Each school is different on what they will allow. No schools are aloud to increase individual COA's for things like rent, food, clothes, personal expenses, credit card or loan payments, car payments, etc. I once went to a school that allowed an increase for costly car repairs and towing. Another school allowed an increase for K-12 private school tuition, but denied increases for car repairs. I've also heard of some schools allowing increases for residency interviewing, while others do not because they say this is already built into their student budget. This is where the professional judgment comes into play. The things that pretty much every school will allow for are medical expenses (including excessive health insurance costs) and child care.

By the way, I'm sure I don't even need to say this to you, but for others who might be reading this, only take this route of additional loans if it's absolutely necessary due to previous commitments or if you have children and it's just the only way. Also, I strongly suggest not getting any private loans if possible because they do not have the favorable repayment terms or loan forgiveness options that federal loans have that you may need to use in the future.

 

[a runner]

The last thing you want to be worrying about during medical school is financial insecurity, especially if you have a family or children. Unfortunately you will not know for sure exactly how your school handles budget increase requests until you are already attending, so this can be quite stressful, especially the first year when you are still learning how things work with your financial aid office. I would still contact the FA coordinator, though, and pick his/her brain about what they allow for budget increases.

Try getting your COA increased and cutting whatever expenses you can, and see if it is enough. If not, in addition to the above ideas (military and short sale), I would consider more drastic options in order to get your finances under control, including exploring bankruptcy, foreclosure, etc. I know all this can be extremely difficult to deal with, but I assume medical school is worth the sacrifice to you or you wouldn't have applied as a non-trad. I wouldn't defer a year because it seems quite uncertain that your situation would be much improved in a years time. I hope it all goes well for you.

 

[Crow T. Robot]

Thanks for all the advice, it is very much appreciated! I'm seriously considering a short sale- that wouldn't impact my future federal loans, would it?

 

[RangerBob]

Thanks for all the advice, it is very much appreciated! I'm seriously considering a short sale- that wouldn't impact my future federal loans, would it?

I also agree with DrMidLife advice--you're in a tough situation, but I don't think you're left with many options.

But regarding a short-sale--I believe it affects your credit as much as a foreclosure would. But I believe your credit has to be really bad to not qualify for GradPlus loans. I'm not positive, but I would think you'd be OK. I don't know anyone who has undergone a foreclosure or short sale and applied for federal loans, but hopefully someone can chime in with more definitive information. (Certainly it could be worth contact the Department of Education and asking them. Also, you can ask your medical school's financial aid director).

 

[Glimmer1991]

You mention a family--is your spouse not able to cover expenses (at least somewhat)?

 

[a runner]

You mention a family--is your spouse not able to cover expenses (at least somewhat)?

He/she mentioned that they are a single parent, so I assume no spouse is in the picture.

 

[a runner]

I also agree with DrMidLife advice--you're in a tough situation, but I don't think you're left with many options.

But regarding a short-sale--I believe it affects your credit as much as a foreclosure would. But I believe your credit has to be really bad to not qualify for GradPlus loans. I'm not positive, but I would think you'd be OK. I don't know anyone who has undergone a foreclosure or short sale and applied for federal loans, but hopefully someone can chime in with more definitive information. (Certainly it could be worth contact the Department of Education and asking them. Also, you can ask your medical school's financial aid director).

Foreclosure and bankruptcy would all be the same result: you cannot qualify for a gradPLUS loan if it's been in the past 5 years and would need a credit worthy co-signer. Definitely another thing to consider in all of this. Perhaps a sibling or parent would be willing to co-sign if you have to go this route.

http://www.fastweb.com/financial-ai...a-plus-loan-despite-an-adverse-credit-history
"To be eligible for the Federal PLUS loan, the borrower must not have an adverse credit history. An adverse credit history is defined in the regulations at 34 CFR 685.200(c)(1)(vii)(B) as including a current delinquency of 90 or more days on any debt or having had certain derogatory events within the last five years. These derogatory events include bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment or default determination. It also includes the write-off of federal education loan debt."

 

[Crow T. Robot]

Nope, no spouse.

Ugh, so if I foreclose or short sell, I could jeopardize my gradPLUS. Maybe there's an opening on the local street corner there...

 

[RangerBob]

Nope, no spouse.

Ugh, so if I foreclose or short sell, I could jeopardize my gradPLUS. Maybe there's an opening on the local street corner there...

It may be worth asking the Dept of Ed how a short sale affects eligibility for GradPlus. I would assume it's the same as a foreclosure, but it's worth getting a definitive answer. Of course, I don't know if you'll actually get hold of someone who knows what they're talking about, but your school's financial aid office should be able to help you.

Are you accepted to an in-state school? Because you may not even need the Plus loans if that's the case. If the school is out-of-state or private, talk to the school's financial aid office for advice. Also consider deferring your acceptance for a year to save up some more money and build equity so perhaps you can avoid the short sale. If you can, get help from family. Or from uncle Sam--the military really may be a good way to go. It's a tough situation, but hopefully you can make it work.

 

[Crow T. Robot]

I'm attending a private school. And unfortunately, the military just isn't an option for me. I hadn't thought about the deferment, I will give that some pause, thank you.

 

[one2bDr]

I'm attending a private school. And unfortunately, the military just isn't an option for me. I hadn't thought about the deferment, I will give that some pause, thank you.

I am a foreclosure Paralegal, and I can tell you that Short Sale is the better option before foreclosure. The impact of the Short Sale on your credit depends on the lenght of the deliquency of the mortgage payments, and also how badly upside-down the property is. Basically, if payments are current, you can negotiate the Short Sale to be contingent on a waiver of deficiency (which means the bank will take whatever is made from the sale and not come after your for the difference), but if you obtain the waiver and a short sale approval while having been current, there will be no damage to your credit. I live in South Florida, and from the hundreds of cases I've handled, I can tell you the banks have not been very open to consider a short sale if the homeowner is current with their payment, and people usually have to go 90 days delinquent to get the bank motivated to consider loss mitigation options.

I would try not to go over 90 days delinquent and seeks a short sale approval with a waiver of defiency. Also, please remember that whatever the shortfall is, they will most likely give you a 1099 for it before next tax seasons. We had clients short sale for 70k under the amount owed, and they have all been slapped with 1099's these past few months.

We are in similar situations, only that I don't have children but I do care for an elderly mom with health issues and no financial assistance, because she is a foreign national. I have been lucky enough to have saved up some money which I know will come handy, but no matter what I will get myself into an abyss of debt. By all calculations, I'll be applying to medschools when I'm 36. I know the HSPS military scholarship has an age cutoff of 36, but they also grant age waivers to the right applicants, so if you are fit and feel like you can enter into that deep commitment for your country, it sould be an option, as they pay your full Tuition, Fees and book + a monthly stipend of about $2k. You will serve one year active duty for every year of the scholarship (at least 4 or you can extent beyond residency), you will also have all benefits of the military , their health insurance for you and your dependents, etc...but you are also at their disposal, which translates into deployments and permanent changes of stations.

I'm sure you've been digging deep, but could there be any organizations that may offer smaller scholarships or assistance to single mothers seeking higher education? I know if I was a philanthropist, this would be something worth my money.

 

[a runner]

I am a foreclosure Paralegal, and I can tell you that Short Sale is the better option before foreclosure. The impact of the Short Sale on your credit depends on the lenght of the deliquency of the mortgage payments, and also how badly upside-down the property is. Basically, if payments are current, you can negotiate the Short Sale to be contingent on a waiver of deficiency (which means the bank will take whatever is made from the sale and not come after your for the difference), but if you obtain the waiver and a short sale approval while having been current, there will be no damage to your credit. I live in South Florida, and from the hundreds of cases I've handled, I can tell you the banks have not been very open to consider a short sale if the homeowner is current with their payment, and people usually have to go 90 days delinquent to get the bank motivated to consider loss mitigation options.

I would try not to go over 90 days delinquent and seeks a short sale approval with a waiver of defiency. Also, please remember that whatever the shortfall is, they will most likely give you a 1099 for it before next tax seasons. We had clients short sale for 70k under the amount owed, and they have all been slapped with 1099's these past few months.

We are in similar situations, only that I don't have children but I do care for an elderly mom with health issues and no financial assistance, because she is a foreign national. I have been lucky enough to have saved up some money which I know will come handy, but no matter what I will get myself into an abyss of debt. By all calculations, I'll be applying to medschools when I'm 36. I know the HSPS military scholarship has an age cutoff of 36, but they also grant age waivers to the right applicants, so if you are fit and feel like you can enter into that deep commitment for your country, it sould be an option, as they pay your full Tuition, Fees and book + a monthly stipend of about $2k. You will serve one year active duty for every year of the scholarship (at least 4 or you can extent beyond residency), you will also have all benefits of the military , their health insurance for you and your dependents, etc...but you are also at their disposal, which translates into deployments and permanent changes of stations.

I'm sure you've been digging deep, but could there be any organizations that may offer smaller scholarships or assistance to single mothers seeking higher education? I know if I was a philanthropist, this would be something worth my money.

1. If you're interested in in having a government scholarship that pays all your tuition plus a generous stipend and there is no chance of being deployed or leaving the country, check out the Nat'l Health Services Corp, basically the same terms as far as time commitment. http://nhsc.hrsa.gov/scholarships/index.html

2. I would still check into how short sales affect gradPLUS eligibility, even if a waiver is given by the bank. If a waiver is given, wouldn't this be considered a discharge of debt, thus the 1099? Just because the bank waives their right to the deficiency and to sue for a judgment of the difference in amount owed doesn't mean that the discharge of that debt won't be considered an adverse credit event. Even if the bank doesn't (or can't) acquire a judgment against you, I would imagine they will still report to the credit bureau that the debt was not paid as agreed.

3. Something to consider is the 90 days delinquency cut off for gradPLUS loans. The rules stipulate that any history of 90 day or more delinquency on any debt disqualifies you for gradPLUS loan eligibility, so keep that in mind if you try the short sale route so you don't go past that.

 

[one2bDr]

Great comment above by runner, and yes, he is right about the debt discharge and 1099. Additionally, you could also apply under the Making Home Affordable Act and perhaps get a loan modification with a lower monthly payment, then rent out the property if you're moving away to attend medical school. Perhaps there could be friends or family members you could rent to? I know it's a long shot suggestion, but its better that either short sale or foreclosure. The largest lenders and servicers are taking from 3 to 6 months for a loan mod review, it's worth a try.