A few financial aid questions

[TheXc]

Background: I am an undergrad freshman. Currently I am attending a branch of a state university. Since my mom teaches there my government loans are more than enough to pay for tuition. The problem is that my mom is moving out of state at the end of spring quarter and I am transfering to the main campus next fall quarter.

Question one: It looks like I will have to take out private loans to cover the majority of my education. I will have to have my mom cosign the loans since I have no credit but she is worried that her cosigning my loan and her current student loans will affect her credit when buying the new house out of state. How big of an impact would that be and are there any alternatives?

Question two: When I am in medical school, are the undergrad private loans deferable until after residancy like the goverment loans are? Or will I have to borrow more while in medical school to pay for the undergrad loans?

Thanks for the help!

---

Members don't see this ad.

 

[TheXc]

Is this in the wrong forum? These questions, especialy the first one is causing a lot of tension/stress in the family house. Normaly I wouldn't ask a question like this on boards, but not too sure who else to ask. Any advice or comments are appreciated.

 

[Doctor Bagel]

My first question is have you exhausted all financial aid options before looking to private loans? Borrowing lots of private loans for undergrad is probably something you want to avoid if at all possible. And if your mom has to cosign, has she thought about taking out PLUS loans instead of you going the private loan route. PLUS loans usually have better terms, and if she's cosigning, she might as well take out the loans herself.

As to your mom's concern about buying a house, any loans she cosigns or takes out for her will be considered by her lender. If her debt/income ratio gets too big, she might very well get denied for a loan. She'd probably have to take to a mortgage broker/banker to get the specifics on this.

With question 2, it depends on the terms of the loans. You'll need to specifically look for loans that are deferred when you're in school. Loans that are specifically labeled as "student loans" usually fit this criteria, but you've just got to read the fine print.

 

[TheXc]

My first question is have you exhausted all financial aid options before looking to private loans? Borrowing lots of private loans for undergrad is probably something you want to avoid if at all possible. And if your mom has to cosign, has she thought about taking out PLUS loans instead of you going the private loan route. PLUS loans usually have better terms, and if she's cosigning, she might as well take out the loans herself.

As to your mom's concern about buying a house, any loans she cosigns or takes out for her will be considered by her lender. If her debt/income ratio gets too big, she might very well get denied for a loan. She'd probably have to take to a mortgage broker/banker to get the specifics on this.

Thanks for the response. My parent's goal is for me to pay for the majority of college myself (probably because i am the oldest out of four kids and both of my parents dropped out of college the first time). I am thinking that private loans are the (only) way to go since my part time job mostly covers books and gas.

 

[Doctor Bagel]

Thanks for the response. My parent's goal is for me to pay for the majority of college myself (probably because i am the oldest out of four kids and both of my parents dropped out of college the first time). I am thinking that private loans are the (only) way to go since my part time job mostly covers books and gas.

Have you filled out a FAFSA? If not, you definitely need to do that before applying for private loans.

 

[yadayadadude]

I'd transfer to a cheaper school before I'd take out private loans for undergrad. Sorry, but that's insane.

 

[TheXc]

Have you filled out a FAFSA? If not, you definitely need to do that before applying for private loans.

Just finishing, should be filed by tonight. Thanks for all your help, much appreciated

I'd transfer to a cheaper school before I'd take out private loans for undergrad. Sorry, but that's insane.

OSU is probably in the middle as far as tuition goes for state schools. Unfortunately the 3,500 I recieve in subsidized loans in like 1/5 of what I need.

 

[Sol Rosenberg]

Just finishing, should be filed by tonight. Thanks for all your help, much appreciated

OSU is probably in the middle as far as tuition goes for state schools. Unfortunately the 3,500 I recieve in subsidized loans in like 1/5 of what I need.

What about unsubsidized loans? Maybe you should talk to someone in your school's financial aid office, and read up a bit more on your options before freaking out.

I'm not trying to be mean, it just seems that you really don't know your options. You should be able to afford in-state tuition (though your mother is moving out of state, you might be able to still be considered in-state -- read over your state's residency requirements CAREFULLY) at a state school without having to resort to private loans.

 

[TheXc]

What about unsubsidized loans? Maybe you should talk to someone in your school's financial aid office, and read up a bit more on your options before freaking out.

I'm not trying to be mean, it just seems that you really don't know your options. You should be able to afford in-state tuition (though your mother is moving out of state, you might be able to still be considered in-state -- read over your state's residency requirements CAREFULLY) at a state school without having to resort to private loans.

I don't think you are being mean, I appreciate your honesty and advice.

From what they told me at Freshman orientation, OSU's policy is that since I am dependant on my mother, she has to apply for a PLUS loan and be rejected before I can take out unsubsidized loans. Unfortunately since a) my mom is moving and is planning on buying a house soon and b) that i have 3 other siblings who will be going to college soon, she doesn't want to go that route.

Thanks for the tip though, Ill definately talk to someone at the financial aid department tomorrow.

 

[Sol Rosenberg]

I don't think you are being mean, I appreciate your honesty and advice.

From what they told me at Freshman orientation, OSU's policy is that since I am dependant on my mother, she has to apply for a PLUS loan and be rejected before I can take out unsubsidized loans. Unfortunately since a) my mom is moving and is planning on buying a house soon and b) that i have 3 other siblings who will be going to college soon, she doesn't want to go that route.

Thanks for the tip though, Ill definately talk to someone at the financial aid department tomorrow.

Can she not claim you as a dependent? I believe that you can also get the unsub loans if you file as an independent. You might have to do so anyway (become independent) to keep your in-state residency anyway. All your parents lose is that they have to pay tax on the extra $4000 exemption that they are getting for you. That amounts to ~28%*4000 = $1120/year (the actual number depends upon their top tax bracket -- I just guessed 28%,) whereas making you get private loans will cost you WAY more than that in interest (and in-state vs. out of state tuition.)

 

[TheXc]

Can she not claim you as a dependent? I believe that you can also get the unsub loans if you file as an independent. You might have to do so anyway (become independent) to keep your in-state residency anyway. All your parents lose is that they have to pay tax on the extra $4000 exemption that they are getting for you. That amounts to ~28%*4000 = $1120/year (the actual number depends upon their top tax bracket -- I just guessed 28%,) whereas making you get private loans will cost you WAY more than that in interest (and in-state vs. out of state tuition.)

Thanks for all the suggestions. I asked the financial aid department all of these things and this is what they said (for anyone interested).

The school still considers me a dependant until i am 24, married, have a child, or a veteran. They also confirmed that my parents would have to apply for a plus loan and be rejected before I can apply for the unsubsidised loan. I would be considered a resident when they move out of state, but may or may not be considered a resident for financial aid (not too sure what this means thinking about it again, I'll have to give them a call).

Right now I am honestly thinking about taking a few quarters off and joining the national gaurd or army reserve. I need to research it a little more though.

 

[TMP-SMX]

Thanks for all the suggestions. I asked the financial aid department all of these things and this is what they said (for anyone interested).

The school still considers me a dependant until i am 24, married, have a child, or a veteran. They also confirmed that my parents would have to apply for a plus loan and be rejected before I can apply for the unsubsidised loan. I would be considered a resident when they move out of state, but may or may not be considered a resident for financial aid (not too sure what this means thinking about it again, I'll have to give them a call).

Right now I am honestly thinking about taking a few quarters off and joining the national gaurd or army reserve. I need to research it a little more though.

I suggest against the guard or reserve if you'd like to keep your mental health and limbs. Other than that, I don't think you have a chance to be independent for FAFSA purposes. As for state dependency, you should check more into that to fix things. I don't think FAFSA has anything to do with state dependency.

Anyway, how can you not be eligible for unsubsidized federal loans? I think just about everyone is eligible for about 2k in unsubsidized loans as an undergrad. When I was hoping for some scholarships in undergrad that's what I was offered.

 

[TheXc]

I suggest against the guard or reserve if you'd like to keep your mental health and limbs. Other than that, I don't think you have a chance to be independent for FAFSA purposes. As for state dependency, you should check more into that to fix things. I don't think FAFSA has anything to do with state dependency.

Anyway, how can you not be eligible for unsubsidized federal loans? I think just about everyone is eligible for about 2k in unsubsidized loans as an undergrad. When I was hoping for some scholarships in undergrad that's what I was offered.

Heh it's certainly not my first choice, but I will do what I have to do. I'm pretty sure I wont be able to get into my next chem class (200 student waitlist), so realy it will not set me back all that much. The only thing I am hestitant on is being activated and delaying school that much further. I'm not too sure If I'm going to go this route or not, still researching.

I can't believe I can't get any unsub loans either. I have friends that do not go to OSU that can get them (maybe I just need to transfer schools )

Thanks for everyone's help.

 

[Sol Rosenberg]

Anyway, how can you not be eligible for unsubsidized federal loans? I think just about everyone is eligible for about 2k in unsubsidized loans as an undergrad. When I was hoping for some scholarships in undergrad that's what I was offered.

Must've been a recent change, because I remember unsub. loans available to pretty much anyone that asked back when I was an undergrad. But, when I looked into it, what I read confirms what the OP is saying, you either need to be independent or have your parents denied for a PLUS loan to be eligible for undergraduate unsub Stafford loans.

 

[Doctor Bagel]

Must've been a recent change, because I remember unsub. loans available to pretty much anyone that asked back when I was an undergrad. But, when I looked into it, what I read confirms what the OP is saying, you either need to be independent or have your parents denied for a PLUS loan to be eligible for undergraduate unsub Stafford loans.

That's really unfortunate. I remember taking out an unsubsidized stafford loan back in ugrad, and my parents never applied for a PLUS loan. The unsubsidized staffords are better loans than PLUS loans, so it's a better option even if your parents are the ones who are going to pay off the loan. Now I'm wondering when that change came about.

 

[TheXc]

Well I have thought it over, and decided the armed forces is not for me. So for next year I am hoping to take out about $10,000 in private loans...probably a little less (I'm going to try to borrow just enough to pay for dorm/appt and then live off of working part time).

Will i be able to find a lendor that will lend out 10g's to an undergrad with no credit? Also are all the companies about the same in terms of rates, etc or is their some variety? Thanks, you guys have been very helpful.