How to use this blog to help you find the info you need

This was originally a post in the blog earlier this week, with so many people trying to find info about the College Student Relief Act of 2007 (H.R. 5)

I wanted to add this as a separate page to make it easier for all of you to find what you need.

Each post I write, I tag with relevant categories.  It’s easy for you then to find what you’re looking for.  On the right side of the blog is a little box labelled Categories.  Simply click on the category you’re interested in, and all relevant posts will be displayed for you.

Feel free to leave any comments if you have a category you want to search for, but that isn’t available here.

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93 Comments »

  1. david said,

    My wife makes 30k a year and I am currently unemployed to focus on school. Having said that, I didn’t qualify for FAFSA and was told my wife makes too much money. Whats your advice on this?

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  8. Denise Marazzani said,

    yrs ago I applied for aid at Licoln tech, unfortunately I was unable to attend and let them know. I was being harrassed by sally mae for this money I explained I went out on SSI and SSD and never atteded the school. They said I had to pay anyway. Later a couple of yrs later I was told that If I send my info. and copies of my social security then the loan can be waived. I did that. Today 5-11-11 I was tracking my tax refund and was told it went to this loan. I cant get a direct number to speak to a person its all automated. and the balance was greater than borrowed due to interest and still have a bal. I called to get my refund back but was directed right to collections. I want and need my money..Someone at the other end dropped the ball yrs ago. Who can I contact please..I do have a fax number and will send info that way, but I am afraid that now that they got my money they will keep it..thanks

  9. carrie said,

    Sallie Mae & their collection agency are trying to get me to pay on a loan for which they claim I am a cosigner. I never cosigned on a loan for anyone. How do I get this error corrected & the collections to stop. Thank you.

  10. adriana bustos said,

    Yes my name is adriana and i aam planning on going to college in january but i need some help so i can get my school paid for is there any help i can get and i already did the fasfa and i havent got nothin back yet

  11. Kim said,

    If I came into some money to pay off the money I borrow can I do it without penlaties?

  12. Valerie said,

    I am a divorced parent of a child that is basically emancipated. Most of the college expenses are paid either through scholarship or financial aid due to the custodial parent’s limited income. My family continues to pay child support for the child to the custodial parent for the child and covers all medical expenses for the child. The question is, can we continue to cover the child (a college senior planning on grad and post grad studies) medically, but have the child be emancipated from the costodial parent?

  13. Sandy said,

    I am looking for loans for my children for fall. My daughter is a senior and my other daughter is a sophmore. Is it best to stay with the same lender? I am getting info from another lender that looks enticing as well as from NEA since I am a teacher promoting that same lender.(My children are not education majors.) Would I be better to stay with 1 lender for everything with the private loans? They do also have some Stafford loans.
    THANKS
    I have a son who just graduated as well.

  14. Michael Watson said,

    As many parents have to, we took out a PLUS Loan. The upfront cash for the loan was considerable, which we were able to finance with the loan. These “points” were rolled into the total borrowed with the understanding that if we paid our debt back on time and schedule, these points would, in part, be given back. They were given back but the guarantor called it “forgiveness of debt” with a 1099, which is income. How can money we never had be considered income?

  15. Chrissy said,

    Last school year (2008) my daughter’s grandmother took out a Parent Plus Loan to pay for her first year of college. The school certified the loan however the loan was recently questioned by the US Department of Education (in fact 2 agents came to her grandmother’s front door) investigating what they thought was “identify theft”; her grandmother confirmed that it was NOT identify theft and that she had consented to the loan but was not aware that a “grandparent” was not an eligible borrower. The agents advised both my daugthter and her grandmother that the school will be calling with additional questions. What happens with this loan? Will the school or government reject the loan after it has already been certified and disbursed?

  16. Ruth Brown said,

    I have read that you can use 529 Plan money to pay off a student loan as long as the payoff is in the same year as the expense was incurred. Is this true and where do I find documentation on this?

  17. Denise said,

    To whom it may concern:
    My social security number was placed on someone else student loan and I can not seem to get it off, which this situation has couse me serious mental, emotional and physical distress can you tell me what I should do about this.

    • Denise – you should probably contact a lawyer because if true, then this is a case of identity theft.

  18. AK said,

    I have a Parent PLUS loan for part of my son’s education. I will be taking out a loan each year for the next few years. I’ve been reading about loan forgiveness for Parent PLUS loans, and I’ve called Direct Loans twice. The info I’m receiving is conflicting. I teach in a public school which is low income. Will I be able to get loan forgiveness, and, if so, is it better to consolidate and defer the whole loan until after he graduates?

    • AK,
      As a teacher at a low-income school, you will likely qualify. However, I should point out that one qualifies only after 10 years of on-time payments.

      Regarding deferring till after graduation, you’ll need to run the numbers for your specific case to see if it makes sense financially. Many people consolidate regardless of paying more in the long run because making one payment is much easier.

  19. LESLIE said,

    I WAS TURNED DOWN FOR A GRAD PLUS LOAN, DUE TO ADVERSE CREDIT. SALLIE MAE INFORMED ME THAT I WOULD HAVE TO GET A STATEMENT FROM ALL CREDITORS, INDICATING THAT I AM CURRENT OR THE BALANCES HAVE BEEN PAID. THE PROBLEM WITH THIS, IS THAT, I DON’T HAVE THE MONEY TO PAY MY CREDITORS AND THEY WILL NOT PROVIDE STATEMENT, SHOWING CURRENT, OR AN ATTEMPT UNTIL I PAY THEM. I HAVE A DEBT OF 3000, WHICH ISN’T MUCH, BUT CONSIDERING BEING UNEMPLOYED AND STUDENT FULL-TIME IT IS A LOT. I WAS TOLD BY SALLIE MAE THAT I COULD GET A COSIGNER, BUT I DON’T WANT TO BURDEN ANYONE WITH THAT OBLIGATION. BESIDES, I DON’T KNOW OF ANYONE WILLING TO DO. DO YOU HAVE ANY RECOMMENDATIONS IN GETTING AROUND MY CREDITORS, SO THAT I CAN GET THE GRAD PLUS LOAN? HOWEVER, I DO KNOW THAT I CAN PAY MY CREDITORS AROUND TAX TIME, AND THEN, REAPPLY FOR THE GRAD PLUS LOAN. WHAT CAN I DO? I REALLY NEED THE GRAD PLUS LOAN TO ASSIST ME WITH LIVING EXPENSES. I WISH THAT I NEVER ALLOWED MY BILLS TO GO DELINQUENT. I SHOULD HAVE MADE PAYMENTS, REGARDLESS, OF MY FINANCIAL SITUATION. IT’S EASIER SAID THAN DONE; I CAN’T CHANGE THE PAST, BUT I CAN CHANGE THE FUTURE.

  20. Ted said,

    No problem.

    I receive no unemployment benefits due to the length of my unemployment, and receive no retirement income (SS, pensions, or ira withdrawls) due to my age and lack of need. My wife’s income and our investment income is all documented.

    I was told by a friend that the FAFSA uses a different calculation for a retired person vs an unemployed but have no idea if that’s acurate. Any way to find out?

    • Hi Ted,

      You really are in a gray area! 🙂 Retirement and the FAFSA is something I know very little about. I’ve been trying to research it for you, but there’s not much information available.

      Try visiting the Department of Education’s FAFSA4Caster at:
      http://www.fafsa4caster.ed.gov/F4CApp/index/index.jsf

      You can put in your situation(s) and see what happens. Remember, it only gives you an estimate, though, it’s not a guarantee.

      Good luck!

  21. Ted said,

    Is there any advantage to listing “Retired” instead of “Unemployed” as to my status on the FAFSA? I’m 52 and have been out of work for 3 years but don’t have to work. I currently have two in college and will have three kids in college at the same time in 2010. Which listing qualifies me for more grants. Household income is about 62k. Previously I listed unemployed but was wondering if listing retired would make a difference.

    • I am not aware of any significant difference. In either case you may be expected to document any income or separation pay. Retirement income will likely be listed. If you are unemployed you may be asked to list unemployment benefits and explain why you do not receive any if you don’t.

      This is sort of a gray area, so tread carefully. If you lie on the FAFSA, it’s a felony but I don’t know enough about you to know if you are truly “retired” or “unemployed”, though it sounds like you’re retired…

  22. Rory said,

    My daughter just finished her first year at an expensive out of state university. Her father (who I have been divorced from for a long time) paid her tuition while I sent her living expenses. Despite the fact that I was already sending her money, he dragged us into court for post secondary support. We just finished arbitration and I was ordered to pay exactly what I have been paying…directly to her. He is furious that it was not ordered to all go to the college directly and is now refusing to pay her tuition unless she does that…which would leave her with nothing for living expenses.

    She did not qualify for any financial aid because of his income.
    She is 19 now, turning 20 in early September.
    They have had a serious falling out and now he is refusing to pay any
    tuition for her. I have read on here about being declared “emancipated” as a minor, but my daughter is almost 20!
    What can I do to help her stay in school?
    I appreciate any information you can share. Thank you!

    • Rory,

      If your ex-husband has been ordered to pay your daughter’s tuition, then drag him to court!

      If not, then how about your daughter live with you 51% of the time? The FAFSA asks for the custodial parent’s finances, and if you have less, then she’ll qualify for less.

  23. Patrice said,

    I was trying to help my niece with her financial aid and she just graduated from high school yesterday but my sister is in default with her student loan. Will this disqualify my niece from receiving financial aid?

    • Hi Patrice,

      You sister being in default will prevent her from taking out a Parent PLUS loan on your niece’s behalf, but it won’t prevent your niece from getting loans in her own name, such as the federal Stafford Loan.

  24. sue said,

    My sister is 21 and has been kicked out of our family home. My parents are from the old country and refuse to help her. She was told that she is considered dependent until 24. Is there anything she can do to become independent. She is currently living with me, her 26 year old sister who si having trouble just supporting herself, let alone my sisster.

    • Sue,
      If your sister is 21, un-married, not in the army and pursuing an undergraduate degree, then she is indeed considered a dependent student.

      To be considered independent, she can get married, join the military or pursue a graduate-level degree.

      If she is having trouble paying for school, perhaps she would consider going half time or part time? Or she could attend a community college, which cost a lot less. She could accumulate credits while working full time until she is 24, when she will be considered independent.

  25. Mariesa,
    According to the US Dept. of Education, “A loan can be discharged if the borrower dies or if the borrower of a PLUS loan (whether a student or parent) dies. A PLUS loan made to a parent borrower is also discharged in the event of the death of the student on whose behalf the loan ”

    Regarding disability: “Your student loan may be discharged (forgiven) if you become totally and permanently disabled. If a physician (doctor of medicine or osteopathy) certified that you are totally and permanently disabled and you meet other requirements during a 3 year conditional discharge period your loan(s) may be discharged. It is important to note that: You may receive Social Security, VA or other disability benefits and still not meet the definition of total and permanent disability that applies to student loan discharges…Note that PLUS loans obtained by a parent on behalf of a student are not dischargeable on the basis of the student’s disability.”

    I hope this helps.

  26. mariesa said,

    what happens to the parent plus loan if a parent becomes disabled or dies?

  27. Debbie – whom exactly did you talk to? The US Department of Education? the FAFSA is a form, so I’m not sure who you spoke to.

    Now, perhaps they’re counting the “age 24” to be someone is age 24 by Jan 1st, 2010. IF that’s the case, that’s the first I’ve heard of it.

    Here is the department of education’s FAFSA contact form – I would email asking for clarification. Hang on to their response, so if you ever have questions in the future, you have this “written” proof from the department. Paper trails are a good thing, even if they’re electronic. 🙂

  28. Debbie said,

    Hi Monique:

    Several weeks ago I inquired about whether my daughter would be considered independent or dependent on her FAFSA. I was told that she is considered dependent if she is under 24 and not married. I just spoke with FAFSA and they informed me that she is considered independent if she was born before January 1, 1986. This would entail changing her FAFSA so that my (parent) information does not need to be on her FAFSA. I am so confused as everything that I have read says that she would be considered dependent. She is 23, still lives at home, is not married, has no children and I provide all of her support. This information I got from FAFSA is contradictory to everything I have researched. Can you help?

    Thanks,
    Debbie

  29. Susan – sorry for taking so long to get back to you – the notice went into my Spam box!

    No, not receiving a Pell grant will not disqualify you for every grant. Very few students receive the Pell grant; you have to show extreme economic hardship. Your son will likely qualify for Stafford loans.

  30. Susan said,

    My son was accepted at a private Kansas college he is getting an athletic scholarship and can also get an academic scholarship through the institution. He was turned down for the pell grant because of our FAFSA score so does that mean that he isn’t eligible for the other grants?

  31. Joan – I do not know of anyone personally, but I’d say it’s worth a try!

  32. joan Florsheim said,

    Do you know of anyone who negotiated with Sallie Mae to pay off a private student loan? I would like to pay off a loan for which I cosigned as it was from 2000 and had been growing, in addition to the interest that has been paid on it.

    Thanks

    Susan

    • Sabrina Hamilton said,

      Hi, we would also like to pay off in a lump sum a private student loan with Sallie Mae, and I am curious to know if you are any success doing so.
      Thanks
      Sabrina

  33. Hi Stacey,

    Give that your daughter was married, and is now divorced, I’m not sure if she would be considered independent or dependent. Unfortunately, “living independently” doesn’t qualify one for independent FAFSA status, nor does “independence” in an IRS sense. You have to be 24, in the military, married, , legally emancipated or in graduate school.

    See now why I’m uncertain? While married, your daughter was independent, and next year she will be again. I recommend you call your daughter’s school’s Financial Aid office and ask them directly.

    And regarding the cosigner, that’s likely a result of the credit crunch. Consolidation is much harder to come by these days. You should have her consolidate the Department of Education (www.ed.gov) and consolidate her federal loans through them. If she has private loans, they have to be consolidated separately.

  34. Stacey said,

    Just for the record, I did pay for her first year of college @ 7500 a year. I told her if she moved out of state with her boyfriend turned husband she was on her own. Well she moved and is now divorced and at tech college which is in exess of 20000 (yah crazy huh) a year which is just impossible for me to pay for.

  35. Stacey said,

    HELLLP! My daughter moved out at 18, got married at 19, divorced at 22, she is now 23 FASA is a nightmare. They want all our (her parents) information, which will do nothing but hurt her when it comes to aid. I dont understand how she can be my dependent when she has lived out of the state for so long, been married, divorced and now is considered a dependent again?

    Also, in the beginning, Sallie mae gave her loans the first few years, all small ones to add up to tuition, then when it came time to consolidate, told her she needed a co-signer. Its crazy, she was ok to give the loans to begin with, but not ok to consolidate? She cant wait another year as the loan payments would be too much, she has to stay in school to defer. Im worried that when it comes time for my younger daughter (10th grade) to go to college this big mess will not allow it to be possible.

    Any loopholes to the dependency rule since she has been out of my house and out of the state for 5 years, not to mention married and divorced. I cant claim her on my taxes, so why is she considered a dependent?

  36. HI Lois,

    I”m sorry to say it sounds like your grandson will be at a disadvantage because you are not his legal guardians. If he is under 24, not married, not in the military and not emancipated by the courts, then yes, unfortunately he is considered a dependent student.

    If his father won’t help pay, then I suggest you call the financial aid office NOW and schedule an appointment to explain your grandson’s unusual circumstances. You will likely still have to file him as a dependent on the FAFSA, but the school may be able to help in some way.

  37. Lois Grider said,

    Hi,

    My husband and I raised our grandson from age 2 until he went away to
    college withoug any support from father or mother. He earned about $11,000 last year and through Florida Bright Futures most of his tuition is
    paid. He also received a scholarship for $3,000 and he had to borrow the
    rest- about $3,500. His parents do not either one claim him on income
    tax. He claimed himself last year. We, his grandparents could not claim
    him all of these years because we are not his legal guardians.

    In the section of the FAFSA where it speaks of divorce, it says to take
    the last year your parent supported you or the one who supported the
    most. The question is- does he still have to be declared a dependent
    of his father?

  38. Hi Chris,

    This is an all-too-common situation, and leaves your daughter’s boyfriend at a distinct disadvantage. Unfortunately, the U.S. government assumes that all parents will help their children pay for college unless they’re 24 or older, married, have children of their own, are active duty military, are a ward of the court , are homeless or an emancipated minor.

    Even sadder – emancipated minors and homeless children were only added to this list this year!

    So you can see how out of touch all those rich lawmakers are with the average American struggling to pay bills.

    So what to do?

    1) Call the school and ask to meet with a financial aid specialist. They’ve seen this before, I’m certain, and will likely have good advice to offer.
    2)Look for scholarships. Many don’t require the FAFSA, though some do, and the money doesn’t need to be paid back.
    3)Keep talking to mom – why won’t she help?

  39. Chris said,

    My daughter’s boyfriend’s mother refuses to give him her financial info for FAFSA. What are his options? He feels as though he will not be able to continue college.

  40. Well you’re talking about 2 different issues 1) they lost it or 2) they’re refusing to cash it (“hold it”, as you put it)

    For #1, it’s not illegal but it is very aggravating. Financial aid people are only human and humans make mistakes. You need to have your financial aid officer call your lender and have them cancel the first check and reissue a new check

    #2 – Unless there’s something wrong with your account, like you’re now less than half time or have some sort of “hold” on your account where you no longer qualify for the aid, then they’re not supposed to hold it without cashing it. This is VERY different then accidentally losing a check.

  41. shelly said,

    Hello, I have been awarded an unsubsidized student loan. The loan company sent the check to my school and now my school says it is lost. I have been trying to get this check for over a month and it has been accruing interest this whole time. Is it illegal for the school to hold this check?

  42. If you submitted your FAFSA before the deadline last spring, and you know your Italian school accepts American financial aid (some do), then you are very likely to get your Stafford “approved” as the only requirement is your school’s certification.

    If you have OK credit, then you’ll likely be approved for the Grad PLUS loan – you don’t need great credit for it, but you can’t have abysmal credit. You are MUCH more likely to get the PLUS loan than a private loan, not to mention it’s a better loan program, so you’re doing the right thing.

    If I could offer a piece of advice – try calling your loan company AND your school, as you need them to work together and some schools are hesitant to OK loans from companies they’ve never worked with. Yes, it’s wrong, I know, but it’s the way of world.

  43. MR said,

    Monique,

    I was accepted into a graduate program in Italy, and the deadline to submit the first tuition installment is September 5th. I had already submitted my application for a Stafford Loan before the August holiday and have not been able to reach anyone in the office to tie up loose ends and have them certify my loan since then.

    Beyond the Stafford Loan, I will need additional funding, hopefully through a Graduate PLUS loan, but the school must initiate the process for that, too. What can I do in the interim? What are the chances that I will be approved for both loans? The total funding I will need is around $70,000 for this 1-year program. My credit is not great, but my current income is respectable; I really have no one who can guarantee my loans, either.

    If I am approved, how long does it take from the time the school certifies the loan until it is dispersed? I have already increased my line of credit so that I could make the first payment, however, this is non-refundable, so if I were declined for the student loans, I would lose this money.

    Thank you,
    MR

  44. Roaslind –

    I’m sorry but I know nothing about social security. You should call your local social security office to find out.

  45. Rosalind Gaston said,

    Will I still receive Social Security Benefits for my Son that is in High School and will turn 18 in January; but will not graduate until June?

  46. Hi Kim,

    Unfortunately you’re probably out of luck with private loans as creditors have tightened their credit restrictions because of the current economic hardship.

    BUT – have you looked into a PLUS loan? They’re federally backed, have a lower interest rate and better therms then PLUS loans, plus they have a lower credit requirement.

    You should always look into federal loans before private loans wherever possible as the private loans are really not nearly as good deals for the average consumer.

  47. Kim said,

    I was wondering if there are any private student loans for parents with fair to not so great credit ? If so-where and who. Iv;e beed searching for days..

  48. HI Sara,

    I’m going to answer the questions I think you’re asking.

    You have fixed rate loans. These are regulated by Congress and may change yearly… or they may not. When they do change, it’s on July 1st (and yes it literally takes an act of Congress). Variable rate loans fluctuate constantly with the market and can change at any time.

    Consolidated loans are fixed rate loans and are not affected by Congress’ changes. Consolidation can help you lock in a nice low interest rate if you have one. A consolidation’s interest rate is calculated by taking the weighted average of all your loan amounts and their respective interest rates. So if you had 10,000 at 5% and 10,000 at 6%, your consolidation loan would lump it all into one 20,000 loan with 5.5% interest that you pay over a longer period of time. You have lower payments each month but pay more in the long run.

    You can consolidate your graduate loans in with your undergraduate loans, that’s perfectly fine. Here’s a handy repayment calculator to help you determine if it’s worth it in your case:

    http://www.studentloanconsolidator.com/consolidation/student-loan-consolidation-payment-calculator.php

  49. sara said,

    Hi Monique,

    I just found on my Sallie Mae account that ALL my interest rate types are “Fixed” – does that mean I never benefit when the interest rate fluctuates every July 1?

    If they are indeed “fixed” does that also mean that I would not have to worry about consolidating since I would not have to worry abut the interest rate going up over time?

    Thanks again.

    Best wishes,

    Sara

  50. sara said,

    Dear Monique,

    I’m totally overwhelmed and confused about the current interest rates – fixed vs variable – and all the options to consolidate or not.

    I am currently doing my graduate studies in London and slated to be finished in the fall, so I’m trying to get a head start on the process before my repayment kicks in mid-October!

    1. I have a consolidated undergraduate student loan with Sallie Mae with $8k left at 4.375% – it was a mixture of federal loans, nothing private.

    2. In 2007, through Sallie Mae, I took out the following amounts for my 2007-2008 graduate studies:
    – Unsubsidized Stafford: $12,000, 6.8%
    – Subsidized Stafford: $8,000, 6.8%
    – Unsubsidized Graduate PLUS Loan: $44,500, 8.5%

    3. I don’t know if these are my interest rates or whether they have dropped like I’ve read? I’ve read about loans being fixed or variable and when I log into my Sallie Mae account, I cannot tell what I have?

    4. My undergraduate loans are already all consolidated and if I make 6 more payments, I am eligible for a 1% reduction, bringing it down to 3.375%

    When in repayment (starting October), my graduate PLUS loans will have the following benefits: 1% reduction after the first payment, bringing it down to 7.5%; 3% reduction after 36 consecutive payments.

    5. If I consolidate my graduate loans – will they be separate from my undergraduate loans (I am thinking not) – and does it make sense to consolidate given the impending benefits?

    6. I understood the benefits of consolidating when I finished my undergraduate studies, but now with varying my degrees of interest rates, loan amounts and benefits, I am totally lost!

    Thank you for your help! Clearly I am not a finance major, rather one in the arts!

    Best wishes,
    Sara

  51. Hi Kathy,

    First off, look for scholarships! It’ll take time and a lot of googling but it is well worth it as you don’t have to repay the money. Your son with a learning disability may qualify for more scholarships than you may realize! Start doing web searches for scholarships for any circumstances, hobbies or interests your sons are involved in. Millions in scholarships go unclaimed every year because no one applies, so it’s definitely worth your time. You can start with free scholarship directories like http://www.studentscholarshipsearch.com/ – and remember, never pay for scholarship info! It’s all freely available on the web, those who sell it to you are out to make a quick buck at your expense.

    Secondly, if you were turned down for a PLUS loan, then at least your 4-year-college son will now qualify for an unsubsidized Stafford loan. Your other son may qualify as well. Get a paper copy of the denial letter and contact both your sons’ schools about the PLUS denial, and do it ASAP as funding is first-come-first-served.

    Good luck!

  52. Kathy said,

    Hi Monique,

    I was interested in obtaining information on getting student loans / grants for my 2 sons. One will be a freshman in a Junior College and the other a Junior. We have receved the FAFSA for both boys this year (2008-2009) but will need more aid specifically for the 4 year student. In the past year I have paid cash for his room and board as we were not eligible for loans. As a result of medical and legal affairs over the past years we had to declare bankruptcy and are currently in our 3rd year. That said, we have not been eligible for Parent Plus or as a co-signor for our children. Additionally, we have not been successful to find other family members or friends to co-sign. My husband is retired and I have a salary close to $100K. We are doing ok financially but we do not own a home and everything we purchase is with cash. I would prefer to use as little of my out of pocket cash as needed but will help as much as possible.

    In addition, my son that is going to Junior college has a learning disability and I was wondering if there would be any financial assistance that he would qualify for this disability.

    Thank you

    Kathy

  53. Hi Steve,

    Well, it cuts both ways. You give a convincing argument about how loans can affect your credit for the next 10 or 20 years. Now put yourself in the shoes of a recent graduate who has crappy credit history and the same amount of debt. Think how many years it’ll be before they can afford to buy their first house!

    As for student loan forgiveness, all I know is contained in this post:
    https://parentstudentloans.wordpress.com/2008/04/30/sudent-loan-forgiveness-for-people-working-in-the-public-sector/

    I would suggest calling the DOE directly and asking if you qualify, and ask them the questions about IBR and ICR repayment plans. Remember, you’ll need to consolidate your loans with the DOE (Direct Loan Program) to qualify. VSAC loans are not eligible.

  54. Steve said,

    Hi Monique, I’m back.

    Having had some time to mull things over I am coming to the realization that assuming financial responsibilty for my son’s education thru a PLUS loan will require advance planning. I am amazed that such large sums (in my case over 90k) can be so easily approved thru a minimal credit check and no consideration to the borrowers ability to pay. I can find no info on the web regarding what happens to a parents future credit position and the ramifications of suddenly adding Plus loan debt which in most cases must max out the parents income to debt ratio. Most of us are close to maxed already! For instance for the next 30 years will the parent be able to buy/refinance a home or even get a car loan? Parents want the best for their children and one of our responsibilites is to make things happen. I wish there were more resources and straight talk to help parents evaluate the implications of all this. A private loan in the students name used to be the simple answer. The credit crisis has changed all this to the point where it seems the options are a plus loan, a terrible private loan or tough luck!

    I’m working another angle. I’m wondering if the student loan forgiveness legislation currently in the works will factor in here. The students mom works in the public sector (non profit family services, not for the government). Where can I find exactly what specific public sector jobs apply? Are Plus loans under both parents names? Does it make a difference which parent? Whats the difference between Direct, FFEL, FFELP? How do the various qualifying repayment plans work with consoldated Plus loans extended to 20/30 years? Larger Plus loan amounts can be originated w/ longer terms at the outset. I note that ICR & IBR repayment plans are not available to Direct plus borrowers, what does that mean? Need an explanation of the requirement that payments must be at least equal to the amount required under the 10 year standard repayment plan. Wouldn’t it be great to consolidate out to 30 years and pay for 10!

    I must be dreaming.

    Thanks for your help.

    Steve

  55. Steve,
    That’s great, I’m glad you’re working with your lender.

    Just one word of warning – generally a lender only gives you a certain amount of time for forbearance. For example, they might only allow you X number of months in forbearance over the entire life of the loan.

    Good luck to you and your son!

  56. Steve said,

    Monique,

    Again Thankyou for the information.

    Checked w/ my lender.

    The Plus loan term is 10 years. You can only extend the term thru consolidation. You can consolodate even if you only have one loan

    The way my lender handles deferrment is thru forbearance. Interest only payments are handled thru a reduced payment plan. They will grant either of these if one informs them that the student will be paying the loan upon graduation.

    Steve

  57. Hi Steve,

    Generally the term for a Parent PLUS loan is 10 years. You’ll want to double check that with your lender.

    If your lender does let you defer payments until graduation, or pay interest-only payments while your son is in school, then you’re quite lucky! Many lenders do not offer such generous terms and you’ll likely want to take advantage of them. You often see those options for a Stafford loan, but not always for a PLUS loan.

    If you can defer or make interest only payments, in your shoes I would take out the PLUS loan each year as the terms are much better than a private loan, and consolidate all 3 loans together after my child graduated. You will be making 1 loan payment each month per loan you’ve taken out, which means during the third year it’ll 3 separate payments a month.

    Consolidation lumps all your debts together, and the interest rate you pay is the weighted average of the loans that go into the consolidation. That may or may not lower the interest rate, depending on the interest rates of your existing loans. Consolidation also lets you make one payment each month instead of 3 – one for each loan.

    Consolidation also extends the life of the loan over more years, if it’s a large loan amount which it would be in your case. You’ll want to check with your lender about their consolidation terms, but for $90,000 you’d probably get a 30 year term.

    As I mentioned before, there is no pre-payment penalty for PLUS loans, so I would pay extra each month while my child was in school during that low-payment period, and try to pay a little extra each month afterwards too. You’ll pay the loan off quicker that way and avoid paying some interest.

    I should note that I am not a financial adviser, this is just what I would do were I in your shoes.

    I would strongly urge you, though, to leave private loans as a last resort because the interest rate can be nearly double that of a PLUS loan, and deferment and forbearance are much more difficult to get. Also, some private loan companies do not allow you to pay off the principal early, so read the fine print carefully!!

  58. Steve said,

    Hi Monique,

    Thanks for the info. Very helpful.

    You mention consolidation after the first year. Is consolidation the way to extend the term or can you choose when you take out the Plus loan. I thought you consolidated to get a lower interest rate. Perhaps you could elaborate on the consolidation aspect. I also thought you could defer or pay interest only etc while the student is still in school.

    Steve

  59. Hi Steve, thanks for writing.

    First off, let me say that VSAC has a good reputation in the industry (my husband’s loans are with VSAC!), so you’ll be in good hands. VSAC is a non-profit lender who lends to people from or attending college in Vermont.

    I think the crux of your question comes down to your sons’ need for a co-signer. With the recent mortgage crisis, lenders have tightened their restrictions for private loans. As a typical high schooler without credit, he will NOT be able to get a private loan on his own.

    So lets look at parent PLUS loans.
    -they have a lower interest rate
    -they can be consolidated
    -you have the options of forbearance and deferment that you don’t have with private loans.
    -no penalties for paying off the loans early

    Really, a private loan should be your last resort.

    You mentioned money being tight, so you probably want more than 10 years to pay the loans back. Consolidating loans will mean you pay more in the long run because you extend the payment period, but you will pay less each month. THere is also no penalty for paying more towards the principle of the loan, or paying it off early if you have a financial windfall in the future.

    Here’s what I would do in your position:

    1st year: take out PLUS loan. It will go into repayment immediately. Once I have all the finalized paperwork in hand, consolidate the loan. After consolidation, try to pay off a little extra every month.

    2nd year: take out the next PLUS loan. Consolidate this new loan in with your previous consolidation. You can re-consolidate federal loans only if you have new loans to add in, which is great for parents getting the PLUS loan. I’d also try to pay a little extra every month.

    3rd year: repeat 2nd year.

    As a foreign national I had complex work restrictions when I attended school in the UK, but if your son has dual citizenship, he may be able to get a paid internship or a summer position to help defray the costs. Living in Manchester is not cheap!!

    Good luck to both of you.

  60. Steve said,

    Dear Monique,

    I need some input evaluating the advantages between a Plus and private loan to fund my son’s education (I understand the basics). He has been accepted into the Biomedical engineering materials science program at Manchester University in the UK. This is a 3 year bachelors / 4 year masters degree program. The school has figured his total entitlement (cost of attendance) at $39560 per year. From this we deduct $3500 subsidized Stafford loan and a $4000 scholarship offered by the school leaving $32060 to borrow per year for the 3 (or 4) years of attendance. As you know financial aid is almost non existent for US students considering foriegn study. If he was to attend his second choice university in the US our EFC would be $15510 with the balance of cost covered by grants and scholarships for a 4 year bachelors (the US school replaced the Stafford w/ a scholarship). But the US school doesn’t have the same program or degree he wants. The UK school is highly rated. So we will need to borrow $96180 for a 3 yr bachelor in the UK vs the $62040 for a 4 year bachelor in the US ($34140 total more for UK bachelor). Our annual income is around 100k, money is tight and I am apprehensive of taking a Plus loan on this level of debt and the payments will be difficult at best. My son knows he must fund his studies and make the payments either way with my help. So its either a Plus loan in my name that he pays or a private loan in his name that he pays. This is the comparison chart from the lender http://services.vsac.org/ilwwcm/resources/file/eb8f054fa53d8c8/Parent%20vs%20ADVT%202007%20July.pdf
    The lender discounts the Plus loan interest rate 1% (7.5%). I will qualify for the Plus loan but I may not qualify to be a cosigner on the private loan so we would have to guess at the priviate loan interest rate and perhaps find a cosigner (now theres a real challenge). My son intends to stay in the UK after studies and work (he has dual citizenship) and says he will be paying back the US based loan in pounds (benefits of a week US dollar). If he stays in the UK he will not pay US taxes so there would be no student loan interest deduction for him (although perhaps he could deduct it on his UK taxes). With a plus loan I would benefit from a hefty student loan interest deduction on a student loan he would be paying a large portion of). The payment on this size educational loan will be like a mortgage payment (large). I want to do whats right and protect my son and not leave him exposed financially as he starts his life. Not sure if you can offer any advice on all this and it may not be a suitable topic for posting but it helped me just writing it all down. By the way, I think your blog is great!

    Thankyou,

    Steve

  61. HI Susan,

    That’s one question I’ve never gotten before, and truth be told, I don’t know the answer. I would suspect that you don’t have to, but I do not know for certain. Here are some places you can go to find the information:

    Social Security Website:
    http://www.ssa.gov/pubs/11000.html

    Department of Education:
    http://answers.ed.gov/cgi-bin/education.cfg/php/enduser/std_alp.php
    Click on the Ask a Question tab to send them an email directly.

  62. susan said,

    My son is nine years old. He receives ssi. Do I have to claim his money for financial aid for collage?

  63. Hi Kat,

    As there are many types of student loans, I’m not sure which you are referring to. If you are indeed correct that extra money goes toward paying off interest and not principle, then I suspect you are talking about private loans. Federal loans can be paid off early without penalty – meaning your payments would go toward principal.

    And yes, you are correct – if your extra payments go towards interest, you are not “paying it down” meaning you are not going to end up paying less money in the long run.

  64. Kat said,

    I want to pay my $40K in consolidated student loans off early and want to make payments toward them that are larger than the monthly balance due. Here is the question:
    I was told any extra money I send only goes to interest not principle? So if I paied extra it wouldn’t be paying them down? is this correct.

  65. Hi Dora,

    I would talk to a tax expert, they’ll be able to give you a bit of help. For example many professional companies like H&R Block will fill out the FAFSA form for you when they do your taxes, so they actually know a bit about the FAFSA form.

    This question is much too important for me to hazard a guess as I am not a financial expert. I do know that about a certain amount – it used to be $10,000 – that even family gifts have to be reported to the IRS…

  66. Dora said,

    We have financial aid this year, but in december we were given a significant gift in the form of bonds, from grandparent to parent. Because this is a gift, it is not reported to the IRS, but does it still need to be reported to FAFSA?

  67. Dee said,

    I paid off what my bank was told was the balance of my SallieMae loan 8/04. TODAY (2/13/08) I received a privacy info letter indicating I still have an account, so I called. I was told that amount was applied, “the system” used it to “push forward the payments until 3/09” and there is over $6,000 still owing which has been accruing interest!

    The supervisor affirmed that NO information has been sent out (“the system is designed that way”) since so I would have no way of knowing this. They do not even send out a statement after a payment like that to show the balance! I wouldn’t have known until the payment booklet arrived for March of 2009. He indicated all I can do is “send a letter to our PO Box”.

    This can’t be legal, can it?? What can I do?

  68. Debbie said,

    My son is 21 years old. He is attending college in the Bay area of Northern California. I am a single Mother of three. Two who attend college currently. My third is in Middle School ( age 13 yrs old). My son is the eldest of three. He has supported himself since he was eighteen years old. He provides for his own rent ( away from home) his own food, his own transportation. He pays for his books . He does receive VA assistance for his tuition as his Father is a disabled veteran. He works full-time and attends college full-time.Is there any circumstances where my income would not be a factor in his finanicial aid? I do not support him. I am not able.His Fahter does not support him. He has been independent financially for three years. It seems unfair that my income should be considered in his financial aid. Help?

  69. Hi Missy,

    Your son may get help, but based on current laws I believe he’ll still be counted as a dependent student for student loan purposes. I urge you and your son to jointly call or go to his financial aid office and explain your situation. They will be the best source of advice in a situation such as yours.

  70. Missy Smith said,

    My son is 22 years old and is going to college as a coop student. His income will be about $12,000 for 2007. We do not claim him as a dependent on our tax return. If he fills out the financial aid forms on his own, based on his income, is he likely to get any help?

    • Mr Marve Fred said,

      promise for you of that

  71. Mikey said,

    Yeah, this is a very very cool blog. 😉
    I just added you to my favorites.

    Thanx,
    Mikey

  72. Hi Jill,

    I don’t have access to that kind of information, not have I come across a list like that, but I’m wondering if the Department of Education might? Their website is http://www.ed.gov/

    Good luck to you.

    • Mr Marve Fred said,

      hi

      get a lon.

  73. jill said,

    I am sorry for being unclear. I am looking for a link that is suppose to list schools that had a high default rate prior to going out of business/changing their name. The adviser at legal aid said there was one—i havent been able to locate it and thought you might know it. It isnt in the main webite but he thought it there was a link that showed different schools that leaned to the shady side of misrepresentation.

  74. HI Jill,

    I’m sorry, but I do not know what you’re referring to. Perhaps a financial aid officer at the University of Alabama might be able to help you?

  75. jill said,

    in 1985 i attended a school called national career college in alabama. i was assured that all credits would go to the university of alabama huntsville. by both the recuiter and the college head. a few weeks i learned it was all lies— a couple of us confronted the school and was banned from the premises after conatacting legal aid and the media. the school has long shut down but i am still fighting the student loans people about owing the debt for a week of attendance. they state it only applies to loans starting in 1986. do you know the link for a site the names schools that have this problem since i was advised it you have the info,, you can get the loan dismissed?? thanks for any help

    • Mr Marve Fred said,

      you can have a loan

  76. Hi Denise,

    I’m not entirely certain what you’re referring to as there are many types of loans. With Stafford loans and Private loans, your son would be responsible for paying it back. WIth PLUS loans, parents/guardians are responsible for paying it back. Private loans can have a cosigner, though, which is often a parent. The co-signer’s credit helps the primary borrower get a lower interest rate, and is responsible for paying back the loan should the primary borrower not do so. It all depends on which type of loan you/he are applying for.

  77. denise landolf said,

    My son is 20 years old and wants to go to Technical school next month. Why do I have to fill out an application for the loan if he’s responsible for paying it?

  78. Hi Ramona,
    While this isn’t a blog about social security, I do happen to have a little knowledge – though just a little – about this. Every year, Social Security will send you a mailing detailing the amount of time you’re worked where social security has been taken out, and detailing your benefits. I get mine in the fall. I hope this helps. For more help, visit http://www.ssa.gov – the official website of the Social Security Administration.

    • Mr Marve Fred said,

      you can a loan.

  79. RAMONA said,

    HOW TO FIND THE YEARS I WORK WITH SOCIAL SECURITY


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