Financial aid counselor, taking questions! Forum

[Trifles]

How is who is eligible for work-study usually determined? Are most students who the government deems eligible awarded the aid or does the school have to limit it significantly?

[sooner]

This is a really good thread--thank you for giving us so much time. Here is my situation. I am debt free and have some savings. I have a $60K (over 3 years) scholarship. Here's what school has offered me:
Federal Direct Graduate Plus Loan Optional $7,546.00
Federal Direct Graduate Plus Loan to cover Need $9,889.00
Federal Direct Subsidized Loan to meet need $8,500.00
Federal Direct Unsubsidized Loan to meet need $10,000

I can't figure out what the difference is between each loan (I can request less). The letter says if I don't request now, might not be offered later. Does that mean I should take some from each loan offer?

I know I need more to pay for tuition and living expenses. I can get what I need from my family, but it still needs to be paid back, and they can't wait 15 years because they're going to retire. They want to charge me 3% but need it back in 7-10 years.

What I really need to know is how much it "costs" to borrow $20K each year? Also, if something happens in my family and their income goes down, is it a problem if I am not getting aid already? (I am 29 and financially independent for 6 years, so their income wasn't a consideration in the aid offer.

Thanks!

Hope yu can help.

[kn6542]

I would strongly advise against borrowing money from your family.

[Unadilla Kayaker]

As someone who has borrowed money from his parents (one of whom lost his job last year), I advise taking the government loans for whatever you need. Borrowing money from family can be difficult and strain the relationship. It might be financially beneficial to you, but it will also put a great deal of extra stress on you when considering paying back the loans. It sounds like your parents are willing to help you without much drama, but it also sounds like they NEED that money back at a set time. It's a dangerous gamble in my opinion.

If they will charge you 3%, they are loaning you money at a loss (surely they can do something with that money to make more than 3%). It will also change you from being financially independent to being tied in with your parents. If one of them were to lose a job, you'd be expected to tighten your belt and possibly pay back the money sooner.

The only downside to the PlusLoans that I know of for you is the extra interest that you will have to pay (I think it's 6.8% now, but not 100% sure). However, the terms of the loans will be clear and if for some reason you can't pay them back as quickly as you expect, the creditor will have to deal with that. It is easier to delay loans to people you're not related to.

I'm not sorry I borrowed money from my parents for college (I couldn't have gotten the education I got without doing so). However, I worry about my debt obligations to them way more than I should. I fully intend to borrow the maximum every year during law school and start channeling money back to my parents for the loans they gave me. They aren't getting younger and like everyone else they took a hit in the market (not to mention in income). So my advise is to get what you need in government loans.

Now let's break the loan types down (in order from best kind to worst kind):

*Federal Direct Subsidized Loan to meet need $8,500.00--This is the best kind of federal loan. The interest on the loan will not accrue while you are in school. It is capped for everyone at $8,500 (possibly less if you have large amounts of the same type of loan from college). This is a Subsidized Stafford Loan.

*Federal Direct Unsubsidized Loan to meet need $10,000--This is the other half of the Stafford Loan. However, interest will accrue on this portion while you are in school. The financial aid counselor on this thread has mentioned trying to pay the interest on this loan as the bills come (quarterly or semi-annually I think). This will keep the principal from growing while you are in school. The cap for both Stafford loans together is $20,500.

*Federal Direct Graduate Plus Loan to cover Need $9,889.00--After the Stafford Loans, GradPlus loans come next. The terms are not as good (meaning the interest rate) and their purpose is to allow you to borrow the full cost of your education (since the better Stafford Loans do not). I believe the Stafford Loans come directly from the Department of Education and the GradPlus Loans came from private lenders in the past but will (starting this year) come directly from your law school. Anyway, after the $20,500 and after accounting for any scholarship you have, you can borrow up to the stated cost of attendance (Tuition+books+fees+a stated room/board #). The part here that says to cover need probably has to do with covering tuition and costs related to school.

*Federal Direct Graduate Plus Loan Optional $7,546.00--Not sure why this is listed separately from the GradPlus above, as my school listed both together after subtracting a scholarship and the Stafford Loans. Basically the terms will probably be the same as the GradPlus Loans to cover need listed above. I just depends how much you think you need to borrow.


Anyway, hope these explanations help. I think they are correct but if I made a mistake I hope others will point it out.

[kn6542]

You can only borrow up to the amount of your cost of attendance, and the school will tell you what that is. That COA won't include things like the deposit on a summer apt for your summer job, other moving expenses, work clothes, new clothes bc you got fat during 1L, vet bills, car repairs, new glasses, etc. In three years, stuff can happen that you won't anticipate, and while some schools allow budget increases to allow you to borrow more money to cover things like that, a lot of schools are strict about it and will only allow for things like medical expenses not covered by insurance, one time new computer purchase, and other very essential things. So if your parents are willing to help you out, borrow from the feds to cover your cost of attendance, and let your parents help with stuff that comes up that isn't included in the COA. It's nice to have that cushion.

[askhos]

Here's a (hopefully) simple question.

So far I've filled out the Need Access application and the FAFSA, but when I went to look at the current aid one of the schools is offering me, I noticed pretty quickly that it wasn't enough to cover everything.

Then I heard about GradPlus loans, but I'm not sure what they are, how they work, or how to apply for them. Any help would really be great!

[03121202698008]

Here's a (hopefully) simple question.

So far I've filled out the Need Access application and the FAFSA, but when I went to look at the current aid one of the schools is offering me, I noticed pretty quickly that it wasn't enough to cover everything.

Then I heard about GradPlus loans, but I'm not sure what they are, how they work, or how to apply for them. Any help would really be great!

How you apply for them is dependant on your school. Some are direct lenders. Since they are no longer originated with banks, the whole process is different now.

[dovlet]

I have the two questions regarding loans.
I was dismissed from the school this summer and after that my lender sold my stafford loan to Deparment of Education. How bad news is this?
And second question. I received the letter from lender saying that I am in six month deferment period for GradPlus and it finishes in october. I need to know when period starts relatively to my dismissal?
And how can I delay the payment? Some people say I can delay the different ways for 2 or 3 years.