Financial aid counselor, taking questions! Forum

[flowylime]

Rumor has it that the banks tightened up their rules this past year.

Where did you hear this "rumor", and why would this even make any sense?

I've heard it at conferences that I or my coworkers have attended. Financial aid administrator conferences typically have events put on by lenders and we get to interact with them so it's not like this information is out of the blue. Some banks have stopped lending educational loans entirely. The federally guaranteed loans are not the big money makers for lenders, since the feds have restrictions on them, but lenders can still determine on their own whether a student is credit worthy. I can't say what their reasoning on this would be, as I don't work for a lender and I am not privy to their decision making, but I would guess it would be because they would prefer to lend a private loan where they can make more money. That's my personal and professional opinion.

[Bennettju]

Hi Flowy,

I'll echo everyone else's thanks here--your insight is invaluable!

I'm guessing I might be in a similar situation to a number of people on this board, in that I plan to go into public interest/government work after graduation, and I want to know the best way to make life livable on a lower salary.

My particular situation is that I have been offered a 1/2 tuition scholarship at a lower ranked school, and acceptances (with no scholarships) to two T-14 schools. Each of the T-14 schools has recently unveiled new LRAP programs which dovetail with the federal CCRAA plan, which allows students to make income-based repayments (IBR), and then forgives the remaining balance of the student's debt after 10 years in eligible public service. I know that Gradplus loans do qualify for IBR, so it should be possible to borrow the entire amount of attending either of these higher ranked schools in eligible loans.

So my question is, what really is the safer bet here? If I go to the lower ranked school, which also happens to be in a very affordable area, I would graduate with much less debt (say $60k vs. $160k). But the lower-ranked school's LRAP is much less extensive, so I would probably be paying the majority of that debt back over time. If I go to the higher-ranked schools, I would be graduating with huge debt, but with LRAP programs which would effectively reimburse me for all (or most) of my IBR payments for 10 years, after which the remainder would be forgiven.

So long as I really do stick with public interest work, it seems like the latter option is the best option, especially in view of the increased career prospects from graduating from a higher-ranked school. Is there anything that I'm missing, though? It would be a horrible surprise to accumulate that much debt and then find out that I missed some detail that would disqualify me from the LRAP/IBR help.

Thanks again!

p.s.: Here are the links to the school's LRAP programs, if that would help: http://www.law.georgetown.edu/finaid/lrap/index.html
http://www.law.northwestern.edu/admissi ... /lrap.html

[flowylime]

Hi Flowy,

I'll echo everyone else's thanks here--your insight is invaluable!

I'm guessing I might be in a similar situation to a number of people on this board, in that I plan to go into public interest/government work after graduation, and I want to know the best way to make life livable on a lower salary.

My particular situation is that I have been offered a 1/2 tuition scholarship at a lower ranked school, and acceptances (with no scholarships) to two T-14 schools. Each of the T-14 schools has recently unveiled new LRAP programs which dovetail with the federal CCRAA plan, which allows students to make income-based repayments (IBR), and then forgives the remaining balance of the student's debt after 10 years in eligible public service. I know that Gradplus loans do qualify for IBR, so it should be possible to borrow the entire amount of attending either of these higher ranked schools in eligible loans.

So my question is, what really is the safer bet here? If I go to the lower ranked school, which also happens to be in a very affordable area, I would graduate with much less debt (say $60k vs. $160k). But the lower-ranked school's LRAP is much less extensive, so I would probably be paying the majority of that debt back over time. If I go to the higher-ranked schools, I would be graduating with huge debt, but with LRAP programs which would effectively reimburse me for all (or most) of my IBR payments for 10 years, after which the remainder would be forgiven.

So long as I really do stick with public interest work, it seems like the latter option is the best option, especially in view of the increased career prospects from graduating from a higher-ranked school. Is there anything that I'm missing, though? It would be a horrible surprise to accumulate that much debt and then find out that I missed some detail that would disqualify me from the LRAP/IBR help.

Thanks again!

p.s.: Here are the links to the school's LRAP programs, if that would help: http://www.law.georgetown.edu/finaid/lrap/index.html
http://www.law.northwestern.edu/admissi ... /lrap.html

You're welcome! As you're well aware, this is a pretty common situation. As I mentioned to another poster, strictly as a financial aid counselor, I would tell you to take the scholarship if you want less debt (obviously).

But I know it's not that easy. I think LRAPs are a great tool to use but you definitely have to read the fine print. You want to clerk after school? You might not be eligible for the LRAP. And so on. I would advise you to lay out your goals and how each of your options fits into them. When do you want to buy a house? How do you know you're committed to public service when your job choices are (at least) a couple of years away? Would it bother you to have all that debt sitting on your shoulders if you were unable to make monthly payments and/or you had the less extensive LRAP?

Sorry I can't make this decision for you or even make it more clear. As a counselor, I would say take the money, but maybe not if you asked me as a person. Good luck in your decision!

[ryguy]

Hi:
My question is, do you know anything about the SallieMae Bar Study Loan at 5.24% ?

[flowylime]

Hi:
My question is, do you know anything about the SallieMae Bar Study Loan at 5.24% ?

Not familiar. I'm guessing that's a variable interest rate? Give Sallie Mae a call with questions!

[ryguy]

Hi:
My question is, do you know anything about the SallieMae Bar Study Loan at 5.24% ?

Not familiar. I'm guessing that's a variable interest rate? Give Sallie Mae a call with questions!

It's on their website. I will call.

[MMLAW]

Regarding the borrower's credit score and eligibility for Grad Plus Loans, are you suggesting that the standards have changed for all issuers of Grad Plus?

I have no 90 day delinquincies or charge offs. I have a strong 7 year payment history on credit cards and am now making payments on my undergraduate loans. My credit score however is below 600 because of the credit ratio (credit limits vs. credit balance).

I would not want this to be a factor in my eligibility so who should I reach out to regarding this?

[kri]

Thanks for this thread.I have a question. I have high LSAT for my school (7pts above 75th) and a pretty avg(higher than 50th) gpa. I honestly dont know how or what to go about writing a request. Im not asking for my hand to be held per se, but what type of arguments for funds work? And what kind of arguments will be met with scorn/disdain/no money?

[CordeliusX]

Hi Flowy-

My question is about how your savings influence FA decisions. In particular, I have about 10K in a Roth IRA. Does this mean I'm forced to tap it? How poor is poor, and how rich is rich, when FA is concerned?

[kn6542]

Rumor has it that the banks tightened up their rules this past year.

Where did you hear this "rumor", and why would this even make any sense?

I've heard it at conferences that I or my coworkers have attended. Financial aid administrator conferences typically have events put on by lenders and we get to interact with them so it's not like this information is out of the blue. Some banks have stopped lending educational loans entirely. The federally guaranteed loans are not the big money makers for lenders, since the feds have restrictions on them, but lenders can still determine on their own whether a student is credit worthy. I can't say what their reasoning on this would be, as I don't work for a lender and I am not privy to their decision making, but I would guess it would be because they would prefer to lend a private loan where they can make more money. That's my personal and professional opinion.

Um, ok. But a lender choosing to no longer deal with GradPlus loans, or educational loans in general, would have no direct effect on a student trying to get GradPlus loans. What matters is what the lenders who are making GradPlus loans are doing. I don't see any reason it makes more sense to change their criteria if they are going to engage in the business of GradPlus at all. What possible benefit would a lender who IS doing gradplus gain from making it harder to lend? Why not raise the interest rate in that case? Or can they not do that?

[kn6542]

Regarding the borrower's credit score and eligibility for Grad Plus Loans, are you suggesting that the standards have changed for all issuers of Grad Plus?

I have no 90 day delinquincies or charge offs. I have a strong 7 year payment history on credit cards and am now making payments on my undergraduate loans. My credit score however is below 600 because of the credit ratio (credit limits vs. credit balance).

I would not want this to be a factor in my eligibility so who should I reach out to regarding this?

Yeah, why would it be? This is a weird rumor.

[thatsnotmyname]

Hi,

Do financial aid people approach financial aid offers differently for students who did early decision and students who do regular decision? Or in other words would a person get a better financial aid offer if they do not do early decision?

Thanks in advance for any help.

[flowylime]

Regarding the borrower's credit score and eligibility for Grad Plus Loans, are you suggesting that the standards have changed for all issuers of Grad Plus?

I have no 90 day delinquincies or charge offs. I have a strong 7 year payment history on credit cards and am now making payments on my undergraduate loans. My credit score however is below 600 because of the credit ratio (credit limits vs. credit balance).

I would not want this to be a factor in my eligibility so who should I reach out to regarding this?

I am suggesting that in addition to the minimum standards I listed above, each lender may have their own discretion when conducting the credit check, and some lenders may be more lenient than others. Stafford GradPLUS loans are regulated by the government (and are considered a federal loan) so there are some regulations that must be maintained, such as repayment plans are standard as well as interest rates. The lenders do have some flexibility, however. For example, some lenders may waive the origination fee of the loan. For this reason, and from my own professional experience, I can't assume that some lenders wouldn't be more selective in their GradPLUS approval than others.

You really should discuss this with the lender you choose for your GradPLUS loans. They do the credit checks and make those decisions.

[flowylime]

Rumor has it that the banks tightened up their rules this past year.

Where did you hear this "rumor", and why would this even make any sense?

I've heard it at conferences that I or my coworkers have attended. Financial aid administrator conferences typically have events put on by lenders and we get to interact with them so it's not like this information is out of the blue. Some banks have stopped lending educational loans entirely. The federally guaranteed loans are not the big money makers for lenders, since the feds have restrictions on them, but lenders can still determine on their own whether a student is credit worthy. I can't say what their reasoning on this would be, as I don't work for a lender and I am not privy to their decision making, but I would guess it would be because they would prefer to lend a private loan where they can make more money. That's my personal and professional opinion.

Um, ok. But a lender choosing to no longer deal with GradPlus loans, or educational loans in general, would have no direct effect on a student trying to get GradPlus loans. What matters is what the lenders who are making GradPlus loans are doing. I don't see any reason it makes more sense to change their criteria if they are going to engage in the business of GradPlus at all. What possible benefit would a lender who IS doing gradplus gain from making it harder to lend? Why not raise the interest rate in that case? Or can they not do that?

I'm suggesting that GradPLUS loans are not as lucrative for lenders than private loans, which is why some may be more selective and some have dropped the program completely. GradPLUS loans are regulated by the federal government so they can't adjust interest rates even if a payment is late or something. They can do whatever they want with their private loans, however. So they would potentially offer a private loan after declining you a GradPLUS.

[flowylime]

Hi,

Do financial aid people approach financial aid offers differently for students who did early decision and students who do regular decision? Or in other words would a person get a better financial aid offer if they do not do early decision?

Thanks in advance for any help.

Hello! No, when you were admitted does not typically matter for financial aid purposes. If the school has institutional aid form, they may have a priority submission deadline, but they probably wouldn't look at your admission date or whether you were early decision or not.

This could have an effect on scholarship offers from the admissions office, but I would check with them to confirm.

[jbarl1]

If my expected family contribution was 0 on my FAFSA should I expect a lot of need based aid?

[flowylime]

If my expected family contribution was 0 on my FAFSA should I expect a lot of need based aid?

Possibly. This is pretty dependent on schools' financial aid offices. Based on your EFC alone, you would be considered a needy candidate. Each financial aid office has their own policy for determining grants. Did they require you to submit information about your parents? For example, private schools will probably have you submit info about your parent's finances, and that will certainly affect your financial aid eligibility. State schools might have a preference for in-state students for both scholarships and grants. You would definitely be eligible for subsidized federal loans, which are considered need-based aid. Best of luck.

[presh]

.

[flowylime]

As the others have said - thanks for taking questions.

If this isn't something you know, my apologies. It is a bit random.

I need to submit the FAFSA soon, but I am also planning on applying to transfer. I am not sure whether to submit the information to the four schools I will be applying to but don't currently attend.

What do you do when you get FAFSA information from someone who isn't a student at your school and hasn't yet submitted an application? Does it get tossed or is there some sort of "holding" file until more information is received from that person?

Ha, that's exactly the kind of thing I would know. It would be held until you were admitted. Once the admissions office notifies the financial aid office that you were admitted, the financial aid office would begin to review your information on the FAFSA. Feel free to submit it to the prospective schools.

[Apple Tree]

Thank you so much for taking questions! The total federal loan+scholarship the school offered me does not cover the whole tuition. What should I do next? Should I contact the financial aid office and apply for private loan? I got $8500 for Stafford, and $12000 for unsub'd federal loan. Is that the maximum amount I could receive for federal loans?

You're welcome! $20,500 is the maximum for federal Stafford loans. You are also eligible for a federal GradPLUS loan to cover the remaining cost of attendance. You could also choose to borrow a private/alternative education loan. If you want a GradPLUS, contact the financial aid office and they will direct you to their process. If you want a private loan, contact the lender directly to apply.

.....

[Gunz353]

Hi, thanks so much for your time and info! I was browsing through and didn't really see the answer to my question. I was accepted to a school with a nice scholarship but still need loans to cover tuition. I am an independent adult and my EFC was 0 based on my low income. I know I will qualify for the standard federal loans, but will need about $10k in GradPlus loans. I have a low credit score from some bad history with credit cards. Some debts were negotiated down and paid in full, but everything is now paid off and in good standing for the past year or so. Is this enough to qualify for GradPlus through the federal gov't?

[cassieyuc]

Hi, I am foreigner, don't have green card or citizenship, what kinda loans can I get? Does US citizen cosigner a must?

Thanks a lot,your answer is very important for whether or not I can go to law school.

[lallygag]

Hi Flowy-

Thanks for all the help so far. I was just wondering the average debt that students graduate with...?

[Apple Tree]

Hi, I am foreigner, don't have green card or citizenship, what kinda loans can I get? Does US citizen cosigner a must?

Thanks a lot,your answer is very important for whether or not I can go to law school.

I'm not a financial aid counselor, but I'm pretty sure you will not be eligible for federal loans. And yes, a US citizen's consignment is needed for a private loan (at least the ones I know). My friend had to take out a loan for her school and she got her teacher to be her cosigner.

[Bobushka22]

Hello... I have generally a perfect credit record (with credit cards, bills, rent, etc.) and don't presently owe anybody. However, these is one caveat... I have two significant marks on my credit file from 2007 from student loans... one from Sallie Mae and the other from ACS... each of these went over three months late because I did not receive the statement. I tried to appeal the situation with each of these lenders and they basically told me tough luck. Will this prevent me from qualifying for GradPlus loans without a cosigner in your experience. Would I possibly just qualiy for less or not at all? Thanks for your help!