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Loans other than Stafford?


Hilltopmom
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Stafford loans have a per year cap, I get that.

 

When there is still a difference between what's covered by Financial Aid & the cash we actually have available, some people just "take out private loans" for the difference. What loans are these?

 

I'm not planning on taking out private loans for him... Btdt for my expensive private school, paid them off.

 

But- Ds would really like to go "away" to a state U since our local one does not have his program & the little kids (we have a 2 & 3 year old too) are driving him crazy.

NPCs & EFCs show that we can cover tuition & part of room & board with FA, but we don't have enough to pay what's leftover. Some of it, but not all.

 

(We know about investigating merit aid, local scholarships, tapping his 529, etc)

 

If he really wants to go away, other loans will likely have to come into play. Not a crazy amount.

But where does one find out info about other loans?

 

Thanks

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I think you would have to co-sign any loans beyond the Stafford.  I would google Parent loans.  The term "parent plus" comes to mind.  Since you have a particular school in mind, you could call the financial aid office and ask about the specifics.

 

You probably also considered this, but he may be able to earn a few thousand working over summers.  If there is a 529, maybe others can speak to the best way to use it, i.e. should you use it all up before taking out any additional loans (I would be inclined to vote yes, use it up first, but I don't really know the right answer).

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Isn't the 529 required disclosure for FAFSA? And aren't 529 funds taken into consideration when determining your EFC? If you use that now, it may mean you are eligible for more financial aid next year, because this money will no longer be part of the mix.  Of course, this is all based on how financial aid played out for you this year, which is so different for everyone.

 

If you don't start tapping into the 529, what are you saving it for?

 

In reality, whatever your EFC is typically means nothing when it comes down to it. There's only so much financial aid available in different forms, whether it's Pell, other state/federal loans/grants, and scholarships. The rest will be paid by you/your student, no matter if your EFC is $500 or $5000 or $15000.  Even if your EFC is very low, it is extremely likely you will still end up with a large gap between the financial aid package and the cost of attending college.

 

Parent Plus loans are loans that you take out, that you are responsible to repay. Based on what you wrote, that doesn't sound like an option. (They're a poor choice anyway due to the interest rate.)

 

In your position, I would encourage my child to look at schools where he has a chance of receiving a merit scholarship to attend. Look at schools that are not the most popular or most desireable, schools where your kid will be in the upper end of students academically.

 

Our personal experience: My son looked at a state school that appealed to him due to location. It was not one of the top schools in our state. We toured it, and I was surprised by how it impressed me. He applied to the Honors program, was accepted, and also was offered their top merit scholarship, which essentially covered full tuition. That made a HUGE difference in the cost of attending.

 

Also consider private colleges, again ones that aren't in super high demand. You can get a lot more in scholarship money, making the final cost comparable to a state school.

 

A hidden gem for research is collegedata.com. It has very helpful stats on Cost of Attendance, Merit Aid given out by individual schools, final student debt and more. You definitely want to be looking at this over the next few months so you can get in those college tours and be ready to apply in the fall. I also found that it was beneficial to apply early. Several of my kids' schools accepted Honors applications only in the early action cycle and/or awarded better scholarships at that time.

 

 

 

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Well, the 529 isn't ours (grandma set it up) & he may or may not actually be given the money (grandma is like that).

So, he can't count on that.

 

We know about merit aid & applying to all sorts of colleges, honors programs, etc.

Have not found private colleges even with their guaranteed merit to be anywhere near as cheap as our state schools. At least running estimates.

 

He's not a top stats kid, nor looking at selective pricey schools.

 

Right now, I was just looking for ways to meet the gap. Found more info once I started googling parent plus loans.

Thanks.

 

He will work Summers to contribute as well.

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Types of loans: federal student loans (Stafford and Perkins), federal parent loans (Parent PLUS), and private loans (from your local bank or lending institution).

Helpful articles: 
- Federal Student Aid: Types of Federal AidTypes of Loans
- Debt.org: Types of Student LoansBest and Worst Student Loans
- FinAid: Loans; Scholarships; other types of aid

One key thing to keep in mind about loans: the *total* amount of all student debt should be no more than the amount of the student's first year salary of working in their degree field. So if starting salary would be $35,000/year, then no more than $35,000 in loans for the years in college for earning the degree. So if the student takes 4 years to graduate, that's a little under $9000/year of debt; if it takes 5 years to graduate, that's $7,000/year of debt.

ThisIsTheDay provided lots of good info to think about beyond loans. I'll just add:

Cast your net wide -- research LOTS of schools that have your DS's degree program and would be a good fit for your student. Then use the College Board's Big Future search engine, to research specific schools. Be sure to click on the "print complete college profile" link, as that pulls up the page with all the data on the school that you can use to help you see how likely admission will be, but esp. if DS's ACT/SAT scores are likely to put him into bigger scholarship range (so, scores that put him in the top 10% of the school's typical incoming freshman ACT/SAT score). That allows you to "be a big fish in a smaller pond", the way ThisIsTheDay's son was able to do.

Then, as ThisIsTheDay suggested, use the College Data website to search specific schools to see how aid is distributed, and how many students are likely to receive aid, and in what form (loans, grants/scholarships).

Anther possible sources of financial aid that might fit DS and be worth investigating: SMART scholarship -- aid towards tuition in STEM fields in exchange for working for several years after graduation as a civilian for the military.

A last BIG small tip re: scholarships and schools -- you mentioned in your original post about local scholarships also called "outside" scholarships). Be sure to ask the schools if they permit "stacking" of scholarships. That means the school's policy is to NOT reduce their merit aid by the amount of the outside scholarship(s), so you get the full amount the school would offer plus the amount of the outside aid. Many schools do not allow stacking, which means they reduce the amount of merit aid by the amount of the outside aid, so there is no change in the total  aid you would receive.

BEST of luck as you search for schools, and get the financial aid figured out! Warmest regards, Lori D.

Edited by Lori D.
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Another private loans info site is here:

 

http://privatestudentloans.guru/

 

Recognize that even though the private loans would be in the student's name, the parent would be a cosigner. Statistically, a majority of consigning parents end up making at least some of these loan payments. You should also get life insurance on your child sufficient to pay off any student loans you are responsible for.

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Stafford loans have a per year cap, I get that.

 

When there is still a difference between what's covered by Financial Aid & the cash we actually have available, some people just "take out private loans" for the difference. What loans are these?

 

I'm not planning on taking out private loans for him... Btdt for my expensive private school, paid them off.

 

But- Ds would really like to go "away" to a state U since our local one does not have his program & the little kids (we have a 2 & 3 year old too) are driving him crazy.

NPCs & EFCs show that we can cover tuition & part of room & board with FA, but we don't have enough to pay what's leftover. Some of it, but not all.

 

(We know about investigating merit aid, local scholarships, tapping his 529, etc)

 

If he really wants to go away, other loans will likely have to come into play. Not a crazy amount.

But where does one find out info about other loans?

 

If the bolded is true, then Stafford is it for students, I think?

 

Students can take out additional private loans, but the parents (or other adult) have to co-sign, so you ultimately are on the hook.

Parent Plus loans are in the parent's name.

 

Someone correct me if I'm wrong, but for just the student to take out loans, I think Stafford is pretty much it.

 

Also, be super-careful, many/most/all??  'student' loans that are not Stafford have ridiculous qualifications like you can't discharge in bankruptcy, and I think most of them don't have any kind of income-based repayment.  NJ has had cases where they've tried to collect on loans from parents after a student has died.  :svengo:

 

Other things people do are take out home-equity lines (much lower interest rates) or borrow against (or just deplete) their 401Ks.  Neither of which are awesome options either, but people do it...

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Also, be super-careful, many/most/all?? 'student' loans that are not Stafford have ridiculous qualifications like you can't discharge in bankruptcy, and I think most of them don't have any kind of income-based repayment. NJ has had cases where they've tried to collect on loans from parents after a student has died. :svengo:

 

 

No student loans, including federal ones, can be discharged in bankruptcy.

Federal loans have income based repayment plans and forgiveness plans which help some, including forgiveness if the student dies.

 

https://studentaid.ed.gov/sa/types/loans/federal-vs-private

 

There is a proposal to raise the minimum percentage of income taken for income based repayments which may increase lower income grads defaults rates:

 

http://www.cnbc.com/2017/01/12/trumps-student-loan-plan-pay-more-but-exit-sooner.html

 

Do not go into default on any government or private student loan. President Trump just reversed some Obama-era protections for students in default, including restoring a 16% surcharge in the balance due if a student falls into default.

 

http://www.collegescholarships.org/research/student-loans/

 

https://www.washingtonpost.com/news/grade-point/wp/2017/03/17/trump-administration-rolls-back-protections-for-people-in-default-on-student-loans/?tid=sm_tw&utm_term=.2a46795037e6

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This is something we've been researching too. What I don't understand are all these stories we hear from students about their ridiculously large amounts of student debt. If there's really only the Stafford loans unless a parent co-signs, are all those parents really allowing their children to accrue that much debt? 

 

This stuff is stressing me out too, OP. Ds is being a bit stubborn right know and thinks he can just take out loans himself. I've told him we won't be co-signing for him. I'm hoping he matures quite a bit in this area between now and when he would go (he's a junior). 

 

 

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This is something we've been researching too. What I don't understand are all these stories we hear from students about their ridiculously large amounts of student debt. If there's really only the Stafford loans unless a parent co-signs, are all those parents really allowing their children to accrue that much debt?

 

This stuff is stressing me out too, OP. Ds is being a bit stubborn right know and thinks he can just take out loans himself. I've told him we won't be co-signing for him. I'm hoping he matures quite a bit in this area between now and when he would go (he's a junior).

Mine is a jr too & seems to think we can just magically come up with all this extra so he can live away from home. (He needs to get a job ASAP)

I really want him to get outta here, but there's only so much I can do. I still have 3 other kids behind him to support.

 

Living with relatives, not in our house, but still in walking distance to our local U is an option, but only for a year to knock out some gen eds locally.

I dunno.

 

It's hard.

Edited by Hilltopmom
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But- Ds would really like to go "away" to a state U since our local one does not have his program & the little kids (we have a 2 & 3 year old too) are driving him crazy.

NPCs & EFCs show that we can cover tuition & part of room & board with FA, but we don't have enough to pay what's leftover. Some of it, but not all.

 

Has he considered options such as studying on campus at the library or other various locations, studying at a local coffee shop, studying at friends' homes etc...? 

 

Maybe there are options to make staying local work for him that he hasn't considered, that could save all of you a lot of money?

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Has he considered options such as studying on campus at the library or other various locations, studying at a local coffee shop, studying at friends' homes etc...?

 

Maybe there are options to make staying local work for him that he hasn't considered, that could save all of you a lot of money?

He can stay at my parents, 7 doors down from us, no toddlers. Lots of extra bedrooms :)

He's not super pleasant to live with, I've got to say. So that might not work out.

 

Bigger issue is our local U has a crappy program for what he wants to study (like professors we know in the dept told him not to go there), so he could start there but then he'd need to transfer anyways.

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Hilltopmom- I hear you. It really really stinks.

 

I also have an 11th grade boy who is not always a pleasure to live with. I really believe getting away on his own is best for him. If I was faced with what seems like no options I would be very frustrated. Fortunately we have a regional state U that is affordable for him. But otherwise I would be in your situation.

 

I've posted before that we won't do parent loans. We also wouldn't tap retirement, home equity, etc. But you know, if there were no other way, I bet I would. That is obviously not financial advice and I really don't know anything about you or your son. I have seen what seems to be parents being pennywise, pound foolish in college scenarios. If taking a few thousand dollars a year in private loans makes a huge difference in your situation I can see it being an OK choice.

 

But I mostly just want to agree with you that it all stinks. It is good you are looking at the realities now, not a year from now. I am sure many parents and students go through a period of grieving when they realize that the college plans they have been working toward aren't workable. It is hard. I'm sorry.

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You might check to see if DS scored high enough, or is close enough to do a fair amount of test prep and retake the test to be ligible for automatic merit aid:
List of Guaranteed Scholarships Based on SAT/ACT Scores
79 Colleges with Full Ride Scholarships
Full Tuition Academic Scholarships

On 3/19/2017 at 10:06 AM, Hilltopmom said:

Well, the 529 isn't ours (grandma set it up) & he may or may not actually be given the money (grandma is like that).
So, he can't count on that.

We know about merit aid & applying to all sorts of colleges, honors programs, etc.
Have not found private colleges even with their guaranteed merit to be anywhere near as cheap as our state schools. At least running estimates.

He's not a top stats kid, nor looking at selective pricey schools.

Right now, I was just looking for ways to meet the gap. Found more info once I started googling parent plus loans.
Thanks.

He will work Summers to contribute as well.


What is your local community college like? Does it have a solid reputation and a good transfer credit policy?

What degree program is DS interested in? Is it one that is scheduled such that DS knock out enough dual enrollment next year that would reduce his total time at the university by a year? (Some degree programs in Engineering or Architecture or Medical fields are scheduled so that core concentration courses are spread out throughout all 4 years, so you can't reduce time at the school to earn the degree, even by knocking out gen. ed credits early)

What about CLEP tests? Would your DS test well, and would the university accept a number of these, enough to knock off a semester or two that way, and reduce overall time (and thus cost) at the university?

More things to look in to:

While it's not as much as what you can earn if you can find a full-time job, AmeriCorps provides housing and a living stipend plus $5800 educational tuition credit -- a credit which can also be used for loan payback under certain circumstances. Even a 450 hour (12 week) project provides $1500 credit or loan pay-back amount. There are a wide range of service areas, and esp. if struggling to find a job after graduation, this can be a great way to get job experience, make contacts, and pay down debt a bit. The Peace Corps also provides loan forgiveness, but only federal loans that are under the William D. Ford Federal Direct Loan (Direct Loan) Program are eligible for PSLF (Public Service Loan Forgiveness). However, the Peace Corps requires a longer commitment and one that is overseas.

What about cutting out the cost of a dorm by seeing if there is a program like this one near your DS's future college: "College Students are Living Rent-Free in a Cleveland Retirement Home" -- I understand there are several of these programs starting up around the country.

Also, you might read through these two threads and see if any ideas might be of help in reducing costs or need for loans:
s/o of Cautionary tale: high cost of college -- a brainstorm $$ idea thread!
How are YOU managing to pay for college?

Also some ideas scattered throughout these threads:
College debt crisis
Newbie Q[uestion] about college costs

Good luck! ? Warmest regards, Lori D.

Edited by Lori D.
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FWIW, AmeriCorps is on the budget chopping block... at this point it's tough to know if it will still be there or not.

 

If you need extra loans, some of the best interest rates come from banks or even credit card companies like Discover.  Be sure to compare if you qualify for them.  I think Parent Plus is easier to qualify for, but I'm not certain.  I'm going off hearsay from what some kids at school (or their parents) have shared with me.

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FWIW, AmeriCorps is on the budget chopping block... at this point it's tough to know if it will still be there or not.

 

Hmmm... Do you know if they will honor tuition credit earned through AmeriCorps? DS#2 here just volunteered 9 months of 2016 with AmeriCorps.

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Hmmm... Do you know if they will honor tuition credit earned through AmeriCorps? DS#2 here just volunteered 9 months of 2016 with AmeriCorps.

 

No one knows what will happen yet since it's just a proposed budget.  I haven't read it in depth to see if any specifics are in there.  It's just something middle son was thinking of doing (applied for) for next school year, so we're watching to see what happens.

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If the bolded is true, then Stafford is it for students, I think?

 

Students can take out additional private loans, but the parents (or other adult) have to co-sign, so you ultimately are on the hook.

Parent Plus loans are in the parent's name.

 

Someone correct me if I'm wrong, but for just the student to take out loans, I think Stafford is pretty much it.

 

Also, be super-careful, many/most/all?? 'student' loans that are not Stafford have ridiculous qualifications like you can't discharge in bankruptcy, and I think most of them don't have any kind of income-based repayment. NJ has had cases where they've tried to collect on loans from parents after a student has died. :svengo:

 

Other things people do are take out home-equity lines (much lower interest rates) or borrow against (or just deplete) their 401Ks. Neither of which are awesome options either, but people do it...

I met a NJ parent who took out a large life insurance policy for her daughter's private student loans she had to consign for.

 

I know a couple who are still paying off college loans for their kids' educations. Having to pay them back after retirement is very hard. The mom said to me very seriously that she hopes they will be able to pay them back before they die. The kids are grown with families of their own now.

 

Another dad I know is older and in a career that has been unstable with long periods of un- or under- employment. He still has $80K of loans to pay off and young children to provide for.

 

After meeting these people, I really starting taking the hunt for merit scholarships seriously.

Edited by Tiramisu
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After meeting these people, I really starting taking the hunt for merit scholarships seriously.

 

It's VERY well worth it to put time into research for our job as guidance counselors.

 

I've told many students it's VERY worth their time to put effort into studying for the SAT/ACT as merit scholarships can be worth more than they'd get from most part time student jobs.  

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I met a NJ parent who took out a large life insurance policy for her daughter's private student loans she had to consign for.

 

I know a couple who are still paying off college loans for their kids' educations. Having to pay them back after retirement is very hard. The mom said to me very seriously that she hopes they will be able to pay them back before they die. The kids are grown with families of their own now.

 

Another dad I know is older and in a career that has been unstable with long periods of un- or under- employment. He still has $80K of loans to pay off and young children to provide for.

 

After meeting these people, I really starting taking the hunt for merit scholarships seriously.

Wow. Yeah, I'm talking more like a few thousand a year. We might be able to meet it other ways than loans, me picking up part time work (not ideal with littles at home), begging the other set of grandparents....

Both vehicles will be paid off this year, so there's that $, but we just bought a more expensive house in town (not a good move for college payments, but necessary for the rest our family at this point).

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The National Guard and the various military reserves offer money for college. My DH had a friend who did the Reserves until he was able to qualify for a ROTC scholarship for his last 2 years of college (his high school qualifications were not good enough for a full 4 year ROTC scholarship).

 

 

Sent from my iPhone using Tapatalk

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I know a couple who are still paying off college loans for their kids' educations. Having to pay them back after retirement is very hard. The mom said to me very seriously that she hopes they will be able to pay them back before they die. The kids are grown with families of their own now.

 

 

I heard a podcast a year or so ago that was a long interview with a guy who has early-onset Alzheimer's.  He retired from his regular job but is working as a consultant, desperately and much as he can despite the fact that being exhausted worsened his symptoms, so that, among other things, he can repay his GROWN KIDS' student loans.  It seemed to me that it was high-time those supposedly-grown-and-employed kids stepped up and paid their own student loans.  This guy had written a well-received book about his Alzheimer's--had "purple" in the name of it, I think, and was very articulate despite some obvious gaps, but I really wanted to scream at his kids, "Suck it up, cream puffs, and pay your own debts."

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Mine is a jr too & seems to think we can just magically come up with all this extra so he can live away from home. (He needs to get a job ASAP)

I really want him to get outta here, but there's only so much I can do. I still have 3 other kids behind him to support.

 

Living with relatives, not in our house, but still in walking distance to our local U is an option, but only for a year to knock out some gen eds locally.

I dunno.

 

It's hard.

"Magical thinking" is a not an uncommon problem among high school juniors. Whether it's where they can be accepted, where they can afford to attend, how they are going to make their millions and retire by 35, etc.

 

Here is my $0.02: Tell your ds exactly what you can afford. I call this the "pile approach". Here is the amount of money that is in (or that we can put in for the next four years) your education "pile." It is irrelevant how much is in the pile, and everyone's size of pile is different. It's not a competition between people. It's just a fact. Everyone has different family circumstances, job situations, health issues, goals, etc. Whether it's $50, $500, $5,000, $50,000, or $500,000, give them the pile size. I agree with Creekland about time well spent in test prep. The fact is that strong standardized tests scores are necessary for most merit scholarship opportunities. Doing well is the student's best and most direct way to increase his/her pile. I would not co-sign a loan, not even for a few thousand dollars. I am adamantly opposed to loans over Stafford amounts.

 

I think parents sometimes feel guilt that they can't give their children *exactly* what they want in their college experience. I believe children can pick up on this and, in turn, step up their level of entitlement. No one is entitled have their college education provided by their parents. It is a lovely gift if one can do it, but no parent should feel guilty if they can't. Parents should absolutely work as hard as they can to navigate their children to the best place for them within the given financial restraints. I believe in laying out the parameters just as they are, whatever they are. There is no need to say, "I'm sorry we can only do X; I wish we could do more."

 

I'm not saying the above is happening with the OP - I don't know. Just offering general unsolicited advice about being matter-or-fact and dispassionate about sharing the financial situation.

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Mine is a jr too & seems to think we can just magically come up with all this extra so he can live away from home...

 

I actually was going to suggest the same thing as Hoggirl. And I totally agree with her that "magical thinking" ;) is EXTREMELY common -- something you have to be patient with and gently bring them back to reality. Sounds like it might be time to sit DS down and have the realistic talk:

 

"Here are actual costs of various schools -- and costs when living at home vs. living on a campus, vs. living with relatives. Here's the pile of money that mom & dad have to contribute. Gee, when we subtract the amount mom & dad can contribute, that leaves $XX,XXX amount left that you will have to be responsible for. Where will that come from?"

 

If it's not sitting in his bank account, talk about how much can he realistically earn now and while in school (maybe $6000/year, if he works 30 hours/week over the summers and then about 10 hours/week while in college.) Subtract these potential student earnings from the total. Is there still an amount of the total cost of school left? Then the only option left is loans.

 

Run that amount that would have to be covered by loans through a student loan pay-off calculator (see FinAid's or BankRate's). That's how much he'll have to pay back per month for however many years after he graduates. Now compare that figure with how much he is likely to earn a month once he's graduated. Now subtract living expenses once he's graduated (rent, food, car, etc.). "Ouch! Now we see why reducing the amount of student debt as much as possible is important to reduce the impact on your future."

 

Now talk about merit aid and how that can help contribute to reducing his college costs. Esp. discuss how test scores determine how scholarships are awarded (as Creekland suggests). Show the connection between test prep and raising test scores. Sometimes just 2 points on the ACT or 100 points on the SAT can make a huge difference -- to go from no merit aid to at least some aid, or go from some aid to a lot of aid.

 

 

 

He can stay at my parents, 7 doors down from us, no toddlers. Lots of extra bedrooms  :)

He's not super pleasant to live with, I've got to say. So that might not work out.

 

Optional bonus discussion (lol): After walking through the financials, you might be able to also casually mention that being able to live rent-free off-campus is an incredible donation that will help reduce a big chunk of his future debt. But offers of donations like that can dry up quick if the recipient doesn't have a grateful and pleasant attitude. ;)

 

BEST of luck in researching options and finding what works financially for your family! Warmest regards, Lori D.

Edited by Lori D.
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An additional note from having seen oodles of high school students go on to college.  The vast majority enjoy their experience even if it's not at their first choice college.  The vast majority end up successfully employed - even if not at what they thought they wanted when they left high school. Often what they end up in they like better than what they thought they wanted.

 

People skills and tact are usually a better predictor of whether they end up in something they like than the specific school chosen.

 

Students who didn't enjoy their experience (and still graduated) are either too deep in debt (usually via private loans) or went to a school that was far, far too easy for them (so be careful if you have a student who likes and can handle challenges).

 

Students who ended up coming home either chose a school that was a poor fit for them (too small, too large, vastly different philosophy of students, too rural, too urban, or even that gym wasn't enough to keep their interest like they thought it would be) or couldn't handle the academics (too poor of a foundation or too much emphasis on extra curriculars rather than studying).

 

There is no single "right" school - or even a Top 100 list - but for each student, it's worth doing research to try for a good match academically, physically, and financially.  Being a guidance counselor is actually a JOB when done correctly just as being a teacher is.

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This is something we've been researching too. What I don't understand are all these stories we hear from students about their ridiculously large amounts of student debt. If there's really only the Stafford loans unless a parent co-signs, are all those parents really allowing their children to accrue that much debt?

 

This stuff is stressing me out too, OP. Ds is being a bit stubborn right know and thinks he can just take out loans himself. I've told him we won't be co-signing for him. I'm hoping he matures quite a bit in this area between now and when he would go (he's a junior).

Sally Mae now Vanguard used to make student loans all.The.time without parent signature. They would loan these kids staggering amounts of money often at high interest rates, and some colleges - like several art institutes - would tell the student it was time so sign for financial aid and then cover the words "promissory note" while hurriedly getting the student to sign.

 

Sally Mae has been the mafia of student loan companies coming just short of threatening to break the student's legs for being late. Several judges have looked into the possibility of loopholes in the law to try to help out the student's by lowering interest rates, and well any possible means to punish SM, but there isn't a lot they can do.

 

BlenDED is another no co signer student loan vendor.

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