Do any of your college kids take out student loans? If so, question...

[Dianne-TX]

We have one current college student (finished 1st year) and one going in Fall 2020.  They will both do student loans.  This isn't a discussion about whether or not they should do that, but rather I'm looking for help deciding *which* company(s) to look into.  Our 1st student went with Sallie Mae and is out of state (but the university he attends doesn't charge out of state tuition, it's the same price for everyone who attends, in state or out of state).  Our 2nd student will be going to an in-state junior college, TX.  Has anyone used the Texas Education loan program?  5% is pretty good.  Thanks for any recs.

Edited April 3, 2020 by Dianne-TX
spelling correction

[Lori D.]

I'm sure you're already thinking along these lines, but everything may change for next year due to the pandemic, so while it's great to plan ahead, be aware that some options may no longer even be available for next year.

Also -- are your students eligible for Federal Pell Grants? Many junior colleges are less expensive than 4-year universities, and if your 2nd student is eligible for a federal Pell Grant (FREE federal student aid that does not have to be paid back), that may reduce or eliminate the need for loans for the 2nd student. Also check and see if your 2nd student is eligible for a state grant of any kind. Again, that would help reduce or maybe eliminate the need for loans for that 2nd student.

That said, the "best" student loans are federal student loans, as they have the lowest interest rates, and the federal direct subsidized loans do not accrue interest until after leaving school. (So less $$ owed for repayment.) Side note: another *possible* benefit is there could be the possibility of delayed payback or loan reduction, should Congress pass such an act.

Federal Direct Subsidized loans
- 4.53% interest for loans dispersed before July 1 2020
- up to $5,500
- as long as the student is enrolled at least half time, interest does not start accruing, until 6 months after the student leaves college (either through graduating, or leaving in the midst)
- US Dept. of Ed is the lender

Federal Direct Unsubsidized Loans
- 4.53% interest for loans disbursed before July 1 2020
- up to $20,500, less any subsidized amounts received at the same time
- interest begins accusing upon signing for the loan
- US Dept of Ed is the lender

BEST of luck in navigating next year's college and financing! Warmest regards, Lori D.

Edited April 3, 2020 by Lori D.

[Lanny]

Dianne: One thing you need to do, if you have not already done it, is to e-File your Federal Income tax return for the 2019 tax year. ASAP...

Also, on  or (very) shortly after 01 October 2020, you need to file the FAFSA form for the next school year, which will be available on the FAFSA web site on that date.

And then, I would begin with the Financial Aid offices in the schools involved. They may have some loans available that you are unaware of.

Begin with the FAFSA and have it sent to the schools involved.

Note: Be sure that you use the information from the Federal tax return for the correct year. They go back 2 years if my memory is correct.

[Dianne-TX]

Thanks to you both!  I'm sorry that I didn't give details, but we've already done the FAFSA and received the award info from the jr college.  She was already given an unsubsidized and subsidized loan (small).  We wouldn't qualify for a pell grant.  What about info on the various loan companies out there.  Do you know of any that are better to choose from?  We're needing to cover the rest required.  We were surprised the EFC wasn't better since we will have two in college now.  It's like they never even considered it.  These are newer waters for us.  Thanks again for any advice/info. you can share from personal experience.    

[Lori D.]

On 4/3/2020 at 11:31 PM, Dianne-TX said:

Thanks to you both!  I'm sorry that I didn't give details, but we've already done the FAFSA and received the award info from the jr college.  She was already given an unsubsidized and subsidized loan (small).  We wouldn't qualify for a pell grant.  What about info on the various loan companies out there.  Do you know of any that are better to choose from?  We're needing to cover the rest required.  We were surprised the EFC wasn't better since we will have two in college now.  It's like they never even considered it.  These are newer waters for us.  Thanks again for any advice/info. you can share from personal experience.    

Yes, it really bites about the FAFSA EFC number not just being "halved" between the 2 students when you go from 1 student in college to 2. Here's a quick explanation of how/why it works that way: https://thecollegefinanciallady.com/2019/03/11/efc-for-multiple-children/

Alas, no personal experience with lenders for loans. Hopefully others can help you out. Just at a VERY BRIEF look at the Texas Education loan program, it looks like a similar set-up as Federal student loans, but for the state of Texas, so that might be a fairly safe bet to go with.

Also... Check out this article from Nerd Wallet: "7 Best Private Student Loans of April 2020" -- at the very bottom of the article, they recap it links to which loan is best for which situation:

• Sallie Mae Private Student Loan: Best for Part-time students and those who want repayment flexibility.
• College Ave Private Student Loan: Best for Students who want to make payments while they’re still in school.
• Ascent Private Student Loan: Best for Independent students; faster payoff.
• CommonBond Private Student Loan: Best for Faster payoff.
• Citizens One Private Student Loan: Best for International students; existing Citizens Bank customers.
• Discover Private Student Loan: Best for Students who may need wiggle room on payments.
• Earnest Private Student Loan: Best for Flexible repayment.

Hopefully others with personal experience of student loan lenders will now jump in for you. 😄 

Edited April 10, 2020 by Lori D.

[Lanny]

DD took out 2 loans that her school (UNC) suggested. I think one of them is a U.S. Government loan and the other one is a commercial loan. I don't remember the details, but both of them seemed to have very good terms. One had better terms than the other one did.  One thing I found unusual was that it seems better for her NOT to  be paying on the loans while she is in school and I don't think they are charging interest at this time. There's no financial penalty for not paying at this time.  Again, I don't remember the details.  For both of them she had to get 2 References who were willing to be References for her. Not co-signers.