<p>Is this how it really works? If we take a $20K loan each year (as a four year loan), and the first year the payments are $500 per month, the second year $1000, the third $1500, and the fourth $2000??? We can handle the $500 per month but not the yearly increase. Is the FA award granted the same amount each year, or is it calculated as a percentage and therefore would change each year as we accrue debt? Any info would be greatly appreciated.</p>
<p>If you absolutely must take a loan out to pay for secondary school, the best way to do it, if you possibly can, is as a vehicle tacked onto your home. Either through refinancing the mortgage and taking out some of the home value, or as a home improvement loan or another thing. Payments on a 160k additional loan (which you can take in increments of 20k per year) will be recalculated with the very low current mortgage rate and not be that noticeable per month. In some cases you may even wind up paying less per month while still taking money out. You will however lengthen the life of your mortgage. But that may be good while getting fin. aid at college.
However - if you do not own a home, do you really want to be stuck for a loan for secondary school? At the rates youve presented? That seems onerous.</p>
<p>It’s exceptionally difficult in many areas to refinance or get a home equity loan these days. As for the above loan, that does sound onerous.</p>
<p>My understanding is that the the FA award stays the same each year (or maybe increases at the same percentage as tuition).</p>
<p>Thank you for your reply. We definitely will look into refinancing or another such vehicle. My question was worded awkwardly; what I’m trying to understand is the following:</p>
<p>It doesn’t seem reasonable that if they awarded us 1/3 of the tuition in year one when we have NO debt, that three years later when we have a HUGE debt (borrowing $30K/year), we would still receive the same amount as when we had no debt. I remember reading that the award is calculated as a percentage of your discretionary funds, so I wondered if they would then increase the award as our debt increases?</p>
<p>We will call the FA offices and inquire - I just wondered if anyone had any insight to share.</p>
<p>I read with interest (no pun intended) today that student loan debt now exceeds $1 trillion. [Student</a> Loan Debt: $1 Trillion and Counting - Forbes](<a href=“http://www.forbes.com/sites/sherylnancenash/2012/03/22/student-loan-debt-1-trillion-and-counting/]Student”>Student Loan Debt: $1 Trillion and Counting). As some also believe that student loan debt is the next bubble that will burst in the American economy, your caution in this regard is prudent. </p>
<p>Another factor to include in your calculations is that your child may incur another $100,000 or more in college debt, if he or she is not admitted to a college that provides financial aid on a grant only or mostly grant only basis. And that $100,000 does not, of course, include additional possible debt for graduate school. </p>
<p>Good luck with all this.</p>
<p>I think your best bet is to call the school. Schools that offer their own low-interest loans don’t usually require repayment until after the student graduates–which is I suppose one way for them to skirt around your situation. However, I suspect that they will not raise your FA amount–I think most schools expect us to consider in advance whether we will be able to afford the entire four years of tuition based on the initial FA offer.</p>