<p>My son was accepted in expensive private LAC this year. I did not apply for FA because I did not qualify. I recently became unemployed. My wife never worked. I have about $25,000 in interest and dividend income. My assets went down. I can qualify for some aid according to collegeboard calculations. It is my understanding that his school meets all costs above EFC.
I have question about student loans. How much can student get in his name? I do not know what limitations are for subsidized loans.
How much can I get if I co sign the loan? Am I even allowed to sign because I am not employed? Can I even get home equity loan to pay for college if I am not employed?</p>
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<p>That is a LOT of interest/dividend income which would indicate that you have a large amount of assets as well. Is there any way you can tap these assets. At 2% interest rate, $25000 would indicate a principal in excess of $1 million dollars.Hopefully there is something there you can use to help your child pay for college. Am I misinterpreting this?</p>
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<p>If it were me…the first thing I would do is talk to the LAC finaid department directly and find out if you can file for financial aid for next semester, and how to do so. Explain the circumstance. You are not the only one in this situation and if the school meets need, they might have the funds to help your child. You probably WILL need to complete the financial aid applications and you will need to document your job situation. If you have a severance package, the school will want to know the extent and amount of that as well. Your assets will likely be considered.</p>
<p>Thank you for your reply.
Most of my income comes from dividends. I invested for 30 years; I have some stocks yielding over 20%. I do not have anything even remotely close to a million. My understanding that my EFC is calculated as follows: 10% of income, 5% of assets. IRA/401K is not considered. Equity in primary residence is considered. Is this correct? </p>
<p>My understanding that FA office just looks at current situation without any regard for future needs such as health insurance, living expenses.</p>
<p>In a nutshell this is what happens…</p>
<p>You apply for financial aid. The school determines your EFC - expected family contribution. How much you can contribute and how much the student can contribute.
This is also determined by the gov’t when you file the FAFSA.
If the school only requires the FAFSA then they use the FAFSA EFC. With the FAFSA, home equity is NOT counted. IRA/401(k) is not considered.</p>
<p>The school then compares the EFC against the COA or Cost of Attendance. This is tuition, room & board, fees, books, transportation.
If your EFC is less than the COA then you have “Need”. A student with “Need” qualifies for the federal loan program - most commonly Stafford Loans. </p>
<p>If your son’s school meets all costs above the EFC then they probably will require you to file the Profile and this will consider home equity. The school will determine the EFC, not the federal government.</p>
<p>The STUDENT borrows the money for the Stafford loans - the limits are $3500 freshman year, $4500 sophomore year and $5500 for junior and senior year. Very needy students are also sometimes offered a “Perkins” loan - another federal loan program.
Students also now qualify to borrow $2000/year Unsubsidized Stafford Loan - additional money but the federal government does not pay the interest.</p>
<p>it is true that basically your income is looked at for that year only. If there are expenses that a family incurs that are extra-ordinary then surely should explain that to the financial aid office.</p>
<p>Parents may also borrow money guaranteed by the federal gov’t throug the PLUS loan program. Payments begin as soon as the money is disbursed and the interest rate is determined by the federal gov’t.</p>
<p>Private loans are loans not guaranteed by the federal gov’t. If they are in the students name then usually a student needs to have a co-signer, unless the student has established credit.</p>
<p>Schools vary in how much loan they expect a student to take. My advice is to first, read very carefully the school’s website and search the website for information about their financial aid policies. Do they meet 100% of financial need? How do they treat home equity? Do they cap student loans? Then talk directly with the financial aid counselor at your son’s school, and have specific questions and financial aid figures to give them. The more you know before you talk with the FA office, the better and the more specific info you give them, the better they will be able to estimate how they will treat your financial aid situation
The standard formulas do look at the age of the parents, and all FA offices have the ability to adjust FA awards to account for special circumstances.</p>
<p>Plenty of good advice. I just want to provide updated loan amounts. Freshmen can take out a maximum of $5500 in Staffords, subsidized and/or unsubsidized. A maximum of $3500 of this may be in subsidized Stafford - but how much depends on need (COA-EFC-grants/scholarships=need for subsidized Stafford). A mix of subsidized and unsubsidized Stafford up to COA-grants/scholarships or $5500 (whichever is less) can be awarded. </p>
<p>The mix for sophomores is $6500 sub/unsub (of which up to $4500 can be in subsidized, if there is sufficient need). For juniors and seniors, it is $7500 (of which up to $5500 can be subsidized, if there is sufficient need). The grade level is defined by earned credit hours as determined by the school.</p>
<p>If a student’s parents apply for a PLUS loan and are turned down (that is, they don’t pass the credit check), the student may borrow an additional $4000 per year in unsubsidized Stafford if freshman/sophomore, $5000 if junior/senior.</p>