Loan timing and prepayment?

Paying for College
1

We were not planning on taking out any loans. We own two family businesses with variable income (meaning money doesn’t come in with regularity on a monthly or weekly basis - but we do make an adequate amount over the course of a year). We may now be taking on a business partner which could further change/delay our cash flow pattern. In the big picture, we will have the money to pay for college (and did not receive any financial aid award at any school) but the timing of it may be up in the air. Thinking about applying for loans, just in case our timing is off with our incomes.

First question. . .

  1. How quickly do loans take to apply/approve/disburse. Trying to determine when I need to go down this path for a fall entrance. Looking at Parents Plus and/or unsubsidized Stafford (that we would pay back) as well as private options. Is there a 30 day lead time? 60 day? More?
  2. If we take out any loans, can we cancel pre-disbursement and/or pay them back early (once the income comes in)?

I know people may recommend working with the college to adjust the timing of our payments but it is tough to predict/commit to what that timing will be. Over the next 60 days, we may have plenty of money at our disposal or we may have to wait several months for it. Just looking for our options to deal with cash flow timing issues.

Can we use loans as a stopgap? Insurance policy for delayed income? I recognize there are loan fees that we would pay for going down this path. . .

Thanks!

2

Each school has its own processing timeline. You should ask the school how long it takes to process.

If you borrow, you can cancel pre-disbursement. In fact, you can cancel within the first 120 days of disbursement. You can return through the school for a certain number of days (school determines), but you can send back to servicer for the whole 120 days … and that is a cancellation, so your origination fees & interest are cancelled.

Hope that helps!

3

Very much so. Thank you!

4

Check the installment plans offered by the colleges as well. Those might give you enough flexibility.

5

You should always take the student direct loan before the Parent Plus loan. The terms of the student direct loan (interest and origination fees) are better.

6

Thanks to all!