Loans?/Home Equity Line of Credit?/Student loans?

My daughter has been accepted into the following colleges. RPI, RIT and Clarkson as well as UNH and URI (out of state). She also has been awarded a type 7 ROTC scholarship - my question is - what is the best way to make up the difference in remainder of the tuition after the scholarship and the financial aid packages? Her father and I are divorced so we will be, hopefully, splitting the cost. What are my best options? Willing to listen to any suggestions because I am totally confused. Thanks so much

Usually the student loans (in student’s name) are part of the financial aid package These have a low interest rate so are usually the best ‘deal’.

A parent Plus loan is a government loan given to parents of students (so can only be for an amount up to COA). They have a 5% origination fee and a rising interest rate (currently about 8.5%) but they are easy to apply for and easy to qualify for.

Some people do prefer HELOCs because the interest rate is lower, and they can borrow what they need when they want it. It is most likely no longer tax deductible.

Private loans can be a good deal or not, depending on terms and your credit rating.

Once you’ve exhausted loans only in the student’s name, HELOC typically has a low interest rate. If you have a 401k type plan, you may be able to borrow against it cheaply.

How much would you have to borrow to make the above listed schools work?

Are you in NYS? Do you qualify for Excelsior scholarship? Did your D apply to any SUNYs?

She applied to SUNY Binghamton but have not heard back yet. Don’t believe she is qualified for Excelsior. Looking to borrow about a total of no more than $20000. How many loans can she take out in her name? Also, once she’s done with school she’ll be in the Air Force due to the ROTC scholarship? How do student loans work in that situation?

Your daughter can take the Direct Loan in these amounts…

Freshman $5500

Sophomore $6500

Junior $7500

Senior $7500

For a total of $27,000 for the four years.

The type 7 ROTC scholarship only covers tuition and fees, so my son is running into the issue that Binghamton will still cost $15,000 a year for room and board. Excelsior only covers tuition, so SUNY schools are stil $20,000 a year. Your daughter might want to consider a private school like Clarkson or RIT because they offer free room and board to students on ROTC scholarships. She will have to convert her type 7 to a 3 year type 2, but it might work out to be less overall, even paying for the first year not on scholarship. We are going through the same decisions now, but it is difficult when we haven’t heard back from RIT or Binghamton yet, and his ROTC scholarship didn’t get submitted until the last board. Another thing to consider is traveling to a crosstown ROTC host college has its own challenges, so maintaining a scholarship at Binghamton could be difficult. I didn’t really answer your questions, but it sounds like we are in a similar position with choosing the right college and how to pay for it.

To touch on your question about methods of payment. I think we will go the route of parent plus. I am a teacher and will qualify for the 10 year forgiveness plan…if it still exists when we get to that point. Parents that work certain government jobs or nonprofits qualify.

https://studentloanhero.com/student-loans/student-loan-repayment/parent-plus-loan-forgiveness-is-possible-heres-how-to-get-it/

@schristopher78

You think you will qualify for loan forgiveness for your plus loans to send your kids to college?

@kelsmom is that true?

According to the article, those of us with government/nonprofit jobs can have the remainder of our Parent PLUS loans forgiven after 120 qualifying payments. I also have a colleague who is doing the same process. I don’t know if the program will last that long and I of course will need to hold off on retirement until they are forgiven.

I worked in public education for 30 years with disabled students. I never was able to cancel loans for my kids…but then…I also didn’t take PLUS loans.

These programs also have the potential to be discontinued. It is also possible that you will be responsible for paying taxes on the amount cancelled. I would check that too.

Loan forgiveness is not well advertised, possibly on purpose. I do believe it has to be a PLUS loan. I still want to go the PLUS route for now because I don’t want to start paying immediately. It is my intention to have my son pay back those loans whether they be in his or my name. We can always transfer them or pay them off through another method if the forgiveness doesn’t pan out.

Here are calculators for different options

https://studentloanhero.com/calculators/

Here is the one specifically for government employees/nonprofit workers…it is not taxable.

https://studentloanhero.com/calculators/public-service-loan-forgiveness-calculator/

A few comments on PLUS loans — if you have good credit you may be able to get a loan at a lower interest rate, sometimes significantly so. Plus loans have a 7.6% interest rate and a 4.2% origination fee (deducted from the amount of loan disbursed).

You can choose to delay repayment of Plus loans, but interest will accrue during the deferment period. If you don’t pay that interest during the deferment period, it will be added to the loan balance.

If it is the intent your student is to pay back the PLUS loan, make sure they are part of the initial decision making process.

Also, the student’s own loans can’t be combined with the Plus loans, so the student would be making 2 payments. Any income based repayment play would be based ont he student’s income for just one loan (student’s) and not on the parent’s Plus loan.

In order to benefit from the Plus loan forgiveness, you’d have to get on a Income based repayment plan. It usually requires the parent to pay 20% of the parent’s disposable income for the 120 payments (10 years). One would hope that a good chunk of the loan would be paid during those 10 years, and only the remaining would be charged off.

Also my understanding is that you cannot directly transfer Parent Plus loans to the student. You can certainly setup your own family agreement that you expect the student to pay them back OR your son can use a private loan refinancing company to get the loans into his name (and therefore be subject to the terms including interest rates of the refinanced loan).

Thanks so much for all your help. Have any of you “haggled” for more financial aid from schools. I was advised to do so, but I want to make sure I do it correctly. Clarkson gave her quite a bit so I can use that to support my “haggling”

What colleges are you going to compare with Clarkson?

Are they peer schools? Do they cost about the same? Do they have need based aid awarding policies that are similar?

The other schools are very similar to Clarkson as well as needs-based award policies.

What school does your daughter want? What can she get with the ROTC scholarship at that school? What does she have in aid offers from her accepted schools? Time to get out the old spread sheet and looking at final numbers and discussing with your ex and your daughter how those costs will be split. As mentioned above, Direct loan amounts will automatically be available to your daughter. With ROTC in the picture, at some schools, just about full cost could be paid, at those schools where room and board is covered for ROTC scholarship recipients.