Oh but wait, there’s more - you also get to pay a ‘set up’ fee.
For a Direct PLUS Loan (both Parent and Graduate), the primary fee is a loan origination fee, currently set at 4.228% of the total loan amount.
Key Fee Details
Deduction Method: The fee is deducted proportionately from each loan disbursement. This means the amount you receive will be less than the amount you borrowed, but you are still responsible for repaying the full original loan amount.
Impact Example: On a $10,000 loan, the origination fee would be $422.80, leaving you with a net disbursement of $9,577.20.
Validity Period: This 4.228% rate is effective for all Direct PLUS loans first disbursed on or after October 1, 2020, and before October 1, 2026.
We are just paying as we go - but this fall will likely be;
Out of State Grad/Prof School
and
UNC-CH InState
and
University of Florida, Indiana University, University of Illinois or Purdue University OOS
That will test our free cash flows really for the first time since we started college kids (we may have to reduce our investing for a year or two).
When I first looked at the financing options I considered the different loan packages, as our investment vehicles were/are currently returning 12-15% annually - so directing our cash to college was basically pulling cash from going into our investments. However, the set/up or origination fees make it even less attractive.
HELOCs can serve a purpose but because they are adjustable - for many people they should avoid them unless the have the access to other forms of capital that they could pay down a BIG chunk of money in under 6 months, significant upheaval in the market can make them very costly for those who don’t have other ‘fungible’ assets to flip out of one area to cover another when interest rates change. Since direct loans are set interest, they are much more predictable long term.
What a blessing y’all are to this friend who needed a family and college guidance. I’m always inspired when I hear stories like this, of good people doing big-hearted things.
Sounds like both kids have fantastic choices – looking forward to seeing where they both land!
That is crazy!!
However it is what many are going to have to deal with. We are fortunate that we can avoid this (assuming nothing to crazy occurs over the next 4-5 yrs). I really wish there were better options for the families that need the extra money!
D26 applied for one scholarship that has many different award levels- one of those is an option for a $20k interest free loan (for the life of the loan- and follows a student loan pay off schedule). Though I would love her to win one of the cash prize offerings- this option is very intriguing!!!
We are waiting on 3 highly rejective RD applications (1 today, 2 next week). Neither me nor my kid are expecting good results. She also has 1 waitlisted application for a school she really likes and will continue to pursue.
D24 heads back to college at the end of this weekend (spring break this week). It’s been nice having both of my kids under the same roof for a brief time this week. She & D26 get along really well and it’s been lovely to hear them giggling with each other.
On Sunday, D26 can finally take off the wraps & bandages on her foot. Finally can get her foot wet. She’s really looking forward to that…simple pleasures in life!
D26’s college offered her a $250 scholarship to offset fees for some leadership program if she wants to join the program. She did some digging and it sounds like it requires you to major in leadership studies and she’d rather major in history instead, so she’s going to pass on that.
Today is the day when we hear from the last school D26 might actually go to if admitted. She has one other outstanding, but has already ruled that one out based on her other admits. The one today is one of her top choices, but is also a reach and highly unlikely she gets in RD. We chatted this morning before she went off to school, and we both agreed regardless of what happens today she will be great! It is not even clear she would choose the school if they pick her.
She already has three incredible options, each of which we are excited about for different reasons, and each of which will be hard for her to turn down. So, we both are in a very different place emotionally than the last time we were waiting to hear.
After today, we can move on to narrowing down and her selecting a school. Which I am excited to get to.
Oh man that feels predatory, I had Stafford loans in college and I remember them being lower interest rate than regular loans but I could be wrong. Thankfully I made enough that I was able to pay them off early but I remember paying twice the required amount every month and after 2-3 years barely making a dent in them.
We are waiting for a few more decisions in the next couple of weeks, the UCs and a few reaches S26 applied to. He has a concert today so got up early this morning and before I could say anything put on his tie. It’s the first time I’ve seen him do it on his own, I don’t know why but for some reason it struck me that he’s an adult now. He can tie his own tie, doesn’t need me to do it for him anymore.
My D26 has 6 acceptances and 1 waitlist as of right now. Of those 6, she will likely be choosing between 2 of them (with the waitlisted school as a potential spoiler). We already know one of these schools very well. We are visiting the other one next week. They are similar as to size and type (both LACs), but very different in most other ways. My husband has a clear (and vocal) favorite and will be pushing her to take that one, but I would rather my kid decide where she will spend the next four years.
We’re in secondhand anxiety here too and sending all the best wishes! One of D26s close friends from the preschool years applied to the same school where she’s going and we have everything crossed! She would be so happy. We think they have a good chance, fingers crossed. Then there’s her boyfriend, waiting on his one reach, and her friends who are all in various stages of agony/anxiety/delight. This is such a phase of senior year! Then there’s me, wishing she would have done what I wanted her to do: apply to the colleges and universities I love that happen to be much, much closer to home. (Yes, I know, MY problem, not hers, and I’ve kept that to myself!)
Not posting this on Compare Colleges because my D does not have all of the decisions. We are CA in state. If she is accepted to UCSD/UCLA/orUCB, she still may accept a full-tuition scholarship at Fordham Lincoln Center. She is ready for an adventure, to try something new, but she is also concerned about prestige. I find myself going back and forth in my thoughts - yes, have the adventure and a great liberal arts education! no, your research opportunities will be limited (she is STEM). I truly do want this to be her decision, so I won’t provide an opinion, just consultation and ways to think about options. Financially, Fordham would be ~$50K less than Berkeley over four years, including travel. This would give some wiggle room for unpaid internships, etc. Any thoughts?
I think there is no wrong answer here as long as she is excited about the choice and it is affordable. Is she planning on non-PHD grad school? If so, does 50k make a difference for the next chapter?
Also, the research opportunities at Fordham for her, may not be as limited as you think. A full tuition scholarship student at Fordham may stand out in ways to give her research opportunities well beyond the mean opportunities for a student at the school (big fish small pond idea). And, if she gets into UCB for example, she will be competing for those opportunities with lots of big fish who tend to be quite assertive at securing opportunities for themselves. Thus, it is not a forgone conclusion to me which would present an individual student in your kid’s shoes better opportunities. And if she decides she wants to have an out of state adventure, Fordham is a great place to be.
On the other hand, the education at all of those UCs are top notch. And if one wants to end up in CA and not planning on grad school, the in state connections are a huge plus. Each of the three is great, though they are culturally very different.
So, I think the right answer is what she thinks is right for her amongst the options she ends up with between those. All those paths can lead to great things.
Thank you! I have had many similar thoughts over the past week. I went to a big fish/small pond undergrad, was handed opportunities while there, then went to T3 grad school in my field. My prediction for her is research (PhD) - she is also talking med school as a po$$ibility.
We have our first admitted students day visit next week, and then at least two more in quick succession after that. Since we will be transitioning to the choosing a school phase this weekend, anybody have good advice/tips on things to do on the visits to maximize their utility for a decision? If it’s helpful, D26 is strongly committed to being an undecided students, so no “checking out your major” or department for her. All her schools are small liberal arts colleges if that is relevant
Never been to one of these admitted student events so trying to get the hive mind’s wisdom on how to make it useful when deciding between schools.
No not wrong. The concept on those was that they were at subsidized rates in a variety of cases - no interest accumulated during school, low/no interest the first six months post grad, rates still sub prime after that.
If you really want to get your mind warped - start researching the federal governments involvement in loan trying to tie repayment to what you earn or adjusted gross income… and about the pathway to complete loan forgiveness (except it;s not total forgiveness, its taken as your loan amount is zeroed out but the forgiveness is taken as unearned income in that one year…).
We have managed to take what should be somewhat more simplistic - make decision on what you can afford, or what you can borrow and afford, and involved the government on multiple points of this Clusterf**k - so that everything in the equation - how much you can borrow, how much you need to pay (monthly and in total), how long you must pay, how much is forgiven, how much will be taken as taxable unearned income… can change and change often… and oh by the way, it’s administered through the governmental approved proxies…and they change pretty regularly… and of course, they never make mistakes in timing etc.
All of D26’s reaches are sending decisions tonight and tomorrow. First one came out and she was wait listed at Williams, so I hope that’s promising for the others.
Still a few to come out. WL today at Colby. Waiting on Scripps and a few highly rejective schools. No April dates!
ETA: Colby asked her if she wanted to apply to the Global Entry Semester -which I think she would LOVE --so she applied. I guess we will see if she gets in.
)
She & D26 get along really well and it’s been lovely to hear them giggling with each other.