Taking Out Colllege Loans (inspired by another thread)

Parents Forum
#1

<p>My parents did not save for my college education, where they're from, college was free (former soviet union), and they did not anticipate the move they would make to the United States with me. Now, I'll be applying to colleges this fall and I'm worried about my financial situation. I have NO money to pay for college and my parents recently bought a home ( we had previously been living in an apartment) and this house is just a bit over our price range so my parents had to take out two mortgages to pay for it. As if that wasn't enough, about a year ago my parents bought and now manage a hair cutting salon. So, not only are they paying off the mortgages for the house, they're also paying off the loans they took out to pay for the business they bought. They simply cannot afford to pay for my schooling. Money is tight right now. </p>

<p>What am I to do? It's not just now, suddenly that I have become aware of this problem, in fact, i have long wondered how my family would pay for college when the time came..Now, its fast approaching and i'm at a loss. My parents have always told me that I would be ok because I could take out student loans.. well, i'm worried about doing this. What are they negative consequences of student loans? </p>

<p>I'm going the premed path, and will ultimately be applying (hopefully going) to med school, which in and of itself is A LOT of money (that will have to be paid by a loan as well). How am i to do this? by the time i graduate med school (assuming i get accepted) I'll be Hundreds of thousands of $'s in dept. How detrimental will it be to me having all this dept after i graduate med school/college? How will things effect my future finances? Will I be able to buy a home, or a car? Will the dept prevent me for doing such things... is it even possible to pay off that much dept in a lifetime? </p>

<p>I'm just really nervous that even if i get into a good school (which isn't likely) I wont be able to afford it...</p>

<p>HELP?!</p>

#2

<p>Your parents made four investments for their future and for yours. Each investment is a very large risk but with big potential rewards.
1. You.
2. House
3. Business
4. Coming to the United States.</p>

<p>In many ways these 4 investments will pay off in the long view of things. </p>

<p>Your investment decision time is fast approaching, Not having $$ is not an obstacle. Your decision will be whether you have the guts to work out your dream. It may take a little longer and it will not be easy. </p>

<p>If your scores are good and you have good recommendations, you should be able to get pretty good FA. </p>

<p>Good luck.</p>

#3

<p>First of all... separate out the problems. There are two with financing your education: undergrad and med school. Almost everyone pays their own way through med school and graduates deeply in debt. There are currently a lot of problems with the medical profession, and the massive debt load, coupled with lower salaries and higher malpractice premiums, has many doctors who are struggling. There are a lot of MDs who would not recommend the profession to anyone.</p>

<p>Generally, IMO, undergrad debt should be kept below $20,000 at the end of four years. Anything more than that is simply too much to pay off. If you end up working, you can't make ends meet on less money. If you go to grad school, you'll be taking out loans for that and have interest accuring on the college loans while you finish your education. So, either way you go, you really HAVE to limit the undergrad debt. Grad school, IMO, is a different animal.</p>

<p>That said - for good reason - worry about med school later. There is no way that you could comfortably take on debt to get through undergrad, which would be workable on a 22-year-old's salary, that would suddenly crush you when added to med school loans. Next task: getting undergrad figured out. If undergrad falls into place, financing med school will, too. </p>

<p>Generally, the top schools give out very good financial aid. Lower-ranked schools will give you merit aid to attend (if you are good). In a lot of ways, and parents might disagree, I would recommend putting out a lot of applications, even though it will cost money. In the long run, the extra $250 for three applications is nothing - but the fact that it could save you thousands in debt is important. Depending on how your grades are, shoot for a range of schools. If you are an excellent student, put out a lot of applications at top schools which are very generous with financial aid. Then, put out applications to the state schools (which may give out different awards), and then apply to a lot of schools which would offer merit aid. </p>

<p>Just my two cents. Anyone else?</p>

#4

<p>You might also want to look into letting the military finance your med school. You will have a military service obligation afterwards, but it is a good deal financially. Don't know if that fits in with your lifestyle, but it is an option.</p>

#5

<p>Masha: </p>

<p>It's good that you are beginning this process now when there is as yet no time crunch. Have you used a calculator to figure out your family Estimated Financial Contribution (EFC)? This is what colleges would expect you/your family to contribute toward your education.
1.Sort out your colleges in terms of reach/match/safety from an admission point of view.
2 Among these, sort out colleges that give merit aid and those that only give need-based aid; apply to both kinds.
Check out your own state university. It may turn out to be excellent,
3. check out honors programs at state universities--some give merit aid along with admissions.
4. investigate outside scholarships. Some need an extra essay, plus your transcript and teacher rec. Look up the threads on colleges that give good financial/merit aid. There are also online resources for identifying scholarships.</p>

#6

<p>Masha, the others have given you great advice, that I cannot improve upon. My advice is this - don't lose sight of your true goal - a college education and the freedom to pursue your dreams after that (med school, law school, etc). Do not get sucked into the notion that your goal is to go to Harvard or Northwestern or Duke. Run yoour family's EFC early, I'm worried that with all those assets, especially heavily mortgaged, that they will not be able to afford the EFC, which will preclude some need based schools.</p>

<p>there are so many good schools, great schools, and it matters so little which school you go to, especially for med school, it does not matter. What really matters to your future, particularly if you want to be an MD, is that you keep that debt load to a minimum. The cost-benefit ratio to medicine is shrinking, as she said, particularly for someone who must borrow all the cost of their education.</p>

#7

<p>Mash, it is good that you are thinking about this earlier than your senior year. As Cangel says, you have been given good advice here. There are several things that you need to understand about an undergraduate education in the US, though you seem to have a good handle on this already. Your parents are primarily responsible for paying for your undergraduate education until you are age 24 with some limited exceptions (marriage, a dependent, military veteran, court intervenition). Just as they are responsible for your highschool education. There are more resources to pay for college in the way of financial aid and grants, however. Because of the business, your parents own, it will be difficult to come up with your EFC. It is also not always the case that a college will come up with the $$ between the cost of attendence and EFc.</p>

<p>My recommendation is to talk to your GC to see what options are available for you. IF you have taken any of the College Board tests, you have some starting point as where you may stand, and your grades are going to be very important along with the course load you are taking. I don't know what year you are in highschool, or where your stats put you among the college bound in your school, so it is very difficul to give specific advice. I suggest buying the USN&WR Ultimate College Guide to get some ideas of what colleges are out there, which ones tend to give 100% of need, and the schools in your area. This way you can start making lists of your possibilities. You certainly should have some local, less expensive options, and then some merit and financial aid possibles. In order to get merit aid, you should be in the 10% top range of a school, as it is a very competitive situation. </p>

<p>My girls had medical school has their ultimate goal and were willing to pick their colleges to optimize their chances to get into med school. The older one turned down Cornell for a small, nurturing med program at a catholic college that had a relationship with a med program. She did get nearly a full ride there, which is helpful now since she is finishing med school with $160K in loans, and she is typical. There are many who owe more than she does. My D is going into her senior year next year and has a good chance of getting into med school, again through a small, lesser known college, which has given her good aid/merit packages. For medical school the two most important things are your MCAT scores and your grades, particularly in your pre med courses. For those really interested in research, it does help to come from a research heavy undergrad program, but even then grades and test scores trump the research experience unless you find the cure for AIDS or some other such thing. To go to some school that is a tough go, rack up heavy loans during the undergrad years, having to work parttime, do whatever, may not be the surest path into a medical school.</p>

<p>Take care, and good luck.</p>

#8

<p>Just curious--what happens if you die without having paid all debt?</p>

#9

<p>If YOU take out the loans and YOU die, they are paid out of YOUR estate to the extent they are so covered. For students, that is usually nada. For parents, there are often insurance coverages built into the loan. The Plus loans are structured so that if the parent taking out the loan dies, the payback obligation ends. That may not be the case for home equity or other private loans where the estate has to pay off any debts before anyone inherits a dime.</p>

#10

<p>The fact that your parents have a large mortgage for the house and have invested in the business can be excellent for your FAFSA, as they can choose to take a minimum salary for themselves and keep reinvesting in the business. Less salary, low home equity, more FA. </p>

<p>Their current plan for the family's long-term financial well being may actually help you quite a bit. IMO, you should urge them to see an accountant specializing in financial aid, now, to educate them and maximize the amount of aid for which you will legally qualify.</p>

#11

<p>Hi Masha,</p>

<p>As others have said, you are very wise to start looking at this process early.</p>

<p>I don't know what your status is but if you are not a permanent resident of the U.S., I would also suggest looking at colleges that are need blind to international students and either meet your demonstrated need or offer really good merit aid, because you would be considered an international student in the admissions process. This would mean that you will have a lot of students vying for just a few spots and not all schools willbe need blind so your family's ability to pay would be a factor.</p>

<p>As others have stated keep a good array of shools, especially some where you may fall at the top of the applicant pool and have good chances of obtaining merit money. Keep in mind that the Ivies and the Elite LAC's only offer need based financial aid.</p>

<p>Look at the posting schools that offer great merit aid as a jumping off point of schools to look at. all the best</p>

#12

<p>Thank you everyone for the advice.. i'm gonna share some of it with my parents and see what happens</p>

#13

<p>Look at schools that use the CSI - it takes debt into account in order to determine your ability to pay.</p>

#14