Student Loan Questions............

**sahm629** · 07-08-2011, 10:37 PM

Hi everyone ~

My dh and I fortunately do not have student loans.

However, it is very unlikely we will be able to pay for our kids' college.... we are going to save but there's no way we can save ALL of the expected amount for tuition.....

SO... unless they get scholarships or work before college, join the military, etc... they will have some (hopefully not ALOT) student loan debt. I'm hoping they will get part time summer jobs though in high school , hopefully.

I'm just wondering....

1. How long do you have to pay off student loan debt? (How many years)

2. What is the interest rate usually?

I'm just curious how much payments they will have post-college, etc

THANKS!!!!!!!!

**khaski** · 07-09-2011, 08:27 AM

I never had student loans myself (having had a baby at age 19, I got a full ride to the local community college, where I got a degree as an xray tech- I made dean's lit every semester except the 1st, studying 16 credits at a time and doing an unpaid internship- full course load is 12 credits). I would strongly suggest encouraging them to start at a community college, living at home and commuting to it, then transferring over to a 4 year school. The savings tuition-wise is INSANE and it would give you guys 2 more years to save up for the last 2 years. I can't count on one hand how many friends of mine in their 30's and even 40's!!! are still working off those student loans....and they cannot be discharged in bankruptcy. I would think long and hard about other options if I could find any besides debts that will follow my kids around for another 20+ years! Of course, it also depends on how much $ you're talking about.....you also might dedicate some serious time, maybe block out some time weekly, to research/apply for grants/scholarships that are less well known. Even all the little $500-$1k ones from private organizations really ad up. And I fully expect my kids to work through high school and contribute a decent chunk of their income towards college!

**lottaLove** · 07-09-2011, 08:32 AM

Here student loan repayment is usually over 10 years. The interest rate is prime +1% for mine. In hindsight, I wish I had taken an extra 2 years to finish school and worked my way through. If I had, I would have no student loan debt, and would not be making $471/month payments on the 30,000 in government loans I had taken out.
Everyone seems to think that once they go to school they will get an excellent paying job and will be able to afford whatever their loan repayment amount is, however this is absolutely not realistic. I know so many people who have defaulted on their loans because of hard economic times.

**kita** · 07-09-2011, 09:21 AM

While I might disagree with some about the student loans, I do think they should be used with great caution. Not the first year because that is a big "weed-out" the non-serious students. Not for non-essential stuff.
There are programs that your child might do well in that are lock-step ones which require full time attendance and often do not lend themselves to extra jobs during the quarter. I am thinking of nursing, physical therapy etc. The other requirement for my (maybe someday possibly imaginary) children would be...the degree would be immediately transferable into a real paycheck. So, student loans might be allowed for an x-ray tech degree or ultra-sound tech but not art history.
It isn't that I wouldn't encourage my kid to do art history if that is what he wants, but if he can't pay for full-time, he can go part-time and work full-time at the museum....
Here is the booklet the government puts out on student aid including loans.

http://studentaid.ed.gov/students/at.../11-12YFSL.pdf

Remember...unless your child is less than two years away from college the rules may change.
And even then the rules may change. Way back in the eighties, I volunteered for a year for a stipend. One of the side benefits of living off the stipend would be that I would be considered financially independent. Since my parents refused to help pay for college, it would better reflect my actual financial life. When I returned, the rules had changed and rather than looking at actual financial dependence, it was "unless you are at least 26 years old or married you are a dependent on your parents, shut up we don't care if you made your parent's mortgage payments".

**Telephus44** · 07-09-2011, 09:39 AM

Generally, you have 10 years to pay back student loans. Some loans can stretch longer depending on the type of loan and the lender.

Federal Stafford Loans (the most common) have variable interest rates that adjust once a year. Currently, rates are pretty low. When I graduated, mine were at 9.125%, and the got as low as 4.5%. Stafford loans come in 2 kind - subsidized (no interest accrues until you start paying them back) and unsubsidized (interest accrues while you are still in school, before paying them back). Generally you want to take the subsidized first, then unsubsidized. There are loan limits and income limits for these.

With Federal Loans, you generally have the option to ask for a forbearance (you get to stop paying them for a set amount of time with no penalty) if you have a demonstrated economic hardship. You also generally have the option for income based repayment (so if you make very little, your payments are smaller). Both of these can impact the total amount of interest paid, but can give you breathing room if you need it.

Private loans are a whole other ballgame. Similar to a car loan, you can get whatever a lender is willing to lend at whatever interest rate they want to charge. You should exhaust all Federal loan options before taking private loans.

One thing often talked about with student loans is consolidating. If you are going for 4 years, you generally end up with 4 loans - one for each year. Consolidating basically turns them into one loan. If you do this, it locks the interest rate. When I started paying back my 4 loans, I had 2 at 8.875% and 2 at 9.125%. Rates dropped every year (this was early 2000's when the lowered the rates to almost zero) and when then got to 4.5% I chose to consolidate. I got a weighted average interest rate, but it was then fixed until I paid it off. Once you consolidate, you can't UNconsolidate. In hindsight, I could have gotten it down to 3.5% if I had waited another year.

Most (but not all) lenders will offer a discount on your interest rate if you either have them auto-deduct the payment from your checking account or make so many payments on time (usually 48 or 60).

**larabelle** · 07-09-2011, 11:08 AM

I was in your kids situation when I entered college and I took out a boat load of student loans. I just paid all of them off last year. If I had to do it all over again I never would have taken out a loan to pay for school.
I would have participated in The College-Level Examination Program® (CLEP) to obtain some of the credits. I would have attended a community college for the remaining credits and obtained my associate degree. I would have attended a state college for my bachelors degree and taken the majority of my classes online so that I could have worked fulltime around my homework assignments...

**mommynurse** · 07-09-2011, 09:31 PM

Originally Posted by larabelle

I was in your kids situation when I entered college and I took out a boat load of student loans. I just paid all of them off last year. If I had to do it all over again I never would have taken out a loan to pay for school.
I would have participated in The College-Level Examination Program® (CLEP) to obtain some of the credits. I would have attended a community college for the remaining credits and obtained my associate degree. I would have attended a state college for my bachelors degree and taken the majority of my classes online so that I could have worked fulltime around my homework assignments...

Me too! My DD#1 enters college in August. She knocked out some of her pre-reqs by doing Dual Enrollment classes while still in high school (for free!). Most of the financial aid she was offered came in the form of loans. Whatever happened to grants?

**mommynurse** · 07-09-2011, 09:33 PM

If you work, you should check and see if your employer offers any tuition reimbursement.

**Frugal Sooner** · 07-10-2011, 09:19 AM

My parents were unable to fund my college, but did let me live at home rent free while I went to college. I went to Community College the first two years and obtained an Associates degree. I then transferred to a state college that was within commuting distance. In order to pay for it, I took a job with a company that offered tuition assistance. They paid 90% for A's, 80% for B's, and 70% for C's (nothing for D's or F's). I had to work at least 30 hours per week to qualify. Was it harder than living in a dorm room and partying every night? YOU BET! But I went on to get my Bachelor's & Master's degrees without a single penny in loans!
Are there situations today where student loans might be needed? I'm sure there are, but the vast majority are not. In most cases, you're mortgaging the future to pay for 4-5 years of fun.

**grneyegrl** · 07-10-2011, 09:36 AM

if your kids do get loans make sure they are for tuition only. im sure they can earn enough to pay for living expenses(i did) and maybe save enough for the next semesters bill...this way the amount borrowed is kept to a minimum.

**BertineC** · 07-10-2011, 10:46 AM

I got an almost free ride to my state school because my father is a university professor in the system so I got a 90% tuition break. Parents also kicked in $3K a year (and ONLY $3K a year), and I also worked an on-campus job and a summer factory job. I did take out $10K when I was in graduate school (same school, same deal) which is more than manageable.

When I was 18 I kicked against going that state school route because even though i went to a flagship school I didn't go to a "major" flagship school like a Big10 or Pac10 (yes, i know those are sports conferences but just to group schools) and there was only one logical choice in my state where I would attend. However, as I've gotten older and look back and 1) where I have ended up and 2) how much freedom NOT having those loans I have been afforded, in hindsight it was a good decision. I work with a bunch of people who went to fancy and expensive schools and it made no difference in the end, except I have flexibility while a lot of them are tied down by student loans and perhaps an ill-timed house purchase.

Save the money on undergrad - spend it for graduate school. Two years at community college and CLEP credits is an excellent idea - those first two years are such scrub classes anyway that there is no value in paying full freight. And a lot of people have to go 5 years because the classes just aren't available, so this would give that flexibility as well.

Oh, and half.com is an excellent resource for buying used books!

Besides, community colleges tend to have a lot of night options that free up employment options during the day.

Good luck!

**Luckybustert** · 07-11-2011, 09:59 AM

Originally Posted by larabelle

I was in your kids situation when I entered college and I took out a boat load of student loans. I just paid all of them off last year. If I had to do it all over again I never would have taken out a loan to pay for school.
I would have participated in The College-Level Examination Program® (CLEP) to obtain some of the credits. I would have attended a community college for the remaining credits and obtained my associate degree. I would have attended a state college for my bachelors degree and taken the majority of my classes online so that I could have worked fulltime around my homework assignments...

I agree. I don't know how young people who are in entry-level positions make the payments -- by the time I finished school, and the repayment started, the monthly payments took a ridiculous amount of my monthly pay, and my job was not entry-level. Even after refinancing to bring the payment down, it took a huge chunk each month. This is the part the financial aid counselors in the schools DON'T tell the students about....just how much it's going to cost them later when the payments kick in.

**Greebo** · 07-11-2011, 10:02 AM

Student loans are sold under the myth that they'll help you get out there earning faster, thus getting you ahead, but in reality if you shoulder the burden of student loans after getting a faster degree, you can end up much further behind, financially speaking, than a counter part who takes twice as long to graduate but does so debt free.

**miss_cas** · 07-11-2011, 08:48 PM

Hi there, Put your mind at ease. I graduated college with a self-funded bachelor's degree in 1996 debt free. I got a full pell grant the first year then President Clinton changed the rules leaving me ineligible a month after my father lost his job. I applied for every scholarship I could find, the best place to look is the bulleting board outside the office of the subject you are studying. You can also join a professional organization for your field so you get to hear about all the internships and get a really good shot as some more scholarships with little competition. These two are the easiest places to find scholarships except for the atheletes. I also worked and my employer paid for a couple of classes.

As you mentioned, your kids are high school aged I guess. My biggest suggestion is to put acedemics and atheletics first. A job should be so far down on the list of priorities that it only takes place in the summer. Have the kids get involved in at least one outside activity which gives good scholarship options and can prove to be helpful for college acceptance. The athletics brings the biggest scholarship potential with academics coming in second.

**A high school student focusing his/her attention in a mediocre service job limits their earning power later.** You need some training beyond high school to earn an adequate living to live on your own much less support a family.

Do what you can to be able to sustain living quarters plus food for the kids while in college. This is the biggest way to save money by having the kids remain in your home. It's easy to work part-time while in college and even benefits one when you can finally get a job in your field so you have experience.

You can also save a lot of money by getting an associates at a community college then transfer to the university to get a Bachelors degree. This cuts the costs in half for the first two years. If your kid wasn't a high academic achiever, you will find the community college atmosphere to be very helpful as the classes are easier, have fewer students and the instructors give more individual attention. Don't hesitate to hire a tutor if necessary; the foreign students are usually math and science geniouses plus hard up for spending money.

Also, take the science, math and foreign language classes immediately so you don't forget the material. You can also test out of some of the classes which is cheaper.

Answers for your two questions:
1. Most banks look to have student loans paid back in 10 years.
2. Student loan rates run 3-8%.

**MomToTwoBoys** · 07-11-2011, 09:44 PM

I tried college and had student loans funding almost everything (I did have some grants and did work study, but it wasn't enough). If you don't pay those loans, you end up getting in a lot of credit trouble.

If I were you, I would start saving early on for college. Most children don't understand how important savings is, so it'd be good to teach them early about how much college will really cost them and how they can help. There are a wide variety of programs out there that help to ease the burden of post-secondary high school, but it's really up to the child and whether he/she really wants to go to school.

For our 7 year old, I'm starting an RESP (Registered Education Savings Plan) for him on his 8th birthday. He'll have 10 years worth of contribution through us and that'll get him started. But the way that I look at it, a base amount of $12k will not be enough. We've started teaching him early about what money's value is and how he can help if he really wants the things he wants.

I would second the notion of getting all of your child(ren)'s credits that will transfer over to a 4-year school by doing community college and AP classes first. AP classes start in high school and most high schools offer them in addition to things like tech prep (friend of mine did tech prep his last two years of high school and it helped him immensely when he went for his welding certificate).

I would start researching all of the available tuition assistance programs and grant funded scholarships out there.

Some student loans allow for forgiveness for students who teach and forbearance rules if you're having employment issues. I would, however, try to help your child by getting them to learn to save early and using that towards college. Weekend jobs and summer jobs are excellent and they teach responsibility and fiscal savvy.