Student Loans

[Tazman81]

Liz, my concern with this comes via the fact that these are Subsidized student loans that are being used for a purpose in which they are NOT intended.  Subsidized meaning, you and I are paying the interest on these loans.  I in no way attacked the OP, mearly brought to light that I thought it was wrong for the OP to "take off the moral hat" and use these funds for things in which they were not intended.  And to even deepen this discussion was my review of a post that the OP wanted to get a new vehicle.  If you read the post, the OP even states the new vehicle is NOT necessary.

Anyhow, I expect the OP to do whatever he chooses with the student loan proceeds and I cannot stop him.  Hopefully others will read these post and decide to do the right thing.  Also maybe we can get tigher regulation around how student loan proceeds are truly being used.  I wouldn't even mind going forward the government issuing a debit card so that as the loan proceeds are used, they can be monitored to make sure it is benefiting the community in the way it was intended to.  But I guess all of that is a dream for the furture.  As much as we all preach about wanting independence and freedom to do as we choose, it seems we don't make the right decisions when given the option to do as we choose.  If student loans were meant to pay for weddings, child bearing costs, and new vehicles, then they wouldn't be called student loans.

[beamMEup]

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Tazman81 wrote:

  If student loans were meant to pay for weddings, child bearing costs, and new vehicles, then they wouldn't be called student loans.

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+1

And we wouldn't be subsidizing them.

[cdtotten]

Hey everyone,

Thought I would check back in here. After more thought and review, I agree that I will not be using any additional loans for non-educational reasons. When you ask friends, all you here is "ya, great idea, makes sense"... so I thought I would post on a logical forum for discussion.  My family actually is in pretty good financial standing with an 8 month emergency fund saved up, and about $50,000 in equity in our home. We didn't need the extra money, but the thought of course crossed my mind.

As for the car - that is my wife's call. If she wants a new car, i will support her decision if the payment makes sense at the time.

I got a couple PMs from people upset with my question - sorry, didnt mean to offend anyone. I agree with most of your responses, and I like the suggestion that refunds be put on trackable cards.

Thanks for the responses - can lock this now if need be!

[beamMEup]

That post has just poked me right in the brain cells.  Which is hard to do right after lunch.

First of all, I'm not sure that FAFSA forms need to be filled out for subsidized student loans - but it seems to me that it's the general process.  Please correct me if I'm wrong on that.  If not, I'd like to update my kids on how to get subsidized student loans without the FAFSA.

It's been a few years since I've looked at a FAFSA form.  We learned a while back that my kids aren't able to benefit because my income and savings disqualify them - even though they do not live at home.  As a result they work full time and go to school full time to pay tuition and their living expenses.  However, last time I checked the forms, they require a pretty full financial disclosure, including savings.  So, for those of us who are just a little FAFSA familiar but have not filed recently, could you help clarify how much income and savings can be reported without disqualifying a student for subsidized aid?  I'm surprised that you can have eight months of emergency funds in savings and still qualify.

I know that, in my case, if I don't report my income or savings correctly, I'm subject to this issued statement:  "If you get Federal student aid based on incorrect information, you will have to pay it back; you may also have to pay fines and fees. If you purposely give false or misleading information on your application, you may be fined $20,000, sent to prison, or both."   Because there are a few websites that promote hiding savings in order to qualify for aid, I would guess that savings can be a significant detriment to being approved for subsidized loans.

And for those folks who are familiar with the need for emergency funds (usually recommended at 3-6 months for those starting out); coupled with the desire to lower consumer debt - could you help clarify your personal decision to not  use a portion of your 8 month emergency savings to paydown your credit card debt?

Please don't be offended - I'm geniunely curious, and look forward to your response.

[laz98]

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beamMEup wrote:

That post has just poked me right in the brain cells.  Which is hard to do right after lunch.

First of all, I'm not sure that FAFSA forms need to be filled out for subsidized student loans - but it seems to me that it's the general process.  Please correct me if I'm wrong on that.  If not, I'd like to update my kids on how to get subsidized student loans without the FAFSA.

It's been a few years since I've looked at a FAFSA form.  We learned a while back that my kids aren't able to benefit because my income and savings disqualify them - even though they do not live at home.  As a result they work full time and go to school full time to pay tuition and their living expenses.  However, last time I checked the forms, they require a pretty full financial disclosure, including savings.  So, for those of us who are just a little FAFSA familiar but have not filed recently, could you help clarify how much income and savings can be reported without disqualifying a student for subsidized aid?  I'm surprised that you can have eight months of emergency funds in savings and still qualify.

I know that, in my case, if I don't report my income or savings correctly, I'm subject to this issued statement:  "If you get Federal student aid based on incorrect information, you will have to pay it back; you may also have to pay fines and fees. If you purposely give false or misleading information on your application, you may be fined $20,000, sent to prison, or both."   Because there are a few websites that promote hiding savings in order to qualify for aid, I would guess that savings can be a significant detriment to being approved for subsidized loans.

And for those folks who are familiar with the need for emergency funds (usually recommended at 3-6 months for those starting out); coupled with the desire to lower consumer debt - could you help clarify your personal decision to not  use a portion of your 8 month emergency savings to paydown your credit card debt?

Please don't be offended - I'm geniunely curious, and look forward to your response.

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FAFSA absolutely has to be filled out.  sometimes schools have additional forms too.

yes, you are required to provide full financial disclosure, but i imagine many, many people fudge their numbers to reduce their out-of-pocket cost, especially when it comes to their savings.

my gf makes about 40k a year, but we have no savings.  she only qualified for an unsubsidized loan.

[beamMEup]

gotcha 

[lizkaelin]

Hey Beammeup,

Yes, absolutely the FAFSA has to be filled out.  i was also selected for additonal verification (as are around 30% of all FAFSA filers) and had to provide a copy of my tax returns and a couple other documents.

My EFC was only $1,400 - mostly as a result of having a child recently. From what I have seen, new parents are given more support than individuals with no children or older children.

Anyways, thanks for the responses.

[Tazman81]

@Beam:  Here is the info from the FAFSA website regarding an independent student.  Take a look and I hope it applies to them.

http://www.fafsa.ed.gov/fotw1112/help/fftoc02k.htm

I am also posting it below just so that you can read it and don't have to go to the link, but wanted to show where the info came from.  Please read carefully because the way they have worded it confused me at first.

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If you can answer No to all of the following questions, you are considered a dependent student on the Free Application for Federal Student Aid (FAFSA):

• Were you born before January 1, 1988?
• As of today are you married?
• At the beginning of the 2011-2012 school year, will you be working on a master's or doctorate program (such as an MA, MBA, MD, JD, PhD, EdD, or graduate certificate, etc.)?
• Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training?
• Are you a veteran of the U.S. Armed Forces?
• Do you have children who will receive more than half of their support from you between July 1, 2011 and June 30, 2012?
• Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2012?
• At any time since you turned age 13, were both your parents deceased, were you in foster care or were you a dependent or ward of the court?
• As determined by a court in your state of legal residence, are you or were you an emancipated minor?
• As determined by a court in your state of legal residence, are you or were you in legal guardianship?
• At any time on or after July 1, 2010, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless?
• At any time on or after July 1, 2010, did the director of an emergency shelter or transitional housing program funded by the U.S. Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless?
• At any time on or after July 1, 2010, did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?

If you are considered a dependent student, your parents must answer the parental questions on the FAFSA.

If you can answer Yes to any of the questions above, you are considered an independent student and information about your parents is not required on the FAFSA .

Note: Health profession students may be required to provide parental information regardless of their dependency status.

If you have a special circumstance that prevents you from providing parental information you may be able to submit your FAFSA. However, your FAFSA will be incomplete. You must contact the financial office at your college and provide them with documentation to verify your situation.

[Tazman81]

Beam, in response to your other question, I make about 42k a year.  The income that you enter is only your taxable income.  And I've always included my checking/savings which has 4months emergency fund and growing.  I never qualify for a pell grant (I think because of the income, not the savings) and I always qualify for about 45% subsidized and 55% unsubsidized loans.  Your family may qualify for more if you have more than 1 child in college at the same time.

And I don't think it is fair to have to put in your emergency fund, but the financial aid people that I've spoken to said it didn't really make a difference in the loans you qualify for.  Usually only a difference if you get a pell grant or not.  They presume its for those that do not have to work and want to go to school.  Its to help make sure pell grants aren't given to those that have substantial funds in the bank and are not working because they don't have to.

[chia04]

The OP is a graduate student which automatically makes him an independent student, therefore qualifying him for more money in subsidized loans.  Unfortunately, for most undergrads it really isn't an option.  I was in the same situation where my parents made just enough money to disqualify me for most federal student aid (especially grants), but not enough where they were able to help me out with school.  I had to work as many hours as I could and relied on credit cards to make up the difference (in fact I had to put an entire semester's worth of tuition on a credit card, I'm still paying for it now).

More than restricting where money is spent, I'd like to see reform on these issues.  Too many people are disqualifed for parent's income when parents aren't able or willing to help out.