Student Loans

[concorduser]

I have a 15 year old daughter who will be going to college in 2 years. I have tried to save enough for the college, but if she decides to goto med school, she might have to go for educational loan. Do I have to cosign for the educational loan or is it some thing she can get it on her own? How does this work?

[MattH]

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concorduser wrote:

I have a 15 year old daughter who will be going to college in 2 years. I have tried to save enough for the college, but if she decides to goto med school, she might have to go for educational loan. Do I have to cosign for the educational loan or is it some thing she can get it on her own? How does this work?

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Talking to a good college counselor or financial adviser NOW might save you LOTS of money down the road, because decisions you make NOW could have major implications for how much aid your daughter gets.

You probably won't need to cosign for the loan, BUT your daughter will need to fill out a long Federal form called a FAFSA so the college Financial Aid Office can calculate the "Estimated Family Contribution" according to a Federal formula. For that she will need all sorts numbers from your tax forms and other financial records. The college then subtracts their estimate of what it costs to be a student there from the estimated family contribution to determine how much she will get in fellowships and loans.

The really tricky aspect, and why I strongly suggest talking to an expert NOW, is that different types of assets owned by the parents and/or the student have different effects on how the Federal formula calculates aid eligibility. Make the wrong choice now an it could cost you and your daughter big bucks down the road.

[Timothy]

This is great advice-

and the rules are constantly changing

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MattH wrote:

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concorduser wrote:

I have a 15 year old daughter who will be going to college in 2 years. I have tried to save enough for the college, but if she decides to goto med school, she might have to go for educational loan. Do I have to cosign for the educational loan or is it some thing she can get it on her own? How does this work?

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Talking to a good college counselor or financial adviser NOW might save you LOTS of money down the road, because decisions you make NOW could have major implications for how much aid your daughter gets.

You probably won't need to cosign for the loan, BUT your daughter will need to fill out a long Federal form called a FAFSA so the college Financial Aid Office can calculate the "Estimated Family Contribution" according to a Federal formula. For that she will need all sorts numbers from your tax forms and other financial records. The college then subtracts their estimate of what it costs to be a student there from the estimated family contribution to determine how much she will get in fellowships and loans.

The really tricky aspect, and why I strongly suggest talking to an expert NOW, is that different types of assets owned by the parents and/or the student have different effects on how the Federal formula calculates aid eligibility. Make the wrong choice now an it could cost you and your daughter big bucks down the road.

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[talulah]

Medical school does not require even good credit. Just tell her never to default on anything or file for bankruptcy and she'll be able to fund the entire thing herself.  As someone on their own, I would love any help from family, but at this point, as an adult, I would never expect it. Also, tell her to try to get into a state school, if possible. It'll make things easier down the road.

[LynnInMN]

I beg to differ.  As a former financial aid officer at a large state school with a medical school, 80% of all students using financial aid did need some private loans which are credit based.  The cost of attendance at a state school right now for medical school is $52k.  You cannot finance that all on federal aid.  Graduate PLUS loans are credit based. 

Message Edited by LynnInMN on 06-16-2008 03:25 PM

[jesslyn]

At the point that your daughter, six or more years from now, is in the position of having to apply for federal (18,500 max) and/or private student loans for med school, she should first attempt to get everything in her own name.  Only after being denied in her own name should you attempt to co-sign.

My grad school experience was that I was approved for all of the federal loans with no co-signer, but a co-signer was required for the private loans.

For law/med school, where you go is very important to your career prospects after the fact, and very competitive to even get in.  Lots of stuff to worry about later on.  At this point, seems to me that you're in great shape to have the ability to pay for her college.  And remember, we're talking about professional school--there's something to be said for the student having to figure this out (and apply for the financing, if necessary) for themselves.  My total student loan bill for grad school was north of $100k, and with that kind of debt, having to sign off on those loans yourself goes a long way for putting the good kind of fear-of-God in you.

[MattH]

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jesslyn wrote:
...My total student loan bill for grad school was north of $100k, and with that kind of debt, having to sign off on those loans yourself goes a long way for putting the good kind of fear-of-God in you.

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The cost of graduate school will depend on the field of study, in Business, Law, or Medicine it's almost entirely paid by loans, but in many more academic fields there are Teaching Assistant, Research Assistant, and Fellowship options.

I was a Teaching Assistant for most of my grad school years so when I finished my total debt was under $20K, and when I was a Postdoc they paid me (not much, but enough to get by without going further into debt). Once I started working in industry (I'm in pharmaceutical R&D), I paid off the remaining debt very quickly.

My wife, whom I met and married in grad school, had a fellowship for several years.

Toward the end when our Assistantship and Fellowship support had run out, she worked nearly full time in a clinical lab and I worked part time in food service for a while to make ends meet without incurring too much more debt. I hope I never again have to work food service, but it did make us consistent tippers since we learned what it's like getting part of one's income from tips!

Message Edited by MattH on 06-26-2008 06:46 PM