Can you “max out” on student loans

[Anonymous]

We will be sending the first of our 3 kids to college next year. We are looking at the possibility of co-signing on as many as 12 loans over the next 8 years. There will be 4 year period where we would have to sign for two loans a year. Is this even possible? We shouldn’t have a point where all 3 are in college at the same time if the oldest finishes in 4 years. Has anyone done this? Can it be done? How badly does it affect you’re credit?

[Kree]

Hello and welcome to the forum.

I personally have 12 student loans. I'm pretty sure I've heard about people with 20+  and that is individuals not parents. I don't think there is a limit for federal loans, private loans could be a different matter.

How much they will effect your score really depends upon your credit profile. The thicker your file, the less they will matter.

[Anonymous]

The short answer (I'll give you a longer answer later) is yes to both. There is a limit to what you can take out for federal loans over the life of the loan. I'm not sure if it's per kid or overall for plus loans though. Federal Student loans are not credit based but I'm not sure about the parent loans.
The private loans are subject to the terms whatever lending institution you borrow from and whatever limit they decide to give you. There are several articles about this... private loans should be avoided at all costs. Too many people focus on the lower interest rates and forget that in the years that it takes to pay back these loans life happens. Most don't have any of the payment protections that student federal loans do. Try to do whatever you can to get student (and if necessary) federal loans.
If you get a student loan it will go on your child's credit report. This is actually a great thing; many people later benefit from the account age of their oldest account, usually student loans. You can always pay the loan yourself, but the loan but I will have all the perks of being theirs (payments based on their income, unemployment deferment, forgiveness, etc.) The federal parent loans have way fewer protections and they go on your report. How they show up varies; you could be looking at a lot of new tradelines on your report so I could see your credit score likely going down. For student loans they'll need to meet there requirements of Independence (not bring claimed as a dependent for the tax year FAFSA requires usually does the trick) or they can qualify for student loans if the PLUS loans are denied.

Anywho, check out there gov site for student aid. It has a lot of good resources. If the FAFSA is out for their Freshman year, apply now so it can process and you can give you an idea of what will be offered to you.

[Anonymous]

Great, question, just to be clear there are "Federal" and "Private" student loans. Federal Student Loans (usually issued from colleges directly) have undergraduate and graduate borrowing limits. Private Loans such as Wells Fargo, Sallie Mae, etc., don't have aggreagate borrowing limits (to the best of my knowledge). Note: Federal Student loans are not credit-based, private loans are based on the borrow's credit worthliness- which could limit borrowing.

Federal Student Loans:

$57,500 for undergraduate students (Associates Degree, Bachelors)

$138,500 for graduate or professional students (Master's Degree, PHD, etc)

 Note: 

After reading your question again, I wanted to add more information.

I would highly recommend that your children consider taking out Federal Student Loans (if loans are needed). Unless you can lock down a low interest rate through a community bank or credit union, I believe Federal Student Loans are the best option. Federal Student Loans are only in the student's name, no credit-check need, they don't affect credit score negatively. I highly recommend staying away from Parent Plus Loans, which are basically "Parent" Federal Loans. Parents must begin repaying the loans once the student's semester begins, while the student's Federal Student Loans have deferred/delayed repayment until 6 months after they graduate/stop being full time student. Feel free to send me a message if you have any questions, I would be glad to help!

Note: I have been working as a Financial Aid Professional for just over 3 years, working with FAFSA's, Loans, etc.

[Anonymous]

These limits are for parent PLUS loans as well, even when you have multiple students/ kids? And they don't run credit for PLUS loans?

[Anonymous]

Yes, parent PLUS loans do require a credit check.
"You’ll also have to fill out and submit the Free Application for Federal Student Aid, or FAFSA, which you can now fill out and submit as early as October 1.

Schools have different application processes for Parent PLUS loans. You’ll either be able to request the loan from StudentLoans.gov, or you may have to check with the school’s financial aid office for information on their process.

As with private student loans, Parent PLUS loans require a credit check. Your application might be denied if you have an adverse credit history as defined by the Department of Education. For example, you can’t have charged-off accounts, accounts in collections or a 90-plus-day delinquent account with a combined balance of $2,085 or more.

You may be able to appeal the denial if your negative credit history is based on extenuating circumstances (StudentLoans.gov lists some examples) and you complete PLUS credit counseling.

You could also get approved if you have an endorser who doesn’t have an adverse credit history and you’ve completed PLUS credit counseling. The endorser takes a similar role to that of a cosigner and will be responsible for repaying the loan if the borrower doesn’t.

If your application is denied based on your credit, and you can’t, or don’t want to, get an endorser or appeal the decision, your child could become eligible for an additional $4,000 to $5,000 worth of Direct Unsubsidized Stafford loans."
https://www.creditkarma.com/advice/i/what-is-a-parent-plus-loan/

[Anonymous]

I saw something about loans that the kids get a loan of $5,500 freshman year $6,500 sophmore year and $7,500 junior and senior years. Are these loans included in that $57K amount or would the 57K be in addition to these loans. 

[Anonymous]

It's included, but those limits are for dependent students. There is also a maximum of subsdized loans that they can be given each year. Those have a career maximum of $31,000 for federal dependent student loans($23,000 unsubsidized).
Independent undergraduate students, and dependent undergraduate students who were unable to qualify for PLUS loans, qualify for something different.
First-year: uo to $9,500 ($3,500 subsidized limit) second-year: up to $10,500 ($4,500) Third-year and beyond: up to $12,500 ($5,500)
The aggregate limit for independent students is $57,500 with a subsidized loan aggregate limit of $23,000.
https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized

If you need more than you are offered in your financial aid package (from filling out the FAFSA), this is when you'll need to decide what to do. Tbh the first year was the hardest because monthly rent allows you to get a job or something but those school fees like meal plans and dorms can be a lot upfront.

The federal student aid gov website is extremely helpful in getting information, the FAQ, etc. A lot of information but all worth the read imo. There student loan gov website is kind of the "after" in terms of how to proceed after you get aid, including repayment, forgiveness, etc. I wish I had understood that part when I took out aid because it can save you years of repayment. For example, the unsubsidized loans accrue interest while in school; if you pay at least the interest you can keep it from being capitalized.

[Anonymous]

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@Anonymous wrote:
These limits are for parent PLUS loans as well, even when you have multiple students/ kids? And they don't run credit for PLUS loans?

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The Federal Student Loan limits for students does not include the "additional $4,000 Unsub. Loan amounts" that students can recieve if parents are denied for Plus loan. (It's not included in the aggregate limits for undergraduate studies).

The Department of Ed. runs credit checks for Parent Plus Loan (I'm assuming that true for graduate Plus Loans as well). I'm not aware of Plus Loan limits, but i'm sure they are out there. It is very common for parents to borrow $10,000-15,000 per award years to cover the rest of a student's tuition. 

[Anonymous]

Augustrush1993:
Are you sure?
The chart from the Dept of Education has a category in the chart for annual and aggregate limits had a column for "Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)."

Which would make sense because independent students are eligible for $4000 more in unsubsidized loans by default.

PLUS loan limit would be the cost of attendance (as determined by the school) minus any financial aid received.