Looking for a little guidance as my family ventures into the world of student loans. We've been lucky to have my oldest graduate in a few weeks with scholarships that completely paid her undergrad years, but now she is headed to med school and will require loans. We also have a HS Senior about to start college in Fall, and we are thinking of getting student loans in her name to boost her FICO (will be her first loan).
Any advice you guys can share, or can you provide some articles to read to better prepare us?
A little background info for you:
- The med school child has been approved for the full amount of post-grad loans for her COA (cost of attendance) at around $72k per year.
- I've forgotten the names (think it was Stafford and Grad Plus), but they were both unsubsidized.
- The child heading to college for the first time has been approved for both a subsidized and an unsubsidized loan, but we only plan on taking the subsidized one. We will (hopefully) pay whatever is left as she goes through undergrad.
TIA!
Hello,
Congrats on your kids being accepted to the schools! How exciting!!
It sounds like you've got it pretty well planned out. For the student going to med-school shipping there is a thread that may interest you. While federal loans have many more protections and I am usually strongly against private loans, is might be something to think about after they get a permanent job.
Since they will qualify for PSLF it boils down to income. While they will have significant loans, if they decided to go for a lower paying job for 10 years they would probably get significant loan forgiveness. This would not be taxed as income. In contrast, the borrowers in the thread made a lot of money and would have no forgiveness from PSLF. Once a steady, significant stream of income was"guaranteed" it maked little sense to keep paying on the federal loans with higher interest rates. It's a risk to get rid of the protections, but really if your income is that high, there potential savings might still outweigh the risks. While in school I would try to pay off at minimum the interest to prevent capitalization.
As for the student going to undergraduate school, the student loan is an excellent idea. Student loans end up jump-starting many borrowers' credit and are usually one of the longest tradelines on their report. In addition, there are far more protections and payment options for federal student loans than there are for federal parent loans. Paying off the loan while in school would make it a rare interest-free loan. If it ends up they need more than that, a small unsubsidized student loan is still a good option.
Hope this helps and if you have any more questions, feel free to ask.
Congrats on your kids being accepted to the schools! How exciting!!
It sounds like you've got it pretty well planned out. For the student going to med-school shipping there is a thread that may interest you. While federal loans have many more protections and I am usually strongly against private loans, is might be something to think about after they get a permanent job.
Since they will qualify for PSLF it boils down to income. While they will have significant loans, if they decided to go for a lower paying job for 10 years they would probably get significant loan forgiveness. This would not be taxed as income. In contrast, the borrowers in the thread made a lot of money and would have no forgiveness from PSLF. Once a steady, significant stream of income was"guaranteed" it maked little sense to keep paying on the federal loans with higher interest rates. It's a risk to get rid of the protections, but really if your income is that high, there potential savings might still outweigh the risks. While in school I would try to pay off at minimum the interest to prevent capitalization.
As for the student going to undergraduate school, the student loan is an excellent idea. Student loans end up jump-starting many borrowers' credit and are usually one of the longest tradelines on their report. In addition, there are far more protections and payment options for federal student loans than there are for federal parent loans. Paying off the loan while in school would make it a rare interest-free loan. If it ends up they need more than that, a small unsubsidized student loan is still a good option.
Hope this helps and if you have any more questions, feel free to ask.
"Nelnet loans 7.50% interest can I get anything better?"
https://ficoforums.myfico.com/t5/Student-Loans/Nelnet-loans-7-50-interest-can-I-get-anything-better/...
https://ficoforums.myfico.com/t5/Student-Loans/Nelnet-loans-7-50-interest-can-I-get-anything-better/...
Thanks, Sabii!
For the med school child, her grandparents have offerred to pay the interest on her loans. We haven't worked out the details just yet, as we all are new to this. It's a wonderful gesture, to say the least! She is hoping to get into a loan repayment "scholarship" for rural and underserved areas... but this is a highly competitive "scholarship". Basically, you work at an approved location and every year you work there, they pay off a year of your study along with providing regular paycheck. We know the president of a local non-profit site that provides services to low income, and they have plans to open 2 more locations somewhat nearby and have already offerred to hire her and pay off her loans. This would be the best, but not guaranteed and still 4 years away!
Not ready for this stage of my wife and I becoming empty nesters! I anticipate making some road trips to each college on alternating weekends!
Oh wow! Grandparents are so awesome. Sounds like you got it all covered.
Oh no! Both babies will be gone! Well, I'm sure they will miss you guys just as much. 😀
You're welcome. Glad I was able to help some. Take care.
Oh no! Both babies will be gone! Well, I'm sure they will miss you guys just as much. 😀
You're welcome. Glad I was able to help some. Take care.