Fall classes start in less than two weeks for me, and aside from asking myself “Seriously? It’s time to go back to school already? Has it really been 9 months since I dropped out?” – I have a lot to do in preparation for my glorious return. A lot of it is actually rather hard to do from my seat here in Los Angeles – there will be a lot of phone calls back home to my mom to sort out financial aid paperwork.
But mainly, there’s a difficult decision to be made. It bothers me more than all of the little paperwork problems. This decision comes from the fact that my financial aid award comes $3,500 short. $3,500 is almost exactly three times what the government believes my family should have to pay out of pocket.
This $3,500 actually does include “federal work study” (the amount I’m expected to earn myself by way of an on-campus job), which is $2,400 for the year. Of course, what this doesn’t take into account is that $1,200 of that is due in September. $1,200 that I simply don’t have.
So, here are my options:
1) Helpful family members
Parents, grandparents… maybe someone has some “family grant money” laying around.
2) Federal Loan
This is the option I’ve used every year in the past, when my financial aid has come up short. Of course, you can’t apply directly for an Unsubsidized Direct Loan (makes it kind of a misnomer, eh?), your parent has to be denied for a PLUS loan. Every year we’ve done this, and every year that a parent is denied is a black mark on the credit report. With my parents trying very hard to fix their credit, I’m more leery of this option than ever.
3) Private Loan
I have never used one of these, but I’m even more leery of them than anything else. Adjustable rates that can be as bad as credit cards? Jeeze, why don’t I just throw the balance on my credit card – at least then I’d know what I’m getting into! (Please, no one take that statement literally.) Also, I don’t really have anyone with good enough credit to co-sign for me, so I’d probably be out of luck, even if I wanted one.
4) Lending Club?
An interesting thought. What type of interest rate would I get on Lending Club? Would my loan get funded in time to pay my tuition bill? Although I wouldn’t get as good of a rate as a federal loan, it seems like a better option, simply because it wouldn’t hurt my parent’s credit. Also, the repayment period would be shorter.
5) More Scholarships
There really isn’t time for this to kick in this semester, but it’s worth looking into for the future, especially next year. It’s also worth a shot to send a letter to my financial aid office, simply asking them to increase my award.
6) Monthly Payment Plan
This goes at the bottom, because it really doesn’t help any. My total balance of $3,500 would be divided into 10 monthly payments of $350. That’s a tad high for a monthly payment for me. Still, it’s an option.
Any feedback or thoughts on my dilemma would be appreciated – maybe you guys will think of something I haven’t!
There is another option. Beg. Go to the financial aid office and tell them you don’t have the money and you don’t know what to do. Odds are, they will give you some subset of the options you just listed, but you never know. They might have something up their sleeve.
Loans are harder to get now, ever since the credit crunch.
If you go on Prosper, I will sign up for it (through you) and fund a portion of your loan.
AC,
Actually, I did just that, yesterday. I asked the financial aid office why I’m not receiving some of the same loans and grants I got last year, and they responded by telling me to go with Option 2 (the federal loan that hurt my parents’ credit).
Давид,
Thank you, as always. After talking to my parents and the financial aid office, a Prosper loan is looking more and more like the way I might go. If I do decide to, there will be a post about it here, so that you and any others that might be interested in funding the loan can have a chance at it.
You can get a sallie mae private loan without a co-signer. However, I would try to avoid private loans as much as possible and only use it as a very last resort. I had a co-signer for my sallie mae loan and it didn’t help anyway. I have two and now they are between 8-9.25% and are variable. (They had started out at 7.5% or so).
The best thing for you do to would be to try and get a federal government loan. Do NOT get a private loan because they have high interest rates and you will wind up paying them back for the rest of your life. Apply for a Federal Perkins or a Subsidized Stafford Loan because the government will pay your interest for you as long as you stay enrolled in school.
You can also try to get grants or scholarships. Here are some good sites to check out:
http://www.fedmoney.org/
http://apps.collegeboard.com/cbsearch_ss/welcome.jsp
http://www.freegovmoney.net/
http://www.educationplanner.com/education_planner/paying_article.asp?sponsor=2859&articleName=Grants_and_Scholarships
http://www.studentawards.com/
http://www.college-scholarships.com/
Good luck!
Heard this story on NPR this morning.
http://marketplace.publicradio.org/shows/2007/08/23/AM200708234.html
Hey Stephanie — I blog about student loans for Wells Fargo, and your situation has me a little confused, specifically what you said about federal loans.
Did your financial aid package not include loans to begin with? Usually if scholarships, grants and work study aren’t enough to cover your cost of attendance, your school will include federal loans in your award letter.
I’m assuming from your post that your school participates in the Federal Direct Lending Program. You should be able to qualify for a Federal Direct Unsubsidized Stafford Loan without your parents needing to apply for a Federal PLUS loan. It’s true that if they are denied a PLUS loan you may be eligible for more Unsubsidized Stafford funds, but you should still qualify for some amount without going through the process you described.
Ashley,
Thanks for the heads up about Sallie Mae not needing a co-signer. It’s rates like that though that I called “as bad as credit cards” (although those aren’t terrible).
Trish,
I do, currently, have several federal student loans. I have maxed out my Perkins loan (you can only borrow up to a certain amount, I think it’s $25,000 or so) last year, and I’ve had Subsidized Direct Loans every year (including this upcoming one). Thank you for all the scholarship links, those will help!
Давид,
Thanks for the link, I love NPR!
Barbara,
My aid package does, in fact, include federal loans. And grants. And several scholarships from the school itself. And like I said, technically work study should help bridge the gap, but since I won’t start seeing paychecks from that until school starts, it doesn’t help me pay the first $1200 bill. And in the end, it’s all still not enough – even with everything, including work study, I’m $500 short (plus the cost of textbooks!).
My school does participate in the Federal Direct Lending Program – my federal loan is the Subsidized one. When I asked about getting an Unsubsidized one, they told me that I absolutely had to apply for, and be denied, the PLUS loan.