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Student Loan Question

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Student Loan Question [#permalink] New post 10 Jan 2009, 16:00
So I have a couple of questions regarding student loans.

1. How many current students here take out private loans in addition to their financial aid package? For instance, say you are approved for $65,000 by the school to cover all expenses, but your budget says you need $75,000. Do you do private loans for the remainder? How does that work?

2. Also, when is the disbursement date for loans? Can you get private loans in say early July? The reason I ask is that I am planning to quit my job July 1st and then travel, but I'm not sure if my savings will cover a Europe trip in early July and then a MAP trip in late July before orientation starts at Texas. I may only be able to afford the MAP trip. Of course I could get private loans, put everything on my credit card and then pay it off when they are disbursed - does that option work as well?

Thanks for your help in advance.
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 17:36
by "your budget", do you mean just what you calculated and not the "Official Student Budget" that the federal government puts out? If so, then yes, you can get Sub/Unsubsidized/PLUS loans to cover up to that budget, the the rest is private loans. The thing is, with the credit situation right now, I found it hard to get private loans with good rates, and most asked me to get a co-signer (700+ credit score, no late payments ever, US Citizen). So check around first to see if you can even get a loan, and the rates aren't like 11%.

The loans generally get disbursed a few weeks before official school start date. So I got my fall semester ones 10 days before school started. I still haven't gotten my spring semester ones and we're at 10 days before school starts. I don't think you can get it any earlier.

One way to fund your trip is to see if any 0% APR credit card deals are still around. If so, get one and make all your purchases on that one. Some even give you a 0% 6 month cash advance. Just be careful not to overspend. :)
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 17:52
Besides scholarships or fellowship awards, do students get government grants with their financial package? How big is the amount and does everyone get this grant as part of his/her financial aid package? I was under the impression that gov't grants are usually more common for undergrads.
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 18:18
ninkorn wrote:
Besides scholarships or fellowship awards, do students get government grants with their financial package? How big is the amount and does everyone get this grant as part of his/her financial aid package? I was under the impression that gov't grants are usually more common for undergrads.


as far as I know, they (feds) don't give grants for grad school. Only loans.
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 18:47
So let's say, for argument's sake, that Chicago Booth's 2009-2010 budget is $79,000. I can obtain Unsub/Sub/Plus loans up to that amount? I was under the impression that any federal loans will be extremely limited, and that I would have to get the rest through private loans. In other words, if I received $30,000 from the Fed in loans, I would need to borrow $49,000 in private loans in order to meet my tuition and expense obligations. Or, are you saying that a student will have access to $79,000 in federal loans and can then borrow more through private avenues if he or she wants to live high on the hog throughout school? I'm planning on living like a pauper, personally, but the security of having access to additional funds would make me feel warm and fuzzy.
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 18:55
After doing some more research, I am under the impression you can only borrow (including private loans) up to the cost of attendance guideline set by the school. For example, Texas says $40,000 with in-state tuition is the cost of attendance, including $13,500 for ALL living expenses. Their housing guideline is like $350 - $450 sharing a 2 bedroom. THAT IS RIDICULOUS! I can't find any decent place to live for that. I think it comes out to $1800 a month for all expenses. With car, food, travel, etc., I am worried about being able to even attend school if that is all I can borrow. I just don't have the savings to supplement $15,000 extra.
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 19:00
jb32 wrote:
After doing some more research, I am under the impression you can only borrow (including private loans) up to the cost of attendance guideline set by the school. For example, Texas says $40,000 with in-state tuition is the cost of attendance, including $13,500 for ALL living expenses. Their housing guideline is like $350 - $450 sharing a 2 bedroom. THAT IS RIDICULOUS! I can't find any decent place to live for that. I think it comes out to $1800 a month for all expenses. With car, food, travel, etc., I am worried about being able to even attend school if that is all I can borrow. I just don't have the savings to supplement $15,000 extra.

That was my initial impression as well. $350 to $450 a month for rent is ridiculous, even in Texas.
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 21:12
The living budget that each school gives you is ridiculous, but most schools will let you appeal to a limited extent. So check with your school to see what they let you do.

For example, if they say tuition is $30K and your living expenses is $25K (for SF Bay Area, it's ridiculous), that means you can borrow up to $55K total with unsub/sub/PLUS loans.

Your expected contribution amount out of those $55K (determined by the FAFSA) will affect how much unsub/sub loans you get. But whatever you can't get with unsub/sub, you can get to the full $55K (total combined with unsub/sub) with the PLUS loans. that's the max you can get. Everything else will have to be student loans like CitiAssist or Sallie Mae.
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Re: Student Loan Question [#permalink] New post 10 Jan 2009, 21:22
I haven't even been accepted anywhere yet and already I'm scared of how I'm going to pay for it. I look at my credit cards and car payment and get scared that I won't be able to go because of money. I'd probably be pretty damn upset if that did it. Hopefully if I get in I can figure it out.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 09:10
kryzak wrote:
The living budget that each school gives you is ridiculous, but most schools will let you appeal to a limited extent. So check with your school to see what they let you do.

For example, if they say tuition is $30K and your living expenses is $25K (for SF Bay Area, it's ridiculous), that means you can borrow up to $55K total with unsub/sub/PLUS loans.

Your expected contribution amount out of those $55K (determined by the FAFSA) will affect how much unsub/sub loans you get. But whatever you can't get with unsub/sub, you can get to the full $55K (total combined with unsub/sub) with the PLUS loans. that's the max you can get. Everything else will have to be student loans like CitiAssist or Sallie Mae.


Thank you for you replies to this thread, Kryzak. So if I understand you correctly, anybody can meet the entirety of their financial obligation (as set by the school) using federal loans and go above and beyond that using private loans (if one is so inclined).
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 09:29
MeddlingKid wrote:
Thank you for you replies to this thread, Kryzak. So if I understand you correctly, anybody can meet the entirety of their financial obligation (as set by the school) using federal loans and go above and beyond that using private loans (if one is so inclined).

I hate to disagree with Kry, but I don't think taht is right. I think you can borrow up to the total cost of attendance including private loans. As in, whatever the school sets as the total cost of attendance is the most you can get in loans to pay for school. Whatever else you need is up to you. However, you can solicit the financial aid office for exemptions to the total cost of attendance, but that is on a case by case basis.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 09:55
http://www.fuqua.duke.edu/documents/student_resources/financial_aid/daytime/coa2008-2009.pdf

Cost of Attendance or Student Budget

Cost of attendance is NOT the amount of money you think you need or the amount you actually need to attend business school. It is the amount of money the financial aid office at the business school thinks (or rather calculates, estimates and averages) you need to survive and make it through business school each year.



Cost of attendance it a dollar amount that the business school's financial aid office comes up with, based on federal guidelines which are rather strict. It includes all costs such as tuition, fees, books, commuting expenses, and living expenses that the "average normal" (single) student would have to pay during one school year. As already mentioned, the business school has to follow government guidelines to set up the budget and does not have much ability to change the budget (or so they claim at least).

This magical dollar amount called "cost of attendance" is the same for each student, regardless if he/she is married, or has children, lives alone, or with room-mates. The business school only considers the expenses of the student by himself/herself. Family members such as spouse and children are not considered and do not increase the amount of money allotted to the student for living expenses.

The cost of attendance is usually broken down into the "student budget", which shows each item (tuition, books, rent, utilities, commute, clothing allowance, etc.) separately. Financial aid, in the form of loans and scholarships, will only cover the cost of attendance. Financial aid is not available for any higher amount than the cost of attendance (or "total student budget"). Government loans, scholarship money, and alternative loans can be used to cover the cost of attendance.

Your "change check"

For example, if your financial aid office says that your total cost of attendance is $50,000 per year, including all living expenses, tuition, etc. and you happen to qualify, because you are so good looking or whatever, for some fancy scholarship worth $80,000 per year, your financial aid office will limit your financial aid package to $50,000 since that is your cost of attendance. The other $30,000 is not available to you at all. You would receive a check of whatever money is left of the $50,000 (not the $80,000) after subtracting tuition, fees, etc. for the year for you to live on.

As illustrated by the example, taking the total amount specified by the cost of attendance and subtracting out the tuition, fees, books, supplies, and mandatory insurance, leaves you with the amount that will be paid out to you each year to cover living expenses. The school usually mails a "change check" to you every semester. It is your responsibility to budget that money to last the entire semester to pay your bills.

The summer break is not included in the budget, either. So, you only receive money for 9 of the 12 months of the year - since that is the only time you are in school.

That means that the financial aid office only considers you to be a student for 9 of the 12 months of a year and only budgets enough financial aid for the 9 months during which you are actually a student. If you don't have a job over the summer, you will have to stretch the limited change check to also pay your bills over the summer.

Note that, generally speaking, the annual change check is just under $11,000 (or $5,500 per semester) at most business schools. That's not a lot to live on, especially if you have kids or other unique circumstances. It comes to about $900 per month if budgeted over 12 months.


More cost of attendance info

In most cases, the schools calculate your budget with the assumption that you will have room-mates to share rent expenses, so that the budgeted rent expense in your student budget is very low, not enough to really afford your own place.

Again, to make this point very clear: even if you hypothetically qualified for say $200,000 in loans, scholarships, etc. per year, the school will only allow you to fund (from all these sources combined) the total budget amount specified. NO MORE!

Having said that, there are a few exceptions that allow you to increase you cost of attendance. Childcare expenses fall in this category. If you have childcare expenses because you are attending school, you can add this expense to your student budget and get a larger change check to cover these expenses. But this does not give you more money to live on each month. Also, this is a loan, after all that you will have to pay back.

If you need to purchase a computer or laptop for school, this also counts as an allowable expense to increase the budget. You purchase the computer or laptop and then turn in the receipt to get reimbursed. Reimbursement only works if you still have some unused financial aid available to cover the additional student budget expense. Most of the time, this is not an issue since you can typically qualify for more private loans if you need them.

You have to provide documentation in the form of bills, receipts, and signed statements from other people involved (daycare providers) to get reimbursed for childcare expenses. A receipt is sufficient for reimbursement of a computer purchase.

You can also qualify for some "one-time" money if something unexpected happens, say, your car is stolen, you have to have a brain transplant or some other major one-time expense comes up that would "sink your boat". These circumstances can be considered for additional aid. However, this is limited and only approved on a case-by-case basis. Note that you have to be able to qualify for this money in loans or scholarships first. If you are at a very expensive school and have maxed out your loan amounts, there may be no additional money available for this or you have to access private loans.

You cannot increase you "change check" by qualifying for extra aid or alternative loans. The different loan programs and scholarships only determine where that money comes from, not how much in total you get. All government loan programs have caps (max amounts you can borrow) and some business schools are more expensive than what you can borrow through government loans.

That is what alternative loans (available through the financial aid office also) are for - to bridge the gap if your cost of attendance exceeds the amount the government is willing to loan to you each year.

Be sure to read the details about the different loan types and scholarships available for pros and cons about each.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 10:38
So what I'm reading is:

a) Government gives out very little money and dictates to schools how much they "recommended budget" should be.
b) To live reasonably, private loans are required

So I will def need private loans if I want a 1BR in downtown chicago. Did i miss anything?
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 10:46
I think we have coupla months to research before we have to seriously worry about this issue.

1) Let's file our 2008 tax return
2) File fafsa
3) Wait for our school fin-aid package


Then let's visit this topic again. I am sure by school, and by individual - situations will be different.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 10:51
I interpret it the same way, Soni. From checking out SallieMae.com, it looks like GradPLUS loans are capped at the cost of attendance (the school's budget), minus any other aid you receive (Stafford loans, scholarships, etc.) If you want to spend more than the school's budget, it's up to your savings or private loans, which will give you however much the bank/lender is comfortable lending based on your credit.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 11:49
NJMike4MBA wrote:
I interpret it the same way, Soni. From checking out SallieMae.com, it looks like GradPLUS loans are capped at the cost of attendance (the school's budget), minus any other aid you receive (Stafford loans, scholarships, etc.) If you want to spend more than the school's budget, it's up to your savings or private loans, which will give you however much the bank/lender is comfortable lending based on your credit.

No, you guys have it wrong. If you want to live above the cost of attendance, then you HAVE to use your savings. Private loans only cover from where GardPLUS stops up to the cost of attendance. Anything over that is on you. From Sallie Mae: Borrow as much as you need to pay for your education, up to the cost of attendance as certified by your school and confirmed by Sallie Mae, less other financial aid received.*

For example:

Duke allows $68,013 for 1st year cost of attendance. This includes tuition, housing, fees, food, travel, health insurance, etc. - everything.

They give you $16,140 for living expenses. That includes room, food, entertainment, travel, etc. THAT'S IT! You can't borrow anything above that. They suggest $6500 for housing, which equates to $541 a month for a 12-month apartment lease - remember very few places do 9 month leases. That also has to include any bills, i.e. cable, power, water. Duke suggests $4,400 for food, which equates to $488 a month for 9 months. $3300 for miscellaneous, which equates to $366 a month. $1940 for transportation, which equates to $215 for 9 months. So your spending must be less than $1,069 a month for 9 months. So if you thought you were going to borrow extra to go skiing or travel on breaks, that ain't going to happen.

That is all you can borrow for living expenses. It is ILLEGAL by the Higher Education Act passed this past summer to borrow above the total cost of attendance. I don't mean to scare anyone, but if you don't have much in savings, then you will have to live on the above suggested budget.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 12:08
jb32 wrote:
NJMike4MBA wrote:
I interpret it the same way, Soni. From checking out SallieMae.com, it looks like GradPLUS loans are capped at the cost of attendance (the school's budget), minus any other aid you receive (Stafford loans, scholarships, etc.) If you want to spend more than the school's budget, it's up to your savings or private loans, which will give you however much the bank/lender is comfortable lending based on your credit.

No, you guys have it wrong. If you want to live above the cost of attendance, then you HAVE to use your savings. Private loans only cover from where GardPLUS stops up to the cost of attendance. Anything over that is on you. From Sallie Mae: Borrow as much as you need to pay for your education, up to the cost of attendance as certified by your school and confirmed by Sallie Mae, less other financial aid received.*

For example:

Duke allows $68,013 for 1st year cost of attendance. This includes tuition, housing, fees, food, travel, health insurance, etc. - everything.

They give you $16,140 for living expenses. That includes room, food, entertainment, travel, etc. THAT'S IT! You can't borrow anything above that. They suggest $6500 for housing, which equates to $541 a month for a 12-month apartment lease - remember very few places do 9 month leases. That also has to include any bills, i.e. cable, power, water. Duke suggests $4,400 for food, which equates to $488 a month for 9 months. $3300 for miscellaneous, which equates to $366 a month. $1940 for transportation, which equates to $215 for 9 months. So your spending must be less than $1,069 a month for 9 months. So if you thought you were going to borrow extra to go skiing or travel on breaks, that ain't going to happen.

That is all you can borrow for living expenses. It is ILLEGAL by the Higher Education Act passed this past summer to borrow above the total cost of attendance. I don't mean to scare anyone, but if you don't have much in savings, then you will have to live on the above suggested budget.


I think the part where school/fed will give you less than the cost of attendance makes sense. I see those cases all the time.
But the limitation on private loans.. that's something new. I thought private loans wouldn't care about the budget.
They want us to loan more and then punish us with their ridiculous rate right?
Good source though JB.. and I'll definitely try to take a look and ask around more about that rule If i can.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 12:12
NJMike4MBA wrote:
...........capped at the cost of attendance (the school's budget)........If you want to spend more than the school's budget, it's up to your savings or private loans.........


jb32 wrote:
.............If you want to live above the cost of attendance, then you HAVE to use your savings.......



Aren't you guys all saying the same thing?

Gov't backed loans are capped at cost of attendance published by each school. If you need more than that amount, you need private loans from private banks or savings...?

Am I missing something here? :-D
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 12:24
We're sort of saying the same thing, but I should have been a bit more specific in what I said. Private student loans are capped at the school's cost of attendance thanks to Congress. You can get other loans from banks (not likely, but if you qualify) that aren't capped, but these wouldn't have the same nice re-payment terms that student loans have. They may not be the best option, but if you need more than what's in the budget and don't have savings it is an option.
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Re: Student Loan Question [#permalink] New post 11 Jan 2009, 12:33
Yes, Ninkorn, unfortunately you are missing something. You can not borrow more than the cost of attendance utilizing any source. Some people are saying you can borrow up to the cost of attendance with government sources and then borrow over the cost of attendance through private sources. I'm saying that is wrong. If you want to live in a $2000 a month loft, then you better have the savings to pay for it.

An example:

Cost of Attendance: $75,000 a year
Stafford Subsidized: $8,500
Stafford Unsubsidized: $12,000
GradPLUS: $40,000
Expected Family Contribution (Determined from FAFSA application): $14,500

Now you could use Private Loans for the $14,500 and then use savings to live above the $75,000 a year. However, let's see another example.

Cost of Attendance: $75,000 a year
Stafford Subsidized: $8,500
Stafford Unsubsidized: $12,000
GradPLUS: $54,500
Expected Family Contribution (Determined from FAFSA application): $0

If you have no savings, then that is all you get. You can only get private loans to 'bridge' the gap between GradPLUS and total cost of attendance, i.e. covering your Expected Family Contribution.

Also, to Nike's point you may be able to get a personal loan, but direct to consumer loans for education above the total cost of attendance do not exist. There are no lenders that offer those loans anymore. Before the credit crisis and Congress's action, they did exist. One thing to note with personal loans is that they do not have deferrment of payments because you are in school. They are just like any other unsecured loan - and might I add very difficult to find, if not impossible, in this environment.
Re: Student Loan Question   [#permalink] 11 Jan 2009, 12:33
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