How to finish school when Stafford Loans hit limit?
June 14, 2011 5:06 PM Subscribe
My boyfriend's Stafford Loan is about to hit limit, before he finishes school. We feel like we've run out of options. Can you think of something we haven't?
My boyfriend has been an undergraduate, going to school part-time and in pieces, for about seven years. The end is in sight. But his financial aid office just informed him that he has only about $100 left on his Stafford loan, before he hits the lifetime limit. He's got about another three or four semesters of part-time school before he's done, so easily another $16,000. (Yes, art school is expensive.)
Under normal circumstances, someone would suggest that he take cheaper classes elsewhere and transfer them in, but he's at the end of his program with only advanced classes left, which the school does not allow you to transfer in.
Right now, it seems like there are no options for us. Here are the things we've thought of:
He unfortunately cannot ask family members to help. We both think taking out private loans is a huge mistake given the debt load he is already carrying, and it's unlikely he'd qualify for one that wasn't borderline usury anyway due to the aforementioned debt load.
Surely someone has been in this situation. What haven't we thought of? We are getting really discouraged.
My boyfriend has been an undergraduate, going to school part-time and in pieces, for about seven years. The end is in sight. But his financial aid office just informed him that he has only about $100 left on his Stafford loan, before he hits the lifetime limit. He's got about another three or four semesters of part-time school before he's done, so easily another $16,000. (Yes, art school is expensive.)
Under normal circumstances, someone would suggest that he take cheaper classes elsewhere and transfer them in, but he's at the end of his program with only advanced classes left, which the school does not allow you to transfer in.
Right now, it seems like there are no options for us. Here are the things we've thought of:
- Make more money by quitting his job and getting a new one. Easier said than done, the market for graphic designers without degrees isn't very big, nor is it lucrative. Would be ideal except for the reality of getting new job in this economy.
- Make more money by getting a second job. There just aren't enough hours in the day to work one job, go to school, commute, study, sleep, and work a second job. Also, a part-time job isn't likely to pay enough to make up the ~$5500/semester cost.
- Take a break from school to save up some money, then resume. This would be great if the current loans didn't come due after six months of no school. Monthly payments would currently exceed his paycheck.
- Take half a courseload, cobble together half the money. Half a courseload for him is one class, or three credits; not enough to stave off the student loans coming due.
- Find a six-credit internship in his field. If there were such a thing as paid, credit-bearing internships, we've yet to find them. Seems it's one or the other, not both.
- Find scholarships. We've really looked, but it's hard to find them in amounts that really make a dent. For undergrads in his field, they want you in school full time for a scholarship. Ones geared towards adult learners are in the hundreds, not the thousands like he needs.
- Quit his job and go to school full time, possibly becoming eligible for scholarships. This is too risky for us; he may not get a scholarship and then he's SOL. Also, I don't think I can support us both on one paycheck at this time.
He unfortunately cannot ask family members to help. We both think taking out private loans is a huge mistake given the debt load he is already carrying, and it's unlikely he'd qualify for one that wasn't borderline usury anyway due to the aforementioned debt load.
Surely someone has been in this situation. What haven't we thought of? We are getting really discouraged.
Actually my wife's private loans have a smaller interest rate than her federal loans. She got them originally through graduate leverage, which is now Brazos. They are adjustable at just under 4%.
posted by TheBones at 5:20 PM on June 14, 2011 [1 favorite]
posted by TheBones at 5:20 PM on June 14, 2011 [1 favorite]
When I was in that situation, I took out student loans from a private lender. I know people are scared by the idea of private student loans, but they are not always predatory loans offered by some shady unknown company, and the interest rate is actually better (for the time being, anyway) than my federal student loans.
posted by joan_holloway at 5:22 PM on June 14, 2011
posted by joan_holloway at 5:22 PM on June 14, 2011
What's his degree in specifically and how many classes does he need to finish? He's . . . only taking two classes? At 5500 a semester? For art school? Unless he's going into a very, very lucrative field, he's setting himself up for trouble.
Can he transfer to a cheaper state school somewhere as a full-time transfer student? Some states are very affordable even for out of state students (New York State is one of them) and are likely to offer a great deal of aid to qualified transfers. He might have to make up quite a bit in credits, but it might be also cheaper in the long run.
Actually my wife's private loans have a smaller interest rate than her federal loans. She got them originally through graduate leverage, which is now Brazos. They are adjustable at just under 4%.
When did your wife graduate from school? That's an exceptionally low rate, and wasn't reflective of private loan rates even in 2003-2009, when I was in school (more common was 6.5%-9%).
posted by PhoBWanKenobi at 5:23 PM on June 14, 2011 [4 favorites]
Can he transfer to a cheaper state school somewhere as a full-time transfer student? Some states are very affordable even for out of state students (New York State is one of them) and are likely to offer a great deal of aid to qualified transfers. He might have to make up quite a bit in credits, but it might be also cheaper in the long run.
Actually my wife's private loans have a smaller interest rate than her federal loans. She got them originally through graduate leverage, which is now Brazos. They are adjustable at just under 4%.
When did your wife graduate from school? That's an exceptionally low rate, and wasn't reflective of private loan rates even in 2003-2009, when I was in school (more common was 6.5%-9%).
posted by PhoBWanKenobi at 5:23 PM on June 14, 2011 [4 favorites]
When did your wife graduate from school? That's an exceptionally low rate, and wasn't reflective of private loan rates even in 2003-2009, when I was in school (more common was 6.5%-9%).
Just looked, and it looks like the current going rate for the graduate plus loan is 8% for a new loan, not quite as good as when she took originally took it out, which was a while ago.
posted by TheBones at 5:27 PM on June 14, 2011
Just looked, and it looks like the current going rate for the graduate plus loan is 8% for a new loan, not quite as good as when she took originally took it out, which was a while ago.
posted by TheBones at 5:27 PM on June 14, 2011
Not to be a total downer, but is this perhaps a warning sign that he's Doing It Wrong™? According the Stafford website, the lifetime limits are $31,000 if he is a dependent, or $57,500 if he is independent, which is what it sounds like he is (adult, family can't help, etc). That's a crap-load of debt to take on for an art degree, seriously, and you are right to be cautious about taking on more debt above that limit.
So my suggestion is to take three steps back and look at the big picture, rather than hunker down and find a way to stay on the current path come hell or high water.
But at the same time, make sure you genuinely have exhausted your options with the school. Every school I've been at has an appeal process with financial aid, where you provide evidence of greater need and plead for more help, and they begrudgingly give you more help. And if that is rejected, the offices of the dean of students (or whatever it is called at his school) and the president will normally have access to discretionary funds (as well as being able to pressure the financial aid people), but again that requires following the correct steps, presenting your case in the right ways, and being able to demonstrate actual need.
posted by Forktine at 5:31 PM on June 14, 2011 [7 favorites]
So my suggestion is to take three steps back and look at the big picture, rather than hunker down and find a way to stay on the current path come hell or high water.
But at the same time, make sure you genuinely have exhausted your options with the school. Every school I've been at has an appeal process with financial aid, where you provide evidence of greater need and plead for more help, and they begrudgingly give you more help. And if that is rejected, the offices of the dean of students (or whatever it is called at his school) and the president will normally have access to discretionary funds (as well as being able to pressure the financial aid people), but again that requires following the correct steps, presenting your case in the right ways, and being able to demonstrate actual need.
posted by Forktine at 5:31 PM on June 14, 2011 [7 favorites]
Take a break from school to save up some money, then resume. This would be great if the current loans didn't come due after six months of no school. Monthly payments would currently exceed his paycheck.
Also, he could go to work full time for 6 months, then go back the next semester before his grace period ends. There are also a shit-ton of different stafford loan payment plans, some with very low payment rates. But, yeah, if he can't pay his loan payments now, how is he planning on managing it once he graduates? I agree with forktine that this is a big picture problem.
posted by PhoBWanKenobi at 5:33 PM on June 14, 2011 [1 favorite]
Also, he could go to work full time for 6 months, then go back the next semester before his grace period ends. There are also a shit-ton of different stafford loan payment plans, some with very low payment rates. But, yeah, if he can't pay his loan payments now, how is he planning on managing it once he graduates? I agree with forktine that this is a big picture problem.
posted by PhoBWanKenobi at 5:33 PM on June 14, 2011 [1 favorite]
What is the exact, per credit tuition rate at his institution? $4,000 a semester seems quite high to me -- is he using a refund from his loan debt to pay for living expenses, or is he only taking out enough to cover tuition?
Does the school participate in the Pell Grant program? How about the perkins loan?
When you say "part-time" do you mean he is registered for at least half-time for each semester, or less?
These are all questions that a financial aid counselor would look into. I would have him contact them ASAP.
It sounds like you are going to have to go the private loan route. Most of these will require credit-approved cosigners, and it's possible that they won't be deferred.
it's unlikely he'd qualify for one that wasn't borderline usury anyway due to the aforementioned debt load.
I'll save the "affordable college" lecture because we're long past that point, but if $5,500 is indeed your PART TIME per semester tuition rate, then I would consider this art-school education to be usurious, not just any loan programs.
posted by Think_Long at 5:48 PM on June 14, 2011 [1 favorite]
Does the school participate in the Pell Grant program? How about the perkins loan?
When you say "part-time" do you mean he is registered for at least half-time for each semester, or less?
These are all questions that a financial aid counselor would look into. I would have him contact them ASAP.
It sounds like you are going to have to go the private loan route. Most of these will require credit-approved cosigners, and it's possible that they won't be deferred.
it's unlikely he'd qualify for one that wasn't borderline usury anyway due to the aforementioned debt load.
I'll save the "affordable college" lecture because we're long past that point, but if $5,500 is indeed your PART TIME per semester tuition rate, then I would consider this art-school education to be usurious, not just any loan programs.
posted by Think_Long at 5:48 PM on June 14, 2011 [1 favorite]
A few thoughts:
Take a break from school to save up some money, then resume. This would be great if the current loans didn't come due after six months of no school. Monthly payments would currently exceed his paycheck.
Yes, they'll come due. But he can put them into forbearance, which is intended for situations like this, for up to 36 months (interest will accrue, however) and if he goes back to half-time, later, they'll go back into student deferment.
Quit his job and go to school full time, possibly becoming eligible for scholarships.
I went to school full-time and worked a full-time job (with overtime, too) for over two years and I managed. So does he have to quit his job to finish school full time? He only has a few semesters left at full-time, right? Night classes, weekend, summer...
Something to think about with private loans -- not all private loan programs have deferment or forbearance options to defer payments. Meaning the minute you take them out, you start paying.
What everyone is saying about huge debt load is absolutely true. Especially for an art degree. The field doesn't pay that well. Maybe finish at a state school, because damn! That's a lot of debt.
posted by clone boulevard at 6:02 PM on June 14, 2011
Take a break from school to save up some money, then resume. This would be great if the current loans didn't come due after six months of no school. Monthly payments would currently exceed his paycheck.
Yes, they'll come due. But he can put them into forbearance, which is intended for situations like this, for up to 36 months (interest will accrue, however) and if he goes back to half-time, later, they'll go back into student deferment.
Quit his job and go to school full time, possibly becoming eligible for scholarships.
I went to school full-time and worked a full-time job (with overtime, too) for over two years and I managed. So does he have to quit his job to finish school full time? He only has a few semesters left at full-time, right? Night classes, weekend, summer...
Something to think about with private loans -- not all private loan programs have deferment or forbearance options to defer payments. Meaning the minute you take them out, you start paying.
What everyone is saying about huge debt load is absolutely true. Especially for an art degree. The field doesn't pay that well. Maybe finish at a state school, because damn! That's a lot of debt.
posted by clone boulevard at 6:02 PM on June 14, 2011
Yes, I agree that at this point, this particular degree at this particular school is financially a Money Pit; what he could conceivably earn in his chosen field is not going to balance out to all the debt and interest he has to pay if he goes on at this rate.
He's been in school off and on for 7 years and has "three or four semesters left." The average for a full-time student, assuming a 4-year degree, with 120 hours, is 15 hours a semester. Since he's been going part-time, I assume he isn't doing 15 hours a semester. So I suppose he could try to take more hours and finish in one or two semesters, or one year, instead of two. Taking out a personal loan, as suggested above, might be feasible.
But, seriously? That's 8% interest on a loan that is beginning to loom large already, and there's no guarantee of a job coming out of an internship or anything that suggests he's going to be able to pay that loan off any time soon, let alone a high-paying job that's going to allow you to live above poverty level while he does so.
I'd say transfer to another school and cut your losses.
posted by misha at 8:49 PM on June 14, 2011
He's been in school off and on for 7 years and has "three or four semesters left." The average for a full-time student, assuming a 4-year degree, with 120 hours, is 15 hours a semester. Since he's been going part-time, I assume he isn't doing 15 hours a semester. So I suppose he could try to take more hours and finish in one or two semesters, or one year, instead of two. Taking out a personal loan, as suggested above, might be feasible.
But, seriously? That's 8% interest on a loan that is beginning to loom large already, and there's no guarantee of a job coming out of an internship or anything that suggests he's going to be able to pay that loan off any time soon, let alone a high-paying job that's going to allow you to live above poverty level while he does so.
I'd say transfer to another school and cut your losses.
posted by misha at 8:49 PM on June 14, 2011
I got more money once by appealing through the financial aid office. You could try that.
Also, private loans are not that bad, and he will probably qualify.
posted by twblalock at 9:45 PM on June 14, 2011
Also, private loans are not that bad, and he will probably qualify.
posted by twblalock at 9:45 PM on June 14, 2011
I don't know about your institution, but at mine, a student can't receive credit for an internship if it's paid, so a paid internship may be a moot point for credit hours anyway. YMMV on that, of course.
You may have to suck up private loans or otherwise get creative. Can he freelance his work? Throw up an ad on Craig's List? And one of you may have to suck up finding a part-time job. Give up some weekends or some evenings for it if you have to. An on-campus job or appealing to any opportunities for work/aid through his department might be something to look into. He should also have a sit-down with financial aid about whether he may qualify for need-based scholarships once he maxes out the federal loans, or what various other options may exist. But he needs to actually make an appointment with someone in Financial Aid and have this conversation in person.
And $5500 is a pretty common part-time cost for private institutions, and many public institutions are cutting programs in the arts that a state school may not even have been an option for this person---and not all state institutions are geographically accessible for people, either, that the student's decision to have gone to this school really shouldn't be judged here --- the guy's worked his butt off to get this far. Also, $5500 is not necessarily just tuition --- there's the cost of the student health insurance that at 6 or more credits the student is required to participate in unless he's covered elswhere, activity fees for student services which covers everything from sports to the student center to student clubs to service oriented departments like counseling, etc. Tuition may only be $3000, which is on par for state school tuition, but add in those other costs --- which state schools have, too, by the way --- and it could easily reach $5000 depending on the school.
posted by zizzle at 4:02 AM on June 15, 2011
You may have to suck up private loans or otherwise get creative. Can he freelance his work? Throw up an ad on Craig's List? And one of you may have to suck up finding a part-time job. Give up some weekends or some evenings for it if you have to. An on-campus job or appealing to any opportunities for work/aid through his department might be something to look into. He should also have a sit-down with financial aid about whether he may qualify for need-based scholarships once he maxes out the federal loans, or what various other options may exist. But he needs to actually make an appointment with someone in Financial Aid and have this conversation in person.
And $5500 is a pretty common part-time cost for private institutions, and many public institutions are cutting programs in the arts that a state school may not even have been an option for this person---and not all state institutions are geographically accessible for people, either, that the student's decision to have gone to this school really shouldn't be judged here --- the guy's worked his butt off to get this far. Also, $5500 is not necessarily just tuition --- there's the cost of the student health insurance that at 6 or more credits the student is required to participate in unless he's covered elswhere, activity fees for student services which covers everything from sports to the student center to student clubs to service oriented departments like counseling, etc. Tuition may only be $3000, which is on par for state school tuition, but add in those other costs --- which state schools have, too, by the way --- and it could easily reach $5000 depending on the school.
posted by zizzle at 4:02 AM on June 15, 2011
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posted by GastrocNemesis at 5:15 PM on June 14, 2011