Help Me Make the American Dream a Reality

May 3, 2008 7:13 PM

Future Lawyer-Financial Aid-Student Loan-Borrower/Cosigner-Filter: Help me help both and Myself and my Ecuadorian friend achieve the American dream--Many details and questions follow.

My friend from Ecuador hopes to go to medical school to become a neurologist, but needs a $20,000 reserve in her bank account in order for her school to take on the enrollment liability and grant her an I-20.

We found that she could get a Sallie Mae loan as long as an eligible U.S. citizen would cosign for her, which I have agreed to do. She will request $50,000 for the coming year but keep only $27,000 and repay the rest, then do the same thing next year. Her total loan request will be $100,000 but will only owe $54,000 plus 5.75% interest.

I have requested contact information for her family living in Ecuador, as well as relatives of hers living in the States (all of which she has provided) and I have full faith that she will pay off the loan.

I am the first person in my family to go to college, am in my own graduate program, and will have accrued about $70,000 in Stafford loans by graduation. I also plan to attend law school in the next few years and will need loans to cover the costs. Currently the annual tuition is $32,000 at the law school I want to attend, but I will not be attending for another 2 or 3 years, so that will put law school at about $35,000 a year for 3 years, or about $105,000.

Given that the lifetime limit for Stafford loans is $138,500, I know that the remaining $68,500 of Stafford loans will not totally pay for school, but I need to keep as much of my loan funding available as possible.

So I have four questions:

1. Will my cosigning for her take away from My lifetime Stafford loan amount, or how does that work?

2. If the answer to the question above is, Yes, will her repayment of that amount release funds for me to utilize for my own education in the future? So if she pays back the full $54,000 plus interest, will that go back into the community chest for my future use and repayment?

3. Also, does anyone know if the total amount is frozen regardless of how much is repaid, or does the repayment amount provide for the possibility of borrowing in the future?

--That is, if I take out the full $138,500 but repay $20,000, could I take out that $20,000 again some time in the future and pay it back later? How does that work?

4. Once I have exhausted my lifetime Stafford loan allowance, what alternative resources will I have for financing my education--what are my chances of getting a good scholarship and for how much?

I hope this makes sense, everybody, and I appreciate any assistance you can provide. Thanks in advance.

posted by mynameismandab to Work & Money (10 answers total)

I can answer #4 -- slim to none. Unlike other areas of graduate study, law schools generally give out very few scholarships. You seem like you might be in a unique need-based situation, so I'd talk to the admissions office of your law school. But generally, law schools are stingy.
posted by lockestockbarrel at 7:18 PM on May 3, 2008

If you have acceptable credit, you can get GradPLUS loans for the difference between Stafford loans and the cost of attendance at law school. Private loans are also available.
posted by deeaytch at 7:41 PM on May 3, 2008

These are really questions you should be addressing to the financial aid director at your law school. This is a person with whom you should develop and maintain as excellent a professional relationship as you can.

Also: I'm not sure where Lockestockbarrel went/goes to law school, but there are plenty of schools that give out scholarships to a significant portion of each class (half or better in many cases), so I doubt that one could sustain an assertion that law schools are "generally" stingy. That said, most scholarships are merit-based, rather than need-based.

Finally, It seems almost silly to borrow money only to pay it back immediately. Why on earth would you not just borrow less? Or keep the money in a bank/investment account? I doubt that repayment of stafford loans would really impact your lifetime limit -- many stafford loans are repayed immediately upon graduation with a consolidation loan, and it seems unlikely that this would re-up your limit.
posted by toomuchpete at 8:01 PM on May 3, 2008

Also: a $3,000 increase over 2-3 years is pretty optimistic, and don't forget to add in living expenses -- it is difficult to impossible to work any appreciable amount during law school. I borrowed virtually every penny of school and living expenses for my three year stay.
posted by toomuchpete at 8:04 PM on May 3, 2008

Response by poster: Additional Information:

I should mention that I will be married by the time I begin school. I am confident we could live primarily off my web developer hubby-to-be's income for the first year or so, so my living expenses will be covered. But I want to know how everything will affect my ability to pay for my education.
posted by mynameismandab at 8:19 PM on May 3, 2008

Although you didn't specifically say so, as an international student she won't getting a Stafford Loan and you will potentially be co-signing for a private loan serviced by Sallie Mae. Co-signing for a private loan will not reduce your Stafford loan lifetime maximum.

Also, although its a moot point, just because one repays a Stafford loan in full doesnt mean future funds become available, thus the concept of a lifetime maximum.

Lastly, I realize you must already trust this person fully to be able to do this for them, but perhaps it would also be wise to draw up an additional contract explicitly stating the terms I repayment. If this person were to default on this loan you would be heavily screwed in the future in terms of financing your law education.
posted by Asherah at 8:50 PM on May 3, 2008

i too can only address issue 4. you can get the grad plus loans to cover the difference between federal loans granted and what your school says it will cost to go to school (this is supposed to be the "cost of living" - including things like tuition, books, rent, food, gas, etc.). this is, however, what the school thinks it costs, and can be grossly off in its estimations. this is all to say that the federal loans + grad plus = not enough (in most everyone's experience i am aware of; ymmv). so what else? private loans. these are nay good and yet tragically unavoidable in the vast majority of situations.

finally, let me encourage you to reconsider law school. check out this post, especially the article i link to in my answer. the long and short of it is that i don't think law school is economically smart for most considering it (especially if they have debt going in), unless they end up in the top 10-15 percentile of their class at a decent school, which is not a great gamble statistically speaking. this only applies, obviously, if you're going for the salary and/or status. absolutely go if you just really want to do what a lawyer does.
posted by ncc1701d at 10:01 PM on May 3, 2008

@toomuchpete -- Law schools are stingy in comparison to other grad programs. From what I understand, it's pretty normal to have a full scholarship and a stipend in a phd program, while it's exceedingly rare to find a law student with a full scholarship. I wanted to point this out because mynameismandab is in a grad program now, so the law school funding situation might be pretty different than what he's experiencing now.

But, yes, scholarships are out there.
posted by lockestockbarrel at 11:39 PM on May 3, 2008

Don't know your Stafford questions, but I can offer two comments. First, make sure you trust your friend 100 percent. This is a lot of money you are co-signing for ... I assume the friend already lives here in the states though, right? Because otherwise this has scam written all over it. And no amount of clever contracting with your friend will get you in the clear should she turn out to be a deadbeat - after all, you can't sue to get your money back from someone who has no assets.

Secondly, don't write off the scholarships idea with law schools. Get a good score (somewhere in the 160s would be a good start) and put some time and thought into your application; apply at least five places and corss your fingers!!!
posted by Happydaz at 12:51 AM on May 4, 2008

"federal loans + grad plus = not enough"

Disagree 100%. That might be the case some places, but my experience was that the school's budget was far more than I actually needed. Further, if it's not enough, schools have ways for you to go about increasing what the school says YOUR budget is.


"Law schools are stingy in comparison to other grad programs."

That may well be, but (a) the JD is a professional degree, so comparison to academic masters and Ph.D. programs is a little misleading and (b) you didn't state it as a comparison in your post, just as a general statement.


As for the general "OMG, don't go to law school" sentiment... almost all of the statistical studies that I've seen on the subject are notoriously short-sighted. As in, they only really consider the first few years of practice and not your earning potential over your lifetime. Law School is a really, really stupid short term investment... but most people don't consider educational expenses short term investments. The people citing them tend to be (although are not always) malcontents who went in to law school with unrealistic expectations and then expected to have a fabulous job handed to them when they walked across the stage at graduation. As you might expect, that didn't happen. The hard work doesn't stop when you get your J.D., and being a law student/lawyer isn't for everyone... but pretty much anyone who gets in can get out and have a great life/career making use of their JD if they work hard and have the right attitude.


Good luck with getting this all worked out.
posted by toomuchpete at 9:39 AM on May 4, 2008