With the rising cost of college tuition, more students are turning to private student loans to help bridge the gap between what is offered through financial aid and what they can pay out of pocket and their actual college costs.. Unfortunately, most young people have a limited credit and employment history, which means they will be unable to secure a private student loan on their own. In general, most lenders require students to have a credit-worthy cosigner before they will be approved for financing. This person doesn’t necessarily need to be related to the borrower (student), but parents and other family members often step up to help out. But, being a cosigner can be risky. If the borrower fails to make payments, the cosigner will be legally obligated to repay the debt. There may even be some risk for the borrower, as well. For example, should the cosigner die or file for bankruptcy before the loan is paid in full, the student loan servicer may place the loan in default and demand that the balance be paid in full, even if all payments have been made on time. Plus, removing a cosigner from a private student loan is not always an easy process. There are two primary ways a cosigner can be freed of their obligations under the promissory note they signed:
Whether voluntary or involuntary, the loss of one’s employment when a child is attending college can leave a parent distraught. Questions like “how will I come up with tuition?” and “will my child have to leave school?” are very common and real. There’s no doubt that the loss of a job has incredibly serious consequences for families–especially those with one or more students currently enrolled in college. As with many such issues, the best way to approach the problem is pragmatically. And when it comes to financial aid, there is actually a prescribed approach that you should take to help get your financial aid squared away as soon as possible. Let’s take a look at the next steps you’ll need to take so you can rest easy and get back to your number one priority–finding a new job.
When the topic of student loan debt rears its ugly head, there is inevitably an argument about who is at fault for our current situation. Many believe the government should be working toward a free college system. Others strongly insist that the colleges themselves are to blame. And there are even some who feel students have played a leading role in why so many Americans are struggling with student loan debt. Regardless of where we place the blame, one thing is clear – the current system is not working.
In order to determine how much federal Pell Grant you will receive, you must complete the FAFSA. Once the FAFSA is processed, there are three main ingredients which determine your eligibility for Pell. The first is the Expected Family Contribution (EFC) which is computed using a formula that takes into consideration all of the information you supply on the FAFSA. Rather than an absolute measure of how much a family can afford, the EFC is a relative measure of a family’s financial strength. Next is your enrollment status. Enrollment status, simply put, is the course load you will take while you are enrolled. Some examples are full-time, half-time or less that half time. The final piece of the puzzle is the Cost of Attendance (COA) as determined by your school. These three variables will be used by your school’s financial aid office to determine how much, if any, Pell Grant and other financial aid you may be awarded. Let’s take a look and see what that could mean for student’s attending college in the 2015-2016 academic year.
It’s that time of the year when high school seniors eagerly await their acceptance letters and parents nervously wonder how much college is going to cost them. Even those who may have put away some money through a 529 Plan or another college savings account may find that it’s simply not enough to cover all their expenses, even after they factor in federal financial aid and scholarships. When this happens, students and parents may need to make some tough decisions. They can look into schools that may cost less, such as community colleges or in-state public colleges, or they can consider another option – private student loans. But, before students and parents make the decision to take on additional student loan debt, they should take a close look at the pros and cons of applying for a private student loan.