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Financial Planning / Paying For College


Subject:  Re: Private student loans Date:  10/19/2018  8:07 AM
Author:  TheBreeze Number:  8508 of 8536

Three of my kids did not need loans in addition to federal, but one did need private loans. Info I learned:

-The rates are better if you co-sign for the kid. Of course, there are pro's and con's, so it's an individual decision if it's worth doing, but I thought it was worth it.

-If you cosign, and the student defaults, you're on the hook. Same if the student passes away (whereas the federal loans aren't on you).

-There wasn't an easy way to determine the rate *you* will actually get. All the info is worded something like "Rates as low as X.X%." My son had to apply for five loans to get the actual rate quoted, and then take the best one (lowest rate, best terms).

-One of the "best terms" was "after 36 on-time payments the co-signer is released from the loan."

-Every year of the three years my son took private loans, we went with a different lender. The best rate/terms one year weren't from the same company each time.

-We got come-ons from all the places applied to for several years.

-Creating an ID and password for several possible lenders and applying to all of them each year might be too much work for some people. For us, it made a couple points difference in the rate.

-The rate was usually an adjustable one, but was tied to the LIBOR rate, as in, LIBOR rate + 3%.

-After graduation, he paid the minimum on all loans, and shoveled money into the one with the highest rate. When that was knocked out, he moved to the next one, and continued in that fashion until the federal loans were paid off.

-He busted his butt in unskilled jobs for a couple summers, then landed an engineering intern job for the last two summers, so he earned decent money the last two years and the loan need went way down after the first year (to no private loan his senior year).

Feel free to ask me anything I might have missed. Oh, always fill out a FAFSA even if you don't think there'll be any eligibility for need based aid...there are scholarships (non-need based) available and you need a FAFSA on file to be eligible.
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