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My mother-in-law is currently enrolled in a community college this semester. She had planned to get student loans to help pay for things so she could quit working full time. It was just discovered that the school does not accept any student loans (federal or private). She does not qualify for any financial aid either. It is my understanding the school got in trouble over student loans in the past and they had to quit accepting them. I don't understand why a public college would not be required to accept student loans. One would think all that is required of the school is to accept the money and report to the lender that the student is in good standing. Are there any options other than a personal loan from a bank? Maybe a bank that would do private student loans, but send the money directly to the student?

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My wife went to two different nursing schools in VA, neither of which would do student loans. I had never heard of such... (more)

drodge (Jan. 10, 2013 @ 2:16p) |

This not a case of the school not accepting federal government student loans. This is case of the school not being a qua... (more)

btuttle (Jan. 10, 2013 @ 7:38p) |

Yeah, I think this is right on topic

No jobs for nursing grads

RushnRockt (Jan. 14, 2013 @ 11:50a) |


Go to a different school?

PooDonkey said:   Go to a different school?

Not real feasible. She has a husband, kids, home, and job. All of which are already in a different town from the current school. Any other nearby school would be too far.

That would be a huge red flag to me. Did they misappropriate student funds? Were their graduates unable to repay their loans?

I would probably go to a reputable online school before going to a school that won't accept student loans.

It may be helpfull to name the school to get a quality response. If they got themselves in trouble with the gov't for their student loan practices, I'd question why she wants to go there and the overall quality of their program. The little information you've given us points in the direction of a diploma mill that will have a negative ROI

The most likely reason the school is stop accepting fed student loans is because the default rate was too high. That is not necessarily a bad a thing. By opting out the school maintains eligibility for the pell grant.

delete

The school won't accept student loans, or the loan providers won't accept the school? They may be phrasing the situation in a way that doesn't make them look bad...

robodukie said:   That would be a huge red flag to me. Did they misappropriate student funds? Were their graduates unable to repay their loans?

I would probably go to a reputable online school before going to a school that won't accept student loans.


She is enrolled in the nursing program. I'm not real sure if this is something that can be done online or not.

alchemist said:   It may be helpfull to name the school to get a quality response. If they got themselves in trouble with the gov't for their student loan practices, I'd question why she wants to go there and the overall quality of their program. The little information you've given us points in the direction of a diploma mill that will have a negative ROI



She wants to go to this school because it's conveniently located between the city her job is in and the city that she and her family live in. This way it's not very far from home or work. Any school further away would probably be too hard on her. I attended this school for 2 years and then went on to a university with no problems (I had scholarships). The hospitals and medical clinics in the area take graduates from this school all the time so I don't think there will be any issue with her finding a job upon graduation.

money2011 said:   The most likely reason the school is stop accepting fed student loans is because the default rate was too high. That is not necessarily a bad a thing. By opting out the school maintains eligibility for the pell grant.


I believe this was the reason now that you mention that. They do still accept pell grants, but she doesn't qualify.

steve1jr said:   The school won't accept student loans, or the loan providers won't accept the school? They may be phrasing the situation in a way that doesn't make them look bad...


Very possible if it was because their default rate was too high.

scoogie said:   steve1jr said:   The school won't accept student loans, or the loan providers won't accept the school? They may be phrasing the situation in a way that doesn't make them look bad...


Very possible if it was because their default rate was too high.


It being a nursing school, high default rate is not surprising. Is the school ranked/accredited?

Yes both the school and the program are accredited.

scoogie said:   Yes both the school and the program are accredited.

Would suggest checking to make sure it's a credible accreditation that employers will accept. Not all are.

One option may be a home-equity loan, but she better be sure she will graduate and get a job.

You may want to check with the state board of nursing website to see what % and how many of their students pass the NCLEX on the 1st try, and see how many took the test. Compare that to how many people they allow into the program in a given year. Reason being is some programs will let anyone in, and fail a good portion of their students (well technically the students fail themselves) as opposed to graduating nursing students who fail the NCLEX. What state is this, and how much does the program cost?

This is in Mississippi. I'm not sure of the cost. My guess for tuition, lab fees, and books would be about 1500-2000 per semester.

I know a lot of community colleges are seeing default rates above 20%. I would think this college must of lost their Title IV privileges

Is it Virginia College?

Squeezer99 said:   Is it Virginia College?

No this is a public community college in Mississippi.

Take this for what its worse, but I would view this a major red flag. I won an auction on eBay once and tried to pay the guy with PayPal and PayPal rejected the transaction without giving a reason. The guy came up with a silly excuse and I ended up paying with a check. His PayPal account had been suspended for fraud which is exactly what he did to me. Sadly, PayPal knew the guy was a conartist and conveniently avoided suspending his eBay account. If they can't take student loans, there is a reason and it probably doesn't bode well for the students.

Scoogie, you really should tell us the name of the school. There are several databases we can check with that information to get you more information. There really is no need to keep it a secret.... it's not like it would hurt anyone's privacy.

ryoung81 said:   Scoogie, you really should tell us the name of the school. There are several databases we can check with that information to get you more information. There really is no need to keep it a secret.... it's not like it would hurt anyone's privacy.

Southwest Mississippi Community College

The big thing that she really needs is to be able to defer payments while in school. She is threatening to just take the money out of her 401k. I've always understood that it is never a good idea to take out a loan on your 401k because of the taxes and penalty you have to pay. Is it even possible for her to do a 401k loan if there is a chance that she may quit her job? Thoughts on this?

scoogie said:   It was just discovered that the school does not accept any student loans (federal or private).

Incorrect about private loans:
http://www.smcc.edu/index.php/financial-aid

Special Note: Currently, our institution does not participate in the federal student loan program; however, you can independently get a private loan or non-certified loan to help pay for your educational expenses if you meet the lender's requirements.

scoogie said:   The big thing that she really needs is to be able to defer payments while in school. She is threatening to just take the money out of her 401k. I've always understood that it is never a good idea to take out a loan on your 401k because of the taxes and penalty you have to pay. Is it even possible for her to do a 401k loan if there is a chance that she may quit her job? Thoughts on this?

You can roll the 401k into an IRA and take the tuition fees out of your IRA for qualified higher education expenses with no penalty. Given she won't be working enough to come up with $4000/year in tuition, I'm guessing she'll owe no taxes on the withdrawal either. Anytime you can take the money out of a tax-deferred account, tax-free is a guaranteed return. Private student loans have rates of 7%+ and interest is capitalized.

She may even get a tax credit for half tuition via the American Opportunity Tax Credit.

LordKronos said:   scoogie said:   It was just discovered that the school does not accept any student loans (federal or private).

Incorrect about private loans:
http://www.smcc.edu/index.php/financial-aid

Special Note: Currently, our institution does not participate in the federal student loan program; however, you can independently get a private loan or non-certified loan to help pay for your educational expenses if you meet the lender's requirements.


Yea that's not correct. When you call them and ask for a preferred lenders list, they have nothing. They tell you outright that they do not accept any form of student loan.

I'm always against 401k loans but make exceptions in cases like this. Generally speaking, RN programs are 2 years (little more if you have no prerequisite needed). That's a quick ROI if you ask me.

I've had a few friends do the community college to RN program and one of them kept going and just graduated her NP program.

I don't know why more adults don't do this program. This is nothing but a Tech School program and one of the few that works (by getting people jobs). If they cut down the bs required courses it would be perfect. I don't know why all high schools don't move programs like these (and carpentry, plumbing etc..) into junior years. There's a "college track" in high schools and should be a "trades track". But parents would throw a fit if little Johnny was told his best future prospects was plumbing.

elektronic said:   

You can take it out of your 401k for qualified higher education expenses with no penalty. Given she won't be working enough to come up with $4000/year in tuition, I'm guessing she'll owe no taxes either.

She may even get a tax credit for half tuition via the American Opportunity Tax Credit:

http://www.irs.gov/uac/American-Opportunity-Tax-Credit

The tax credit is good to know. If she were to take out a 401k loan and then quit her job, wouldn't the loan most likely be considered defaulted? Seems like a loan might not be an option, but rather just pulling the money out for education purposes with no way to pay it back.

scoogie said:   elektronic said:   

You can take it out of your 401k for qualified higher education expenses with no penalty. Given she won't be working enough to come up with $4000/year in tuition, I'm guessing she'll owe no taxes either.

She may even get a tax credit for half tuition via the American Opportunity Tax Credit:

http://www.irs.gov/uac/American-Opportunity-Tax-Credit


The tax credit is good to know. If she were to take out a 401k loan and then quit her job, wouldn't the loan most likely be considered defaulted? Seems like a loan might not be an option, but rather just pulling the money out for education purposes with no way to pay it back.

It wouldn't be defaulted but it would be due immediately upon leaving the company. Definitely risky.

http://www.instantdegrees.com/

You could save her a lot of money and time....

High dropout rates are usually a mixture of failure by the teacher and failure by the student.

I put equal blame on any school that has a high dropout rate and wouldn't touch one with a ten foot pole.

We need to stop supporting the scam that is modern day colleges, high drop out rates, jacked up tuition, and very little real life teaching going on.

That aside,why can't she go to a school that's in the city she works or the city she lives?

I mean, if you're going to be suckered into the belief of college, it might as well be with loans instead of financing it yourself.

Worst comes to worst you can just declare bankruptcy.... Oh wait, the government that is loaning the money made it virtually impossible to declare bankruptcty on student loans, and suddenly the tuition skyrocketed.
Have her read http://www.cracked.com/blog/the-question-youre-not-asking-should-you-go-to-college/ and then make her understand WHY so many people are dropping out of nursing programs.

Early distributions from a 401k are not exempt from the 10% penalty if you use the money for higher education. That exemption from the penalty applies only to traditional IRA's.

Also, tax credits for higher education are available only for expenses to attend an institution of higher education that is eligible to participate in a student aid program administered by the U.S. Department of Education. Whether this institution qualifies would have to be determined by the IRS.

saladdin said:   I don't know why all high schools don't move programs like these (and carpentry, plumbing etc..) into junior years. There's a "college track" in high schools and should be a "trades track". But parents would throw a fit if little Johnny was told his best future prospects was plumbing.

As a graduate that took advantage of the "trades track" in high school, I can say it has served me very well. Decades later employers still cite that education as a significant reason for hiring me. It certainly isn't my only qualification, but it sits very well next to my college degree, industrial certifications, and personal accomplishments.

For parents that might be reading this I want to underscore saladdin's point. Choosing the "trade track" isn't a dead end. It truly is viable alternative or even additive career path, as it was for me.

Sounds like her options for financial assistance to attended this school is going to be a personal loan, home equity loan, or pull from her 401k that will get hit with income tax and a 10% penalty.
If she can afford a monthly payment while in school, it seems like it would be best to not even think about pulling from 401k.

ninasgramma said:   Early distributions from a 401k are not exempt from the 10% penalty if you use the money for higher education. That exemption from the penalty applies only to traditional IRA's.

Also, tax credits for higher education are available only for expenses to attend an institution of higher education that is eligible to participate in a student aid program administered by the U.S. Department of Education. Whether this institution qualifies would have to be determined by the IRS.


You are correct, the MIL would have to rollover the 401(k) to an IRA first.

The school participates in the Pell Grant program - OP, the IRS says call the school for whether it is eligible:

http://www.irs.gov/publications/p970/ch09.html

Ignore my prior link to IRS.gov, that site incorrectly states any accredited institution qualifies.

Squeezer99 said:   Is it Virginia College?

My wife went to two different nursing schools in VA, neither of which would do student loans. I had never heard of such a case, but apparently it's not that uncommon in that field.

This not a case of the school not accepting federal government student loans. This is case of the school not being a qualifying school for federal government student loans. As has been stated this is most likely because their default rate is too high. This IS a huge red flag.

Is the high deafault rate purely the poor personal performance of a significant number of students, is the school so substandard that even motivated graduates can not learn the require material, does the schools graduates have a poor reputation. etc... All of these could severly impact a graduates ability to obtain meaningful employment and this be able to pay off the loans.

This makes going to that school a poor investment. The entire purpose is to obtain employment in a field to raise living standards. If the likelyhood of employment after the expenditure of significant money, effort and time away from family is low, this could be a financial disaster instead.

Yeah, I think this is right on topic

No jobs for nursing grads



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