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Looking for advice on financing my daughter's college education, specifically what order should we use each option.

Cost of attendance: 25000 per year
Transferring to this college as sophomore
Fin-aid: 6500 federal unsubsidized loan + rest in PLUS loans

We have small 529 account with 7500 in it. Plus we can probably pay around 5000 per year out of current income for her education. Rest will need to be loans or from any part time employment she can secure.

Federal unsubsidized loan rate is 4.45% + 1.066% onetime fee

PLUS loan rate 7.0 + around 4.27% fee

I also looked at private loans such as Alliant CU loan at 3.76% variable.

We are thinking about taking the unsubsidized loan and declining the PLUS loan. Finance the rest with 529 plan, current income and Alliant loan as necessary in that order. Does it sound like a good plan? Any advice is appreciated.

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As I mentioned she is going to do BS in public health at UT Austin. She is not sure what she wants to do careerwise but ... (more)

fatw9 (Jul. 30, 2017 @ 4:22a) |

Ugh, I hate reading stuff like this.

meade18 (Jul. 31, 2017 @ 11:26a) |

It needs to be said, Plus loans are taken out in the parents name, not the student's. They are usually not discharged in... (more)

soundtechie (Jul. 31, 2017 @ 11:53a) |

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Is she eligible for any academic scholarships? If not, I would seriously consider sending her to such an expensive school as a sophomore. Could she complete her A.A. at a community college? Likely tuition at a CC is less than half the cost of a university, and she could live at home. Once she has her A.A., she can transfer to a university. Her bachelor degree will be the same whether she attended the university for 2 or 4 years (or 3).

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Spend down the 529 = $7500
Contribute out of pocket = $5000
unsubsidized fed loan = $6500
Student works part time during school year and full time summer = $6000

total $25,000

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Also, won't you qualify for the AOTC? Thats a $2500 credit. Could effectively increase your out of pocket contribution to $7500 net.

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If you have a state tax benefit for 529 contributions, be sure to cycle that $5,000 out of current income through the 529.  Most plans don't have a minimum period for parking the funds; you could literally make a contribution one day and have it distributed back to the university the next, and realize the entire state tax benefit for the year.
 

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cherry3m said:   Is she eligible for any academic scholarships? If not, I would seriously consider sending her to such an expensive school as a sophomore. Could she complete her A.A. at a community college? Likely tuition at a CC is less than half the cost of a university, and she could live at home. Once she has her A.A., she can transfer to a university. Her bachelor degree will be the same whether she attended the university for 2 or 4 years (or 3).
  This is exactly what I did and my two children are doing the same thing.  Plus the 2 yrs at the community college will give them idea as to what they really want to study/what their interests are.

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Whichever loan-based option you utilize, have her work and contribute. Research suggests that students who work 15 - 20 hours/week during school generally do better than their peers (higher grades, more likely to persist). Work full-time summers if possible (I know for some degrees, interning at least one summer is essential to employment after graduation). Plus, when she graduates, she no only has a college degree but also job experience (I'm often surprised at how many students get through college with no work experience whatsoever). And she has skin in the game.

Also, I'm assuming $25K is tuition+housing. Are there ways to bring down the Housing cost (live off-campus, more roommates, smaller meal plan, etc.) either now or after the first year? If far away from home, living on can be nice, especially the first year, but then she should be able to have a better feel for what works off campus.

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It's a somewhat of a troll statement, but if that 25k does not include food and housing its time to find a different school. Even more-so if she is going to school for an underwater basket-weaving degree.

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kmsandrbs said:   ... Research suggests that students who work 15 - 20 hours/week during school generally do better than their peers (higher grades, more likely to persist)...How did that research account for causation? I.e., those who work 15-20 hours/week may do so because they have more free time, because they are better (smarter and more persistent) than their peers.

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kmsandrbs said:   Also, I'm assuming $25K is tuition+housing. 
  You probably can find that low in the west, and mid-west or south. Here in PA, the cost to go to Pitt is about 20k tuition (depending on your major) + 1k fees= 21k + books. If kids want to stay on campus, that's another 12k. 

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scripta said:   
kmsandrbs said:   ... Research suggests that students who work 15 - 20 hours/week during school generally do better than their peers (higher grades, more likely to persist)...
How did that research account for causation? I.e., those who work 15-20 hours/week may do so because they have more free time, because they are better (smarter and more persistent) than their peers.

Here's one study:  https://www.bls.gov/ore/abstract/ec/ec080020.htm

 

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Get a student loan and don't pay it back. Many 1000s have done that without serious repercussions. Unfortunately I did.

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bopc1996 said:   Get a student loan and don't pay it back. Many 1000s have done that without serious repercussions. Unfortunately I did.
  
Repercussions as in what? Debtors prison? The fact that one's credit score ends up in the crapper is a pretty serious outcome. And the gov't always in the end gets their money as long as you are still breathing.

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dcwilbur said:   scripta said:   kmsandrbs said:   ... Research suggests that students who work 15 - 20 hours/week during school generally do better than their peers (higher grades, more likely to persist)...How did that research account for causation? I.e., those who work 15-20 hours/week may do so because they have more free time, because they are better (smarter and more persistent) than their peers.Here's one study:  https://www.bls.gov/ore/abstract/ec/ec080020.htmAre you sure that's the right study? The summary basically says students work more if they need money, and greater work hours lead to lower GPA, which is the opposite of what kmsandrbs said.

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Thanks for the responses. It is the University of Texas at Austin and 25k is tuition + housing.

Is the federal unsubsidized loan better than private loan from say Alliant? One thing I see is that federal is fixed at 4.xx % where as the Alliant loan is variable at 3.8x . Any other difference between federal and private that we should consider?

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fatw9 said:   Thanks for the responses. It is the University of Texas at Austin and 25k is tuition + housing.

Is the federal unsubsidized loan better than private loan from say Alliant? One thing I see is that federal is fixed at 4.xx % where as the Alliant loan is variable at 3.8x . Any other difference between federal and private that we should consider?

Wow. I did not know UT Austin is that expensive. If she is going for stem degree, that's money well spent. If not, go to a cheaper school.

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scripta said:   
dcwilbur said:   
scripta said:   
kmsandrbs said:   ... Research suggests that students who work 15 - 20 hours/week during school generally do better than their peers (higher grades, more likely to persist)...
How did that research account for causation? I.e., those who work 15-20 hours/week may do so because they have more free time, because they are better (smarter and more persistent) than their peers.

Here's one study:  https://www.bls.gov/ore/abstract/ec/ec080020.htm

Are you sure that's the right study? The summary basically says students work more if they need money, and greater work hours lead to lower GPA, which is the opposite of what kmsandrbs said.

That's my point, although I've heard the same "studies show that working students have better GPAs thing" over and over too.  I think the schools just need the cheap labor.  

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fatw9 said:   Thanks for the responses. It is the University of Texas at Austin and 25k is tuition + housing.

Is the federal unsubsidized loan better than private loan from say Alliant? One thing I see is that federal is fixed at 4.xx % where as the Alliant loan is variable at 3.8x . Any other difference between federal and private that we should consider?

  
Well, the federal program may offer a wider variety of repayment/forgiveness programs. Also, check to see when the payments for the private have to start.
 

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dcwilbur said:   
scripta said:   
dcwilbur said:   
scripta said:   
kmsandrbs said:   ... Research suggests that students who work 15 - 20 hours/week during school generally do better than their peers (higher grades, more likely to persist)...
How did that research account for causation? I.e., those who work 15-20 hours/week may do so because they have more free time, because they are better (smarter and more persistent) than their peers.

Here's one study:  https://www.bls.gov/ore/abstract/ec/ec080020.htm

Are you sure that's the right study? The summary basically says students work more if they need money, and greater work hours lead to lower GPA, which is the opposite of what kmsandrbs said.

That's my point, although I've heard the same "studies show that working students have better GPAs thing" over and over too.  I think the schools just need the cheap labor.  

  I'll check my records. One thing to note is that the research as I recall is that more than 20 hours per wek does have a detrimental effect, which often leads people to the quick statement that working more = worse outcomes.

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You didn't mention Pell Grants, I hope that's factored in...

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delhel said:   fatw9 said:   Thanks for the responses. It is the University of Texas at Austin and 25k is tuition + housing.

Is the federal unsubsidized loan better than private loan from say Alliant? One thing I see is that federal is fixed at 4.xx % where as the Alliant loan is variable at 3.8x . Any other difference between federal and private that we should consider?

Wow. I did not know UT Austin is that expensive. If she is going for stem degree, that's money well spent. If not, go to a cheaper school.



I'm pretty sure that's total cost for room and board in state. Tuition is 10k instate and 35k out of state.

25k total is not expensive. Plus it's a great school.

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fatw9 said:   Thanks for the responses. It is the University of Texas at Austin and 25k is tuition + housing.

Is the federal unsubsidized loan better than private loan from say Alliant? One thing I see is that federal is fixed at 4.xx % where as the Alliant loan is variable at 3.8x . Any other difference between federal and private that we should consider?



I'd take 4.x fixed over 3.8 variable. Interest is likely to go up in the future and the variable loan will then go up.

Also the federal loans have income based repayment terms and forgiveness options that private won't. Maybe you don't need to worry about that but having the option just in case is useful.

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dcwilbur said:   
scripta said:   
dcwilbur said:   
scripta said:   
kmsandrbs said:   ... Research suggests that students who work 15 - 20 hours/week during school generally do better than their peers (higher grades, more likely to persist)...
How did that research account for causation? I.e., those who work 15-20 hours/week may do so because they have more free time, because they are better (smarter and more persistent) than their peers.

Here's one study:  https://www.bls.gov/ore/abstract/ec/ec080020.htm

Are you sure that's the right study? The summary basically says students work more if they need money, and greater work hours lead to lower GPA, which is the opposite of what kmsandrbs said.

That's my point, although I've heard the same "studies show that working students have better GPAs thing" over and over too.  I think the schools just need the cheap labor.  

  Why does the work study is the only option?  My two boys work PT outside of their schools during school year.  I'm limiting them to 20 hrs a week as to not to overload their schedule and interference with their studies.

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As I mentioned she is going to do BS in public health at UT Austin. She is not sure what she wants to do careerwise but this major interested her becaus if the courseS involved - biostatistics, epidemiology, public policy etc. She is also admitted to UT Dallas (Neuroscience major, but changing majors appear easier there) where she can commute, avoiding 10K boarding costs. Is UT Austin worth the extra 10K? It's ranked #46 and admits only 30% of applicants. UT Dallas is ranked #146 and less selective - admits 60% of applicants. She will probably have to go to graduate school either way.

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fatw9 said:   She is not sure what she wants to do career wise... She will probably have to go to graduate school
  
Ugh, I hate reading stuff like this.

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It needs to be said, Plus loans are taken out in the parents name, not the student's. They are usually not discharged in bankruptcy. That means that when your daughter can't or won't Pay them off, you're stuck with them. If you need to declare bankruptcy for other reasons, you will have bad credit and still owe  the loan money. If unpaid, the loan will accrue interest until you are eligible for social security, then the government. Will garnish your social security check.

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