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College Expenses - How to help?

Discussion in 'TUG Lounge' started by tiel, Mar 12, 2019.

  1. tiel

    tiel TUG Member

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    Our goddaughter Abby is a senior in high school and has applied to a number of colleges. Unfortunately, neither she nor her family have the financial resources to support her in her pursuit of a degree. Her mother (custodial parent) is disabled, with her sole income being Social Security; she does have some money in an IRA, but it is woefully insufficient to support her in her later years. The mother rents her home, and has a fair amount of debt she is gradually repaying. Her father works, but is not making a lot of money, and has clearly stated he will not support her in any way with her higher education.

    Abby recently received a financial aid package from a school she would like to attend, though she is not ready to commit to that school. The good news with this offer is that it covers 100% of the Cost of Attending the school, with apparent recognition she has no resources. The bad news is, more than half of the offer is in the form of a a Direct Parent PLUS Loan. This loan requires a credit check, and it is unlikely her mother’s credit rating will be high enough to qualify for the loan on her own, though it is possible to get the loan with a co-signer. Under the terms of the loan, interest begins to accrue immediately at a rate of about 7%. There is no way the mother can afford the monthly payments, even if she could get the loan.

    We have been a part of Abby’s life since she was born, and would like to help her with her education expenses, with limitations. We are unsure how to do this, however, and not negatively affect the level of financial aid she qualifies for/receives, if that makes any sense. Assuming this aid offer is representative of offers she will receive from other schools, we have considered being co-signers on a PLUS loan, but don’t know what impact that might have on determining her need, and her mother might not allow that.

    Does anyone have any ideas how we could best help Abby with her expenses?
     
  2. SmithOp

    SmithOp TUG Member

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    You can pay tuition directly to the college to avoid gift tax so it would not be included in the family finances amount.

    Have they completed a FAFSA application, or used the calculator to see how much aid might be available?


    Sent from my iPad using Tapatalk Pro
     
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  3. bogey21

    bogey21 TUG Member

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    To avoid this situation start saving early. I started making monthly contributions to 529s for my Grandkids starting the day they were born. Total is now about $44,000. Hopefully it will be over $100,000 by the time the first of them is ready to start college. It will be a start. I hadn't thought of paying directly to the college and will consider it when the time comes assuming I am still around...

    George
     
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  4. taterhed

    taterhed TUG Member

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    1) Consider this: https://www.investmentnews.com/arti...-loans-and-student-loan-cosigning-just-say-no


    2) You can agree to be an 'endorser'

    Endorser
    Someone who does not have an adverse credit history and agrees to repay the federal student loan if you don't.


    Parent borrowers of a Direct PLUS Loan:

    • Must be the biological or adoptive parent of a dependent undergraduate or the spouse of the parent whose income and assets were reported on the Free Application for Federal Student Aid (FAFSA®), or would be reported if a FAFSA® were filed.
    • Must be a U.S. citizen or eligible non-citizen.
    • Must not be in default on any federal education loans or owe an overpayment on a federal education grant.
    • Must not have an adverse credit history or:
      • must obtain an endorser and complete PLUS Credit Counseling, or
      • document to the satisfaction of the U.S. Department of Education that there are extenuating circumstances related to their adverse credit history and complete PLUS Credit Counseling.
    • And their dependent child:
      • Must be a U.S. citizen or eligible non-citizen.
      • Must not be in default on any federal education loans or owe an overpayment on a federal education grant.
      • Must be enrolled at least half-time at a school that participates in the Direct Loan Program and meet the general eligibility requirements for the Federal Student Aid programs, including filing a FAFSA®.
     
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  5. CalGalTraveler

    CalGalTraveler TUG Member

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    It is great you want to help. It sounds like "with limits" means that you could help but she would still need loans. I do not like the idea of taking on large student loans for a freshman because she may need loans later as a graduate student. Too many graduates and their families are burdened with student debt.

    I know that this is not what she will want to hear, but she could get her GE requirements met at a junior college while living at home. Then she could transfer to a 4 year and only have to pay for the last 2 years. She would probably qualify for the Junior College aid and you could offer to pay for all or part of her last two years. Good incentive too.

    Junior colleges provide an excellent general education at a great price. No need to spend money for the same classes at universities. And no need to burden her and her family with excessive loans.

    No one ever asks "Did you attend all 4 years to a University?" All they ask is: "Where did you graduate?"
     
    Last edited: Mar 12, 2019
  6. am1

    am1 TUG Member

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    Co-signing is a big responsibility. You may be on the hook for all of it or bad feelings will exist if you cut her off. What demands would you put on for cosiginimg? Is going to college her best option? Does she currently work? Take a year off and work full time? Maybe a 2 year jc first?

    Are you okay with skipping classes and going out to the bar/football game etc instead of studying.

    A cash gift each semester may be better.
     
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  7. taterhed

    taterhed TUG Member

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    Work-study programs....
    Jnr Colleges for lower tuition and opportunities for scholarships, additional FA without the big loans.....etc

    If the student can't qualify for school without loans--i.e. a co-signer is needed--it really is a big gamble to attend a high-tuition school on loans....with the potential to leave the bill to someone else.
     
  8. Pathways

    Pathways TUG Member

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    WOW! " Absolutely you can afford these classes, 100%! Just take out a loan for over 50% of what you need to pay us.'

    Can we assume this @%$& financial aid person moonlights as a timeshare salesperson?
     
    Last edited: Mar 12, 2019
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  9. taterhed

    taterhed TUG Member

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    In fairness, this the reality of the modern undergraduate financial aid system.

    In the past, ANY college graduate was in high demand (most) and the return on investment was quick. Now, many college graduates are finding it difficult to find meaningful employment (read 'good paying jobs') and the ROI or time to payback the loans after college is running up to and beyond 10 years....

    Local/Jr/State colleges for basic educational courses (1 or 2 years)
    Military scholarships or tuition assistance
    Scholarships (public and private)
    Grants
    Tuition reduction based on income
    In-state tuition or reciprocal tuition rates
    Corporate sponsorship/internship
    Tuition forgiveness.

    Lots of ways to reduce the pain.....
     
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  10. Pathways

    Pathways TUG Member

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    As a parent of 4 ranging from 22-28- the last of which just finished their college/grad school, I could write a book on paying for your degree. Rob's list is excellent.

    You have plenty of suggestions here so I won't repeat.

    My only push would be: NO student loans for the first two years. When a student is no longer attending, those payments start. If they didn't complete a degree, loan payments will suck the life from them

    If they need money, make sure it is a cash contribution, no strings attached.
     
  11. vacationhopeful

    vacationhopeful TUG Review Crew: Rookie TUG Member

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    I taught for 6+ years part time at a local community college ... people do get fulltime jobs and attend college via their company's re-payment plan. As a instructor, I had a very good reputation .. that even DAY students decided to take my class over the college's fulltime instructors.

    She should find a REAL job with a tuition re-payment plan ... IMHO, college it too expensive to be a 'fun' place anymore. My 3.5 years of college (living on campus) costs equal less than my first fulltime job's salary. THAT is NOT TODAY ... today, it is more likely 3 years of starting salary for the cost of 2 semesters living on campus.

    And yes, I had serious goals in college ... doing 2 majors (math & computer science) and a minor (accounting) between the 3 colleges. And my 4 siblings all attended college too ... Princeton, Duke and Lehigh plus UCLA. I attended Stetson U, Rutgers U, Glassboro (now Rowan U) and Lehigh (MBA .. graduating with my graduate degree together my younger sister got her undergraduate engineering degree).

    Most colleges DID NOT require admission for summer classes (back in the old days) up or part time up to 12 or 15 credit hours. Check the rules TODAY at colleges in your area.

    And my experience with the part time students in the community college ... they did get good jobs with a two year degree. They had the maturity, work history and KNEW why they wanted to continue classwork into a higher degree than an associate.
     
  12. bbodb1

    bbodb1 TUG Review Crew: Veteran TUG Member

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    As a father of three, let me second what Rob said above - might Abby consider the military?

    Depending on what her longer term goals are, she might be able to find a direct route toward experience in her chosen field of interest.
    And, at the same time, open a door that will pay for her education AND offer a the possibility of a steady job throughout her working life.

    Without any prodding from us (their parents) all three of our kids enlisted in various branches of the military and have pretty much avoided any considerable college bills.
     
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  13. CalGalTraveler

    CalGalTraveler TUG Member

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    LoL This seems to be the mantra of most schools these days. When privates give fin aid, it usually brings $70k/year down to $35k /year which is what it costs to go to Univ of Calif. with in-state tuition. That is still a lot of money for most families - especially if you have multiple students.

    Very few students get a full ride with no loans unless they are a superior athlete, or cured cancer in high school.
     
  14. melissy123

    melissy123 TUG Member

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    Some of the elite private schools, like Swarthmore, Clairemont colleges, most of the Ivies, will not require the student or parent to take loans. They have big enough endowments that allow them to give a free ride (AKA: grants, not loans) to students with demonstrated financial need. Some of the UC's, like UCLA and Cal, do the same. They do want the student to take the max allowed federal student loan which is interest free during college and is capped around $5000 for a senior (less for a freshman).
     
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  15. mpumilia

    mpumilia TUG Review Crew: Veteran TUG Member

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    One thing I do know is you should not cosign a loan with anyone ever.

    The military is one option but certainly not for everyone.

    She could go to community college for the first 2 years. Maybe work a part-time or even full time job while she does. Live at home.

    After that- she should stick with an in state college as well. Maybe there is one nearby so she could continue to live at home and not have the room and board expenses.

    Unfortunately, it is hard to find an employer who offers tuition reimbursement anymore, but if she can that would be great.

    That said- why not make a tuition payment directly to the school? Or- contribute to a 529 plan on her behalf? That will help with your taxes (check with the plan you decide to use. In NYS- where I live- my mom did this for our son and she got a tax deduction) and help her out with tuition as well.
     
  16. VacationForever

    VacationForever Tug Review Crew: Rookie TUG Member

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    A few ways to pay for tuition including financial help from you if you are in the position to help.
    - Pay for the tuition directly and you may even be able to get it as a tax deduction for it, depending on your own income level.
    - Gift the god daughter $15K a year towards tuition as it is within the legal limit of not needing to report it.
    - Have her work full time during school holidays and part time during term time.

    I fully supported my son through his first Bachelor's degree and did not expect him to work. He has a learning disability, aka Autism Spectrum Disorder. He did work part-time during the winter break at our favorite Japanese restaurant as a busboy but did not make much. He was enrolled in all summer semesters so he could not work then. I now also fully support him for his second Bachelor's degree and hope that he will finish by end of this year and get a job in his field by early next year. As a parent, seeing one's child succeed in life is the ultimate goal.
     
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  17. DrQ

    DrQ TUG Member

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    The question is what does she want to study? If she is into STEM, there are probably companies out there willing to fund a work/study internship. Couple that with Community College for the first two years and living at home, you can drastically cut the cost of a degree.

    But, that's not the vision of independence many young people seek after High School.
     
  18. mpumilia

    mpumilia TUG Review Crew: Veteran TUG Member

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    We -and some help from my parents as well- paid for our son's college tuition and room and board. BUT- we did not give him and spending money, nor did we pay for his cell phone usage or gas for the car we let him use. So- he worked part-time the whole time he was in college and also on his breaks and during the summer.
     
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  19. bogey21

    bogey21 TUG Member

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    IMO ongoing cash support is the way I plan to go. That way I can limit my support to what I can afford and can cut off my support if everything starts going South. I can't imagine how I would feel paying off someone else's loan if/when things don't work out for whatever reason...

    George
     
    Last edited: Mar 12, 2019
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  20. vacationhopeful

    vacationhopeful TUG Review Crew: Rookie TUG Member

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    I have 2 nieces and 3 nephews. Growing up a child is a difficult task and EVERY kid is very different. The parents of these 5 kids seem to 'send' me each child at least ONCE before age 18. Not for a day or two, but a week or longer. It started with the 4yo ADHA boy for 8+ years of summer weeks and went up to the 16yo genius who was in college. It really does take a 'village' to raise a child.

    The 16yo girl who graduate HS is now a shrink .. and I am still her favorite aunt. The 4yo ADHA is now attending community college. The boy on "life support" at age 12 due to the flu, is now an engineer with the Department of Defense (he was afraid of his shadow). No, I do NOT run a boot camp .. I do my normal stuff .. work or play. The 4 yo loved working with my construction guys for each long 40+ hour work week and then started always helping his father with his projects ... but it convinced his mother, he was NOT a special needs child (as in mentally slow or non-verbal) ... or as I told another sister, "he is YOUR father re-incarnated." And him being mostly non-verbal .. just follow his eyes. He really was thinking and plotting his next moves ... he just had little desire to discuss anything (like our father, the grandfather that he NEVER met).

    PS My favorite respond to my youngest nephew's requests was the single word "NO." He would then start an ONE sided discourse on "why NO .. because of this or that?" NO is a great answer to ANYONE who is trying to 'play' you .. it eventually closes down their discussion but could show you their thought process. Oh, he did learn, that NO was not a start but END of the conversation for a while.
     
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  21. Janann

    Janann TUG Review Crew: Veteran TUG Member

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    Or have stellar (top 1%) standardized test scores and a high GPA. There are a number of schools that literally pay for test scores.
     
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  22. Janann

    Janann TUG Review Crew: Veteran TUG Member

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    My best suggestion is to ask your question on College Confidential:
    https://talk.collegeconfidential.com/financial-aid-scholarships/

    Mention that you are not trying to change the student's college decision; you just want to know what the best way is to provide partial funding without having a negative impact on the financial aid package.

    Whatever you do, don't co-sign for a loan. You could end up making payments for years, long after the student has settled into a low-paying, non-degreed job that is unrelated to her college major.
     
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  23. jbiza

    jbiza TUG Review Crew: Expert TUG Member

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    It´s tough to know that many deserving, hard working students do not have the financial resources to attend college without getting into major debt :shrug: .

    Particularly when college admission/financial scandals go on at the highest levels (brings to mind to those darn timeshare scams :doh:).

    This is an excerpt (below) from a major news story, ¨Operation Varsity Blues,¨ revealed TODAY, on the largest admissions cheating scandal prosecuted EVER!

    Sheesh :ponder:

    College Admissions Scandal: Actresses, Business Leaders and Other Wealthy Parents Charged

    ....“The parents are the prime movers of this fraud,” Andrew E. Lelling, the United States attorney for the District of Massachusetts, said Tuesday during a news conference. Mr. Lelling said that those parents used their wealth to create a separate and unfair admissions process for their children.

    “The real victims in this case are the hardworking students” who were displaced in the admissions process by “far less qualified students and their families who simply bought their way in,” Mr. Lelling said.

    At the center of the sweeping financial crime and fraud case was William Singer, the founder of a college preparatory business called the Edge College & Career Network, also known as The Key.

    The authorities said Mr. Singer used The Key and its nonprofit arm, Key Worldwide Foundation, which is based in Newport Beach, Calif., to help students cheat on their standardized tests, and to pay bribes to the coaches who could get them into college with fake athletic credentials.
     
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  24. Tia

    Tia TUG Member

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    I know someone over 70 yo is still paying her own grown 4 children's college loans she cosigned for, don't do it. I'd almost bet they don't know she is still paying, but if they do then :ponder:
     
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  25. DrQ

    DrQ TUG Member

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    Especially when they decide to pursue something like a Masters of Fine Arts which probably has very low market return.
     

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