Student loan for DD, parents with bad credit

[ssailor]

Our DD has just graduated from high school, no credit.

We (her parents) have bad credit (score around 550). We have read the other post and are wondering what to do. DD needs about 20K after grants etc. We applied for the Direct PLUS loan and were turned down. Since we were turned down the school will give our DD 4k more in assistance, if we go through an alternative loan source. Is there an alternative loan source that will approve us? Doubt it. OR if we can get an endorser for the PLUS loan (20K amount)they might approve it. What Do We Do?

[LynnInMN]

Our DD has just graduated from high school, no credit. 

We (her parents) have bad credit (score around 550).  We have read the other post and are wondering what to do.  DD needs about 20K after grants etc.

What is her total cost of attendance???

We applied for the Direct PLUS loan and were turned down.  Since we were turned down the school will give our DD 4k more in assistance, if we go through an alternative loan source.

If the parent is turned down for a Plus Loan, the student then gets an additional Unsub Loan thru the Feds...no alternative source is required for this portion. 

 

Is there an alternative loan source that will approve us? Doubt it. OR if we can get an endorser for the PLUS loan (20K amount)they might approve it.

From what the regs state, only a parent or guardian can legally apply for the Plus Loan.  If you have someone else with good credit that will co-sign for an alternative loan or private loan???

What Do We Do?

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[ssailor]

What is her total cost of attendance??? $23,000, but received an $2700 in a Federal Sub. loan so now looking for $20,300

 

If the parent is turned down for a Plus Loan, the student then gets an additional Unsub Loan thru the Feds...no alternative source is required for this portion. Yes, she will receive an additional $4,000 for the year, so now looking for $16,300 if we accept this...

 

From what the regs state, only a parent or guardian can legally apply for the Plus Loan. If you have someone else with good credit that will co-sign for an alternative loan or private loan??? When I said we (it's me and her step-father), her biological father said he might consider co-signing...

 

So should I see if he (the ex) will commit to endorsing the PLUS loan for $20,300 or try to find an alternative loan source for $16,300. From what I also understand is that with the PLUS loan repayment starts approx. 60 days from the last disbursement date (approx. March 2006) and with an alternative loan repayment will not start until 6 months after she graduates (approx. January 2011) Will she/we be able to make the payments on approx. 80K plus interest? SCARY

[LynnInMN]

Did she qualify for any pell grants??? Any other loans?? Has the school been able to offer any advise??

 

 

Is the $20k for tuition and dorm fees?? Or just tuitionl??

 

A lot of students here will go to a junior or community college locally to get the mundane general education credits out of the way before transferring to the University of Minnesota. It cann be a huge cost savings. Do you have this option??

[ssailor]

Did not qualify for any other assistance....no other assistance offered from school, counselor not very helpful in my opinion.

 

20k yes for tuition and dorm fees.

 

She wants to go out of state to a wonderful school. She researched it, applied, got accepted the whole nine yards she did and it breaks my heart to be in this situation and not able to help her. It's not fair to her to get great grades and work so hard for so long and then tell her "why not go to a community college etc..... " She wants to whole college life, the education, dorm living, rushing for a sorority, sports, friends everything and is willing to work during college to pay for it. She always has kept "her plate full" and wants to become a doctor - physical therapy (DPT)...I just have to find this money to get her there and I only have until the 28th of this month.

[LynnInMN]

Has she applied for every scholarship that she can qualify for? Often the school's website will have a listing as to what is available.

 

Were their any exemptions or change of income in your household from last year to this which could change financial aid report?? Loss of job, natural disaster?

[snowpuppy]

Have you told the fin aid office the same thing you told us here of DD's situation? Are you close enough to visit the campus & go to the fin aid office in person? Ask for the fin aid director or their scholarship coordinator and explain the situation. Counselors are not the top of the heap. You need to find someone who can loosen the purse strings.

 

Do they have any scholarships she qualifies for? Does she have any 'need' other than her sub loan? If so, ask the school if she can have a Perkins loan. It is 5% interest and subsidized. I would also ask about any dorm/housing grants that may be available.

 

Is the school asking for a deposit/committment by the end of the month, or the full tuition/pmt due?

 

Don't give up until you give the school the full court press

[ssailor]

Has she applied for every scholarship that she can qualify for? Often the school's website will have a listing as to what is available. She is still applying for scholarships to this date but not many are offered by the school to an out of state student.

 

Were their any exemptions or change of income in your household from last year to this which could change financial aid report?? Loss of job, natural disaster?

No, sorry?

 

Have you told the fin aid office the same thing you told us here of DD's situation? Are you close enough to visit the campus & go to the fin aid office in person? Ask for the fin aid director or their scholarship coordinator and explain the situation. Counselors are not the top of the heap. You need to find someone who can loosen the purse strings. I have not gone into this much detail w/the school, 8 hours away from the school, I guess I can try to talk to the financial aid director and see if there is anything that can be done.

 

Do they have any scholarships she qualifies for? Does she have any 'need' other than her sub loan? If so, ask the school if she can have a Perkins loan. It is 5% interest and subsidized. I would also ask about any dorm/housing grants that may be available other scholarships, none that I know of. We completed a FASFA form and she did not qualify for a Perkins loan, our EFC was 12k (I'd like to know how they came up with that #). I will ask about dorm/housing grants, never heard of them before.

 

Is the school asking for a deposit/committment by the end of the month, or the full tuition/pmt due? The 1st of three payments are due...at $16K I would have to pay approx $5k on the 28, then again in August and the last in September. $5k might as well be 16k

 

Thanks LynnInMN and snowpuppy, I'm learning so much

[LynnInMN]

Was the FAFSA filled out correctly?? If you think your EFC is high, question it.

 

 

Also...I have seen cases where the "step" parents income is left out of the loop and FA is based on the custodial parent and biological parent. A friend of mine did it this way...step father was already paying for 2 kids to go to college that he wasnt able to take as dependants. With the bio dads income being way less than the step dads, she qualified for much more aid.

[TxQuiltGirl]

I think the question needs to be asked, so please don't misunderstand. But with the problems you're having getting financial aid, does your daughter NEED to go to a school 8 hrs away from you? Is there not a community college or something where she can live at home and go to school?

[ssailor]

I have gone over our FAFSA and it looks correct...I only included my and my husbands (step-fathers)income since I have full custody and she lives with us. Bio dad does make less than step-dad though. If I do questioned the EFC should I speak to the financial aid director at the school about it?

 

No DD does not have to go to big school 8 hours away, but DD should not be punished for my bad credit for my mistakes. I can't tell her, well DD now that you have finished high school with a 3.7 GPA, know what you want out of life (to become a doctor), have done an internship and was hired on as an aide, and have always dreamed of going to a big University, living in a dorm, etc you can't becuars your mom was stupid, screwed up her credit and can only afford to get you into Community College. If she could get the loan on her own, she would and she would work her butt off while going to school to pay for it. I guess through my mistakes I raised a "go getter".

[snowpuppy]

If your efc was $12k and your costs are $20k, DD does have some 'need' so Perkins (which she can get on her own) might not be out of the question. If your PLUS was denied, she should have the additional $4k on top of the $2625.

 

I would definately speak with or make an appt with the Director of fin aid. A student's value in her contribution to the school is more than the FAFSA or the gpa. Ask if scholarships go unclaimed (the student awarded chose not to attend), will they consider DD to be next in line? Many incoming freshman 'shop' schools and financial aid award letters. Has she declared her major or been accepted into a particular college (such as college of science)? If she has, contact the Dean's secretary in that college and ask if there are scholarships DD has not been offered. The Dean's secretary always knows more than the Dean.

 

As far as the bill that's due, will they subtract her aid from what is due so that you only have to pay the balance? $10k/semester minus her aid for that semester?

 

Don't give up till you get what you came for.

[coffee_addict]

not sure where you are, but in the Western US there's the WICHE/(& some other odd scholarship) that allows out of state residents w/ "good" GPAs, etc to qualify for instate tuition...OTOH, one of my class-mates in undergrad was from out of state & had a non-resident tuition waiver scholarship & this was at a school that accepts your ability to pay before everything else... maybe you could ask about something like that

[TxQuiltGirl]

I have gone over our FAFSA and it looks correct...I only included my and my husbands (step-fathers)income since I have full custody and she lives with us.  Bio dad does make less than step-dad though. If I do questioned the EFC should I speak to the financial aid director at the school about it?

 

No DD does not have to go to big school 8 hours away, but DD should not be punished for my bad credit for my mistakes.  I can't tell her, well DD now that you have finished high school with a 3.7 GPA, know what you want out of life (to become a doctor), have done an internship and was hired on as an aide, and have always dreamed of going to a big University, living in a dorm, etc you can't becuars your mom was stupid, screwed up her credit and can only afford to get you into Community College.  If she could get the loan on her own, she would and she would work her butt off while going to school to pay for it.  I guess through my mistakes I raised a "go getter".

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No one said that she should give up her dreams, but there's nothing wrong with doing it differently than you anticipated. I'm sorry if that offends you, but if I were as driven as your daughter sounds, I would do whatever I could to get to the end goal - which is to be a doctor, if I read your post correctly.

 

There's no reason why she can't qualify for the loans she will need on her own, if she takes a little time to get there. Would going to a community college for a year totally derail her goal of becoming a doctor? During that time, she might be able to work and save a little money, become financially independent (as far as not being claimed on your tax refund), and build up some credit (through responsible use) so she can qualify for her own loans. Also, she would be able to qualify for far more in grants.

 

There are many roads to the end of the journey ... not only one! She just needs to find the one that is best for her.

[ssailor]

Thanks TxQuiltGirl, but the University life is where she wants to be so I need to focus on getting her there.

 

I believe her bio father might endorse the PLUS loan papers, hopefully he has the credit to get it approved (sz he does) anyway in that case can I go into my FASFA and change the information from stepfather to bio father? In hopes it might get DD some more money? Also, her bio father is currently getting disability social security checks...can this help DD with funding?

 

Like I said getting information from our school counselor is like pulling teeth, in my call to her yeaterday I did get DD on the "waiting list" for any leftover grant money not used by other students that decided not to go to school. Shouldn't the counselor knowing my situation have done this automatically and told me? Does anyone know how this waiting list works?

[snowpuppy]

Don't change your initial FAFSA info, it was reported correctly as DD lives with you & step dad and you have provided her support for the last year. Her dad can always co-sign a PLUS loan with you or with step dad.

 

If you are on a 'waiting list' for discretionary funds, the school will wait to see which students are not attending for fall and have been awarded those discretionary funds. The school will do a 'sweep' of sorts and pull back those funds after the start of school, or when notified by a student that they are not attending and declining their award. Those funds will then be available to other students.

 

I am so glad you didn't give up on DD's dream !

[ssailor]

Thanks snowpuppy, keep your fingers cross for DD.

 

As for alternative loans...any one company better than the other? What CB do they pull and what score are they looking for? Are there any I do not want to even consider?

[belleama]

I'm really not thinking that your FASFA was filled out correctly. Usually Unsub loans are awarded before sub loans. She should be able to get a pell grant, a sub loan and an unsub loan. She also should be able to qualify for other eduational loans even without credit because the money goes to the school not to her she just needs to keep her grades up. Also If she had a job why can't she say she is an independant student and/or work part time while going to school? Are you sure she didn't apply for any scholorships or anything that she just hasn't heard back from yet? If she was really intending to go to a school that costs so much I'd be surprised if she didn't apply for somethings on her own and just forgot or hadn't heard back yet.

 

Good Luck

[snowpuppy]

Check to see if Big University is a Direct Lending school or uses lenders such as SallieMae.

 

My only exp with PLUS is SallieMae, they pull EQ. DS is transfering to a Direct Lending school in fall and when I spoke with Direct Lending, they said they can pull from any of the 3 cra's.

 

There are specific rules for PLUS approvals, they do not look at scores at all. If you have been denied, ask them what needs to be paid, cleaned up, etc. Bk's need to be discharged 3 years. I am not sure what they look for in a co-signer.

[LynnInMN]

Also If she had a job why can't she say she is an independant student and/or work part time while going to school?

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FYI..for student loan purposes, a student is considered "dependant" and parental income is taking into account until age 23 regardless of students independant financial status. To be declared independant before age 23 you must be on orphan or ward of the court;have a dependant who you supposrt or be a Veteran. There are other more complicated overrides, such as being legal empancipated. A parents unwillingness to support is not grounds for an override.

[belleama]

I have been working full time since age 17 (it was like a month before my 18th birthday ), living on my own since age 19 and have never included my parents on my FASFA forms. I think maybe once the school asked for a copy of my lease and that is it. So its not a gaurantee just because you are under 23 that you can't be listed as an independant student. You need to demonstrate that you really are independant. I was I worked and I paid rent. If the daughter did not live on campus (think off campus roomie) and worked she could be considered an independant student because she is.

Edited July 8, 2005 by belleama

[belleama]

Also If she had a job why can't she say she is an independant student and/or work part time while going to school?

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FYI..for student loan purposes, a student is considered "dependant" and parental income is taking into account until age 23 regardless of students independant financial status. To be declared independant before age 23 you must be on orphan or ward of the court;have a dependant who you supposrt or be a Veteran. There are other more complicated overrides, such as being legal empancipated. A parents unwillingness to support is not grounds for an override.

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How would you input their financials if you don't have them?

[angeleyeskkhr]

Also If she had a job why can't she say she is an independant student and/or work part time while going to school?

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FYI..for student loan purposes, a student is considered "dependant" and parental income is taking into account until age 23 regardless of students independant financial status. To be declared independant before age 23 you must be on orphan or ward of the court;have a dependant who you supposrt or be a Veteran. There are other more complicated overrides, such as being legal empancipated. A parents unwillingness to support is not grounds for an override.

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How would you input their financials if you don't have them?

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I think what she means is that just because your parents don't want to/can't pay for college, doesn't mean you can just not use their money..I've actually known people who weren't even on speaking terms with their parents but couldn't be declared independent....I forget what happened..they *might* have gotten an exemption, but I think they eventually had to get their parents W2's/Income tax paperwork..

[LynnInMN]

I have been working full time since age 17 (it was like a month before my 18th birthday ), living on my own since age 19 and have never included my parents on my FASFA forms. I think maybe once the school asked for a copy of my lease and that is it. So its not a gaurantee just because you are under 23 that you can't be listed as an independant student. You need to demonstrate that you really are independant. I was I worked and I paid rent. If the daughter did not live on campus (think off campus roomie) and worked she could be considered an independant student because she is.

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Unfortunately your school is not following the regs. Falsifying independant status can cause a school to be closed...it happen in several private school in Calfornia while I was collecting. A student must either be legally emancipated or there must be other extenuating factors such as an abusive parental relationship that can be documented by a third party. I had one student who qualfied as independant because her mother was murdered by her father.

 

Dependent vs. Independent Student

The federal government establishes your status as a dependent or

independent student based on the facts of your relationship with your

parents, not on your wish to be financially independent of them or on

the extent of their commitment to finance your college education.

You are considered an independent student if:

✓ You are 24 years of age before January 1 of the award year.

✓ You are married as of the day you completed the FAFSA.

✓ You are working on a degree beyond a bachelor’s degree.

✓ You have children who receive more than half of their support from

you, or you have dependents (other than your children or spouse)

that live with you and receive more than half of their support from

you. Generally speaking, if the child meets the 50% support test, the

child should be claimed as an exemption on your income tax return.

✓ You are an orphan or ward of the court.

✓ You are a veteran of the U.S. Armed Forces.

If you do not meet any of these requirements, then you are

automatically a dependent student.

Financial aid administrators do have the authority to override a student’s

default dependency determination, for unusual circumstances and with

proper documentation. A parent refusing to pay does not constitute an

unusual circumstance. Visit the financial aid office and schedule an

appointment to talk with a financial aid administrator, who can evaluate your situation and advise you of your options.

[belleama]

I had not had ANY contact with either parent since I was 16 years old and have only recently began relationships with them. So are you saying that I'd have to hunt down my parents so that I can qualify for financial aid? That doesn't even make any sense.

 

I've got a question at age 18 aren't you already considered "emancipated?" Since you are now legally able to enter into formal contracts.

 

Rules are meant to be broken. I do what I need to do to get what I need and want. Is she is really that much of a go getter she'll figure out how to make this happen by any means necessary. Geez, I wish I had parents that were willing to do what her parents are trying to do for her.