Student loans – Help – Where to start

I have a daughter heading off to college shortly. As part of the original financial aid application she was only approved for a rather small student loan amount. Her mom and I are going to try and help pay as much of the cost as we can, but we still want her to pay a part of the cost. We are a little late getting around to the whole student loan thing and are kind of lost of where to begin. They are just so many different lender options out there. She got a year of college out of the way by doing PSEO last year so that really helps. She has plans to work during the school year as well, but I want her to keep that to a minimum untill she gets settled into the whole college life. Anyone recently been through this process and figured out the best place to get the student loan through.

Hey Fishthumper,
first off, congrats to your daughter and to you for getting her to this point. Paying for college is an insanely difficult discussion. As someone who spent my entire 20’s paying off student loans, I will admit I was completely failed in regards as to how to pay for college. First thing, good job on PSEO, it’s an incredibly valuable resource that can save you a ton of money, I think my 2 years of PSEO saved me over 60k. Second, make sure your daughter is ready for college. If she is wishy washy on her major, or, is anticipating going to a private university for elementary education, maybe have some hard conversations about the reality of saddling over 100k of debt. Third, if you don’t already have one, get a financial advisor that you trust to guide you through this and if they are good, they will be willing to sit down with your daughter and set some realistic goals for work, study, savings, etc. Last, the university admissions office should have information on loan services. If I understand your situation correctly, she doesn’t qualify for government subsidized loans, so you’ll likely be looking at private loans. If possible, stay away from variable rate loans, and make sure you understand loan terms and interest rates and write everything down in a neat and organized way so that you can sit down with her once a year or so and talk about where things are at, what it means for her future and what goals she has achieved or made that year. I can’t stress this enough, learn everything you possibly can about this and make sure she understands the commitment she is making and the impact it will have on her future. It really sucks getting your first job out of college and half of your income goes to paying for a piece of paper. Reach out if you have any other questions.

If she already has a Govt backed student loan sounds like you’ve completed the FAFSA, good that was step 1 and not a lot of flexibility within that, you kind of get what you get. I’d reach out to her college financial aid department for some private loan resources as well as work study opportunities. They should have also sent you some info from their financial aid dept on what if anything thru the school she is eligible for. It is pretty late in the game, but private loans should still be available. If she can get a work study job that is ideal, as she makes some base amount to hand out towels at the gym, or put books back in the library aka free money to study.

My wife and I both had 0 help and went to MIAC schools, so I’m very familiar with a (un)healthy debt load. Whatever she does make sure she starts paying principal AND interest once she graduates. That’s what I did, and while it sucked having $600+/month payment right out of college, mine was paid off in 10 years. My wife didn’t really have anyone explain what she was signing up for, and paid interest only until we met 10 years after college and we will have hers paid off about the time she is 40.

I’ll echo what Luttes stated, if she’s in any way hesitant then take a year and work first.

The admissions office is 100% interested in getting you admitted and getting that chunk of federal cash that you’ll have to pay back. Take everything they say with a big grain of salt.

I finished paying mine off last year at 29yrs old, and that was considered “early”. I think the very best thing you can do for your daughter is to teach her fiscal responsibility and the long-term implications of taking an unforgivable loan. Don’t bank on forgiveness they’ve been promising it for 10+ years it isn’t going to happen. I don’t know what your rates look like these days, mine were 7% on subsidized federal loans. If I knew then what I know now about managing money I never would have gone to college during a recession.

Previous generations whop paid 1% and under for loans (ie the older millenials) have no clue what it’s like paying 5%+ on these loans. Take their input with a grain of salt too.

Sorry it sounds harsh, but it is. Good luck and stay sane!

She is going to The university of Minnesota at Duluth. So no private school by any means. That said yearly cost is still around 25,000 a year. I think she is fairly committed to the college process and feels strongly about her current major choice. Will that Major change, who knows. It sure seems like a lot of kids going to college do end up changing Majors for various reason. As long as they are not too far along in the college process, its doesn’t seem to have too major of a impact on thing overall. Part of me kind of hoped she may have taken a year or so off and just stayed at home and worked, but the other part of me is happy she’s ready to move on get a decent education. Like a Lot of kids these days, I think it will do her some good to get out into world and learn what real life is all about on her own.

Man UMDs cost have gone up. I think with a meal plan and living on campus i was around 18k my first year. the first year is by far the most expensive year. She will get “awarded” higher amounts of loans each year she is there which is kind of a weird way to work it. The jobs on campus are the way to go.

Another tip, and this isn’t for everyone, but I lived off campus in an apartment. Living cost me a fraction of what it would have to share an 8×8 box with a stranger, the difference being I had to pay it monthly in real time and not wait until after college was over to start paying it.

If you’re able to balance work and school and life it’s a great way to save on that overall bill.

UofM Mpls cost me $12k per year because I didn’t have another 10k of living and meal plan on the bill.

KPE wrote:

Another tip, and this isn’t for everyone, but I lived off campus in an apartment. Living cost me a fraction of what it would have to share an 8×8 box with a stranger, the difference being I had to pay it monthly in real time and not wait until after college was over to start paying it.

I lived in the dorms my freshman year only and I will tell you that it was significantly more costly because than sophomore year until I graduated because I did the same thing. Rent in a 4 bedroom off campus apartment was pretty dirt cheap looking back at the cost 15 years ago compared to what it might be now.

The advantage of living in the dorm for at least one year is that you meet a lot of people in a short period of time. Some of my best friends to this day are people that I met in the dorms.

She already plans to live off campus next year. I kind of pushed her to live in the Dorms the first year. I though it would be a good way for her to meet some new friends that she may want to get a off campus place with next year. Looking at the cost of some of the off campus places the savings is not all that great. Probably more savings in meals than in the rent. Unfortunately girls are a little different than guys. When I was in college 6 of us guys rented a rundown 2 bedroom apartment and ate mostly ramen noodles and rejected turkey legs from Jenno turkey in town. We spent most of our money on 🍺.

I would just like to say as a guy in his mid-to-late-30’s with a 3- and 1-year-old, I gain great value out of reading these posts. I know I’m years away from some of these decisions and life events, but the interactions on these posts are much more insightful, with personal experiences of what went well and what didn’t, than any broad overview internet article. I wish I could help more people with advice but I enjoy reading these topics from afar to get the wheels spinning on my own future with my boys, and some day hopefully I’ll be able to pass on some information to folks younger than me.

Dan wrote:

I would just like to say as a guy in his mid-to-late-30’s with a 3- and 1-year-old, I gain great value out of reading these posts. I know I’m years away from some of these decisions and life events, but the interactions on these posts are much more insightful, with personal experiences of what went well and what didn’t, than any broad overview internet article. I wish I could help more people with advice but I enjoy reading these topics from afar to get the wheels spinning on my own future with my boys, and some day hopefully I’ll be able to pass on some information to folks younger than me.

Same here, 35 with a 5 yo and 3 yo. We set up savings accounts for our kids when they were born and just do an automatic transfer every week to their accounts, should have a nice little nest egg for each of them when they’re 18-21. Aside from the traditional 529 accounts there are a few other savings vehicles that could be helpful (I recently learned about UTMAs).

Great topic. My oldest daughter will be a HS senior this year. She took her first college tour in Boulder CO 2 weeks ago. 56K per year. Of course she fell in love with the campus. We’ve saved some money for both of our kids college but not that kind of money. We’ve been trying to prepare her for what to expect from us. We would be lucky to pay for 1 year at Boulder. She can go where ever she wants but she will have to pay for whatever we can’t. Fortunately she does really well academically and should get into most schools she is interested in. We are hoping she will qualify for scholarships but it doesn’t sound like you know what that will be until they apply to the school.

bzzsaw – Great to hear that you daughter is doing well academically. Hopefully she is taking advantage of either advanced placement courses or PSEO. My daughter was able to complete a full year of college courses during her senior year of HS. In you or your daughters case that would be like a 56,000 saving. Their were kids in my daughters class that completed almost 2 years of college courses while still in High School.

I am short on time and skipped what was posted. There are lots of grants and scholarships she can apply for at her high school. They might even have them at the college she is attending. Most just need an essay to enter and that same essay can be used for many of the scholarships. Have her check with the Dean for where these are. I was able to receive so many that my first year was paid for from them and also got 15 free pizzas.

fishthumper – did this with my daughter and just went through it with my son. Both go to the UofM Twin Cities. The financial aid office there directed us to SELF loans. That is what we have used for both of our kids. Google SELF loans and it should be easy enough to find.

There is some good advice posted above regarding how to approach higher education costs, and I will chime in with my perspective. I apologize in advance for the length and probable ranting on higher education. For reference, I have my BS in Mech. Engineering (Dec ‘16) and my wife has her BS in Animal Science (June ’16) and her DVM (June ‘20). We both come from middle class families and were very careful on how we funded our undergraduate degrees. I didn’t take any student loans and my wife had a small one that she paid back before she graduated. Veterinary school is a different matter, but she worked extremely hard to manage those costs and came out with approximately 100K in loans.

First, sit down with your daughter and do a simple google search on student loan debt and what that means for many people. YouTube videos on some of the calls taken by Dave Ramsey or others in the finance game also works. The lending practices pushed upon young adults is darn near criminal, and it is easy to see the number of lives that get ruined through these practices. Please do all that you can to become informed on what loan options exist, how the interest rates are set, what the payment terms are, and expected payments. Yes, this is a serious way to approach things, but it is the reality of the situation. Higher education and the expenses that go with it are not something to into lightly. Help her create a plan on how things will be funded and subsequently paid back. It will provide context for what signing the dotted line on each loan really means.

The next hard conversation is regarding her major. Please pull up the anticipated earning potential for what that major is and outline what that means on a monthly budget. There are online calculators that can give an estimate on what a yearly salary means on a monthly basis after taxes. Do not sugarcoat these things, you cannot expect someone with an early childhood education degree to pay back 200K in student loans without some serious sacrifices. For UMD you can look here:
https://career.d.umn.edu/students/graduate-follow-major

My parents stressed early on for me and my siblings that academics was the path to success, and that hard work and sacrifice would serve well. We were taught about the dangers of student loans, and subsequently did everything we could to minimize their impact.
PSEO, IB, and AP are all good ways for students to get college credits while in High School. What you need to watch out for, is that these programs don’t always directly transfer in as applicable courses to your major and might not actually “save” you any time/money. If your daughter has already selected a major, you can pull up the course list for it and then use tools from the Office of Admissions page to see what courses transfer in for that specific program. (For example, some of the AP credits in Physics didn’t exempt you from the physics course required by the engineering department at NDSU, as the AP course wasn’t a calculus-based physics course. Taking that AP exam wouldn’t have saved me anything, so I chose to save money by not taking the exam.)

Encourage your daughter to get a job and work throughout her time at college. You should not be funding things for her; she needs to have skin in the game when it comes to this. Have her apply to as many scholarships as she can, and when she says that she has applied to enough, make her apply to more. I didn’t do enough of this, as I focused more on working (tutor) and maximizing the academic scholarships I already had. My wife on the other hand, was a pro at getting scholarship money and in her senior year she covered her entire years expenses with scholarships. And then worked multiple jobs (tour guide, research assistant, tutor). She continued the scholarship apps through vet school and worked as many hours as she could while in that as well.

My personal opinion is that far too many people go to college who shouldn’t, take loans that they don’t understand, and then blow it all on the “college experience”. Higher education should be an investment into yourself, and you need to make sure your investment pays off, as it will impact you for the rest of your life. If you do things knowledgeably and intentionally it truly can be a huge benefit. My wife and I should be done with the vet school loans shortly after the repayment schedule resumes next year, which will allow us to focus on saving and investing and will give us tremendously flexibility for the rest of our lives.

If you have any questions on my rant or how federal student loan repayment works, you can PM me and I’d be more than happy to dive into further details.

Lost wrote:

The next hard conversation is regarding her major. Please pull up the anticipated earning potential for what that major is and outline what that means on a monthly budget. There are online calculators that can give an estimate on what a yearly salary means on a monthly basis after taxes. Do not sugarcoat these things, you cannot expect someone with an early childhood education degree to pay back 200K in student loans without some serious sacrifices.

I’m not sure that earning potential as a reason to choose a major is good advice. I made that mistake and I’ve regretted it my whole life. I have degrees that include chemistry and electronics because of the lure of the almighty dollar and I’ve lived a good life but if I were going to live my life over, I’d have majored in something that I’m more passionate about. Life is just too short for your daughter not to follow her heart and only look at money as the reason to choose a career.

I’m following this closely. It just dawned on my my daughter is going to be a freshman in HS, where did the time go?? I can’t fathom some of the debt people incur to get a degree. Not to derail fishthumpers post, but Lost and Karry both have valid points about doing something you love but not to sugarcoat things. Even 2 year schools like Dunwoody are 40k plus for a degree

Karry Kyllo wrote:

<div class=”d4p-bbt-quote-title”>Lost wrote:</div>

I’m not sure that earning potential as a reason to choose a major is good advice. I made that mistake and I’ve regretted it my whole life. I have degrees that include chemistry and electronics because of the lure of the almighty dollar and I’ve lived a good life but if I were going to live my life over, I’d have majored in something that I’m more passionate about. Life is just too short for your daughter not to follow her heart and only look at money as the reason to choose a career.

I tried to not state “pick your degree on earning potential” as I also made that choice and wish I would have looked more into skilled trades. I just want to make sure that whatever is chosen is realistic, as it’s not always feasible to expect your passion to correlate into a career that provides the quality of life you want. Thankfully my wife was able to complete her 2nd grade aspirations and become a veterinarian, but even that has its downsides.

That all being said, you still have to be realistic. The sum of monthly payments for the vet school loans would be 1K/month if we had followed the 10year payoff plan. If you accrue that same debt load for a degree that only has an earning potential of 40K, you will have to make sacrifices. Not that you can’t do it, I just want to make sure that people are aware of the consequences that go with it.

@lost excellent perspective. I think you did a good job of describing the role of higher education for those that are passionate and inspired to achieve greater depths in their understanding. I think a lot of people in my generation specifically view/viewed advanced degress (masters, doctorates, etc) as a means to higher paying jobs without adequately understanding the financial implications of those decisions.

For context, I was a pre-med major, ended up with a bachelors in biology, worked in the medical device industry for a while, and now I’m in information security. Obviously each person has and should have a different path, but they should also be properly educated on how deciding to walk a specific path affects opportunities down the road.

I also just thought of something very very very important. You, or someone else close to your family will likely be required to cosign for your daughter’s loans. Make sure she understands her obligation to repay the loans, or else that responsibility may fall on someone else. We are still on the hook for my wife’s family members student loans and I really hope they never default (happened before we met 10+ years ago).

Wait up, isn’t uncle Joe going to pay for everything??? Maybe that’s only for the choosen few.

Jason wrote:

Wait up, isn’t uncle Joe going to pay for everything??? Maybe that’s only for the choosen few.

That’s what my Daughter though. I guess were not one of the chosen few. I’m sure by the time she finishes he will step up and get that done

Jason wrote:

Wait up, isn’t uncle Joe going to pay for everything??? Maybe that’s only for the chosen few.

Don’t get me started,,,,,,

My wife & I ate peanut butter & bologna sandwiches for 8 years, while our son & daughter went to a state university, and both were able to graduate debt-free. Now the Feds are going to reward those who took Disneyland vacations and eliminate their student loan debt?

Arrrrrrr!!!!! HRG

Hot Runr Guy wrote:

<div class=”d4p-bbt-quote-title”>Jason wrote:</div>
Wait up, isn’t uncle Joe going to pay for everything??? Maybe that’s only for the chosen few.

Don’t get me started,,,,,,

My wife & I ate peanut butter & bologna sandwiches for 8 years, while our son & daughter went to a state university, and both were able to graduate debt-free. Now the Feds are going to reward those who took Disneyland vacations and eliminate their student loan debt?

Arrrrrrr!!!!! HRG

geeze… that’s an incredible sacrifice… I hope I’m either able to provide a good chunk, or, like you, sacrifice my own well being to see my kids succeed.

What people don’t understand is that debt is a commodity, bought, sold, and traded just like any other hard good. People who buy debts are relying on the ability of the borrower to repay the loan with interest. If (private)student loan debt just magically disappeared it would absolutely cripple the economy and would likely result in catastrophic recession/depression. If we’re just talking about government subsidized loans, they’ll just print more imaginary money and drive inflation through the roof. $100 for a loaf of bread sound good to everyone?

Good luck to all the kiddos heading off this fall.

I’m 37 and mines heading out to Denver few weeks. Time flies!

Get your hands on “the price you pay for college” by ron lieber. its a stark look into paying for college, how these places operate and how to get the best deal.

The only thing worth financing are things that appreciate, very few things are in this category,your house, land, and your earning potential with the right education. One thing you cannot finance is retirement, so be careful when you help your kid and don’t freak if they have to take out some loans.

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