It was the weekend following the 4th of July when a hint of panic hit me. Jake leaves for college in 6 weeks, and we still did not have all the financing pieces assembled. There was still a deficit of approximately $10,000 that we needed to cover for residency costs. It was time to explore the loan financing options.
At this point, Jake has received as much as he was going to from the university and/or through the federal government, therefore, we knew what the dollar gap looked like for his freshman year. The breakdown of financial aid consisted of:
$5500 state merit scholarship (covers cost of tuition)
+ $1500 unsubsidized loan
+ $2000 subsidized loan
$9000 financial aid package
$19,500 estimated cost of attendance (COA)
- $9,000 financial aid package
$10,500 outstanding balance yet to be covered
My husband and I sat down with Jake at the kitchen table, and the three of us started plugging in numbers to a college planning sheet (available on many colleges' web sites or at collegeboard.com). Once we had completed the costs of attendance (e.g., tuition, residency, meal plan, books, parking permit, etc.), we then added the confirmed financial aid sources and amounts. The remaining cost balance and various options for paying it then became the main focus of our conversation. We knew what we could afford to pay from our salaries, and Jake was aware that his part-time job (which he will find on campus) must cover his share of the car insurance, gas, and some entertainment. We will supplement his checking account, as needed. (Note the word "need," which, I am sure, will be subject to interpretation at some point!)
It was now time to research student loan options. Private loans are a last resort, of course. We had tapped as much of the scholarship and government-supported loans as was possible. The Parent Plus loan was not an option for us due to adverse credit stemming from one of my client's corporate bankruptcy several years ago. We continue to work through that fall-out. So, our concentration turned to private student loan vendors. It brought back many memories of when my parents and I went to the local bank (way back when) to secure student loans for my sisters and me for college. (Once again, there's renewed admiration for them and their ability to help finance four daughters through college! I can still recall my husband and me - after ten years of marriage in 1994 - having a celebration dinner for making my very last student loan payment!)
To begin the student loan search, I started with a resource that I had come to trust: SimpleTuition.com. There is no preferential lender; it's factual information on a number of private loan companies that allows you to compare costs, monthly payments, interest rates, and other important considerations. Applications can be completed online. After reviewing, I selected three lenders, and then determined to which one my son and I would submit his first application. Going through the online process helped Jake to see what is involved and the serious responsibility attached with borrowing money.
Stay tuned for Part II of the student loan process and its outcome in next month's article! Hopefully, we'll be able to share some good news.