Last-minute student loan

Food

Hi, everyone.

I hope it’s not bad to have two threads active at once. This one is for a completely different problem than my other one, so I figured I’d keep it separate.

Actually, this isn’t even my problem, but for a really close friend who I’m trying to help out. He/she has asked me to keep this as general as possible, so I’ll be inelegantly trying to avoid disclosing his/her gender. I’ll try to give all the important info, though.

So, my friend in question is currently in college… they’re paying for it almost entirely with loans. (We’re in the US, by the way.) Because they’re under 24, they’re considered a dependent with regards to loans, so they need to have a consigner.

Up until now, their cosigners have been their parents. The parents had also told them that they had handled the loans for this semester also. However, just yesterday (the day before registration for next semester’s classes began) my friend was informed by financial aid that his/her parents had never actually secured a loan.

He/she tried to contact her parents about this, but they’ve been extremely cagey, only telling him/her that they’re having difficulties (they didn’t say what kind, but we assume financial).

So… basically this friend has been left up shit creak without a paddle. They’re seven semesters deep in college, and they haven’t even secured payment for one of those seven. Unless they secure payment for last semester and this up-coming one, they won’t be able to attend school. He/she was expecting to graduate this spring too, so that makes the sting worse.

Anyway, he/she came to me for help because he/she considers me better at understanding financial matters, but the truth is I’m pretty much clueless about what to do. Do you guys see any options for him/her at this point? Any ideas at all are much appreciated.

(If it’s not cool to make a thread for someone else please let me know.)

ceres

You're fine.

Rend

Does your friend have a bank account with a cool bank, like a credit union or whatnot? I needed an emergency last minute student loan for my last semester as well, and secured a $3,000 personal loan from my bank because I had pretty decent credit (somehow). It's not as attractive as a student loan, but it was also easier to get.

Try calling the bank and saying so. Bonus points if your friend already has a job lined up for graduation. (Also, if they don't, you should encourage them to get on that!)

see317

I'd suggest your buddy join up so they can provide more information/receive advice directly. Not that I think you'd filter it, but it can be easier to talk to a person directly instead of bouncing it through a third party. Especially with financial stuff.

The first thing to do is to talk with the financial aid people at the school as soon as possible. They're there to help a person get money to pay for school. It's going to be tight, and waiting late in the game may result in higher interest rates (especially if the parents aren't able to cosign). They need to get a parent (or both) to join in on a conference call with a student loan adviser and hammer out what options are available.
If there is nothing to be done on that front, if your friend has any accounts with banks or credit unions in good standing, talk to them about getting financing for school.

Last option, and I cannot stress "last" enough here because this is a terrible, terrible idea that will crush your buddy under an unimaginable pile of debt and interest, is to respond to those credit card applications and put it on a card. Once again, this is a terrible terrible idea and an absolute last resort.

Deebaser

Your friend isn't a dependant in need of a cosigner because he/she is 24, they need a cosigner for private loans because they are a college student with at best marginal income.

He/she needs to get help from his/her parents and/or contact the financial aid office and see if there is anything they can do for him/her. They will likely need to get right with this semester's bill before they are allowed to register for next semester.

Good luck.

zagdrob

I'd say this is an awfully shitty situation.

First, I'd recommend your friend press their parents for answers as to why they left them in the lurch. Did they just screw up? Is it a temporary issue that might be resolved in the near future? Or have their parents decided to cut them off for good and leave them hanging? It's important to figure out, because if your friend does need to take a semester off, they will need to figure out where they are living and find out if moving back in with their parents is an option. This is a time for your friend to be assertive and demand answers, because it's about a lot more than just their parent's private business.

Second, I'd recommend your friend contact other family members, family friends, and if possible close friend's parents to see if someone else will co-sign on the loans. It's a lot to ask, but with your friend being one semester away from graduation there is less risk than if they were starting their first year. Also, your friend should investigate co-signer free student loans. The interest rates may be higher (possibly significantly so) but it's possible they will be able to get something that will pay all / part of their tuition.

Third, I'd recommend your friend work closely with the Financial Aid department to explain their situation and find what options are available. This probably isn't a common situation, but a student who suddenly doesn't have their parent's help can't be completely unique. The financial aid department may have some resources available to help your friend, and / or be able to temporarily hold their place in classes until everything gets straightened out. Contacting their bank or credit union (if they have one) isn't a bad idea either.

Fourth, your friend really needs to look into a Plan B - where they need to take a semester off. Do they have housing and job prospects? Can they investigate possible work-study or internships, it's a bit late, but if they can get a job for a semester to get some cash and experience, then go back to school in the summer / fall to finish up, it's a lot better than just being out on their ass.

The timeline isn't great, and your friend should get working on this now - before the Thanksgiving holiday / break, but there is about a month and a half until the next semester starts which should give them some breathing room. Better now than January 7th.

One final point that may provide some leverage - if your friend's parents have already co-signed on six semesters of loans, they have a significant investment / risk if your friend doesn't get their degree and can't find work. A default will fall on the parents, so it's in their best interests to make sure your friend can graduate on time, and start paying instead of being out of work and broke.

kaliyama

Uh...if she's looking for a cosigner, that means that she's getting private loans. Why isn't she getting federal student loans to cover her costs?

wrong_button

Echoing what others have said - your friend will want to get to their financial aid office ASAP to speak to someone about the options. If the friend/parents filled out the FAFSA/loan application/etc. just never secured a loan, hopefully Financial Aid will at least still have the aid eligibility on file.

I wound up in a similar situation in college (lo those many years ago) and on my own was completely flailing at the last minute. I nearly wound up taking out a less-than-optimal-interest rate personal loan at my bank because I thought I could do it myself, but the financial aid officer was able to point me in a more manageable direction and provide a few options. It's late in the game, but the FA office should have a better idea of what paperwork/deadlines are for some of the loan programs, based on state, etc. and help with a more complete picture of the situation.

Food

So I talked to my friend to clear a few things up-

My friend has already secured federal loans that don't require a co-signer. (I believe they're called Perkins & Stafford?) However, in order to cover the rest of the cost, though (which is a pretty significant amount), they have been using the 'parent plus' loan, which as the name suggests, requires a parent or guardian co-signer. A private loan is an option, but he/she would need a cosigner for that too, and none is to be found.

As far as taking a semester off... my friend is extremely responsible. He/she already has a (slightly above miniumum wage) full-time job and an apartment off-campus, which he/she already pays for without any outside help. However, as far as I can tell, he/she still does not have the credit/income to secure a loan on his/her own, and waiting until he/she's 24 to apply for the federal plus loan without a co-signer means he/she would have to take far more than a semester off. So it's not a matter of survival, it's just a matter of having to essentially put his/her life on hold for an indefinite amount of time.

As far as I can see, priority #1 seems to be to get through to the parents. For anyone who has experience with the parent plus loan, assuming that their credit has gone down the drain since last time they co-signed, is there a good chance that they could be turned down?

Rend

First of all, you missed one of your pronoun slashes. Second, you should call your friend Alex or Sam as a code name to make it easier for you to speak about them.

They can't get a private loan of any kind without cosigner? Or just not one big enough to cover the rest of school?

Jasconius

Yes parent loans can be denied.

Everyone has a finite borrowing limit.

When I went through this, i had my mom max out her loan capacity, then I maxed out my own loan capacity, and I finally ended up one semester short, and I had to take a loan from my grandparents to reach the finish line

Frankly they do not have a lot of great options. But really what they should do and how soon it should be done really depends on the exact dollar amount we are talking about here.

Do you need 3k? There are ways of getting 3k.

Do you need 10k? Don't count on it. At least not through loans. Start on Plan B.

Pre-bubble a student could get 10-20k privately, but today? I am highly skeptical. Plus, they are really really raw deals. I have 20k in private loans. It's a ball and chain around my neck.

Deebaser

Food wrote: »

and waiting until he/she's 24 to apply for the federal plus loan without a co-signer means he/she would have to take far more than a semester off. So it's not a matter of survival, it's just a matter of having to essentially put his/her life on hold for an indefinite amount of time.

Waiting until he's 24 will only get him maybe an extra $6,000 a year in federal grants. Nothing else really changes. It sucks for your friend, but there really isn't a magic bullet here. If his parents aren't willing or able to continue funding his education and the tuition/living expenses greatly exceed stafford+part time job income, there isn't much that can be done.

Rend

Also, is your friend working? What field etc?

I worked no fewer than 24 hours per week while I was in school. Thankfully I didn't need to work more because my pay was decent (I made 10/hr for my first 3 years, 15/hr until I was a senior, then 18/hr), otherwise I would have needed to work weekends and do a full 40. I set aside Friday and M/W or T/Th for work, and took classes the other two days.

However, with an actual income, paying for things and such, I was able to have enough credit to borrow on my own power. Of course, I'm also much older than your friend is/was at this time. (I just graduated in may, and I'm 26)

Point being, it's entirely possible for people to pay their own way through school, especially since an income gets you better credit. It sucks, and it sucks hard, but from how you've described your friend, it sounds like they'd be up to the task.

That's beside the fact that a job is looking like it's probably going to be necessary regardless of whether they can get the cash they need to continue school immediately or not.

Food

So we couldn't really find a good solution, and it looks like my friend is going to end up taking time off for at least the next semester. It's definitely a bummer, but things aren't looking so bad after a few days. He/she is getting a lot of support from friends, and one of the more influential professors at my school has offered a part-time internship, so there will still be some experience to be gained.

Anyway, thanks guys. Even though we couldn't find a solution we really appreciated the help from the thread.

You can close this up. Thanks again!