| Author |
Message |
Steve
Guest
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| Posted: Mon Jun 21, 2004 9:22 am
Post subject: Comparing total cost of loans question |
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I need to get a handle on the real costs of student loans to make a
decision on which one to choose. I would like to compare a Nellie Mae
Student loan against an Educaid loan (wachovia). The loans will be
taken out by the student (my son) and I will cosign. I'm applying
online and have both apps just about complete. A couple of questions:
1. My son won't be 18 until August 14. We need these loans approved
and to the school by August 2nd. I'll be cosigning. Will most
financial institutions accept his not being 18 yet if I cosign. Is
there anyway around this if this is not acceptable.
2. Will there be some final cost of loan info provided if approved -
is there some value that can be compared apples to apples used by all
student aid lenders ?
3. Is there any problem filling out multiple apps. The actual debt
isn't recorded until the loan is finalized but have concerns that it
will show on some sort of credit reporting that multiple large sums of
money have been applied for and thereby make me appear less
creditworthy. This may be a stupid question - sorry...
4. Has anyone had experience with either Educaid or Nellie Mae's. Is
there a bias for either one ? The school seems to endorse Nellie Mae
(not because of any better terms but because they are familiar with
the way each does business and get things done faster).
Finally - Thank you very much for any information you can provide. I
seriously appreciate it.
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Steve Blank
Guest
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| Posted: Mon Jun 21, 2004 5:05 pm
Post subject: Re: Comparing total cost of loans question |
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|
I'm not a loan expert, and I can't give definitive answers to all your
questions, but...
Steve <sas@sasonsite.com> wrote:
| Quote: | I need to get a handle on the real costs of student loans to make a
decision on which one to choose. I would like to compare a Nellie Mae
Student loan against an Educaid loan (wachovia). The loans will be
taken out by the student (my son) and I will cosign. I'm applying
online and have both apps just about complete. A couple of questions:
1. My son won't be 18 until August 14. We need these loans approved
and to the school by August 2nd. I'll be cosigning. Will most
financial institutions accept his not being 18 yet if I cosign. Is
there anyway around this if this is not acceptable.
|
When you co-sign the loan, you're taking on the same obligation as if
you took it out in just your own name as far as the lender is concerned.
Your son is just an additional party for them to pursue if it's not
paid, and vice-versa, so his age shouldn't matter.
| Quote: |
2. Will there be some final cost of loan info provided if approved -
is there some value that can be compared apples to apples used by all
student aid lenders ?
|
You should request and know all this before you apply for the loan. The
lender should be able to provide the info. The first things to look at
are the interest rate and any loan fees. And since most are variable
rates, what is their cap?
Then look at the repayment terms. When do they begin - some require
payments to begin within about 60 days, others allow deferring any
payment until graduation (but you'll pay more total interest on those in
the long run) and for how long a period. And are there any prepayment
penalties if you wish to pay off the loan faster than originally planned?
| Quote: |
3. Is there any problem filling out multiple apps. The actual debt
isn't recorded until the loan is finalized but have concerns that it
will show on some sort of credit reporting that multiple large sums of
money have been applied for and thereby make me appear less
creditworthy. This may be a stupid question - sorry...
|
You really shouldn't fill out multiple applications. Most lenders use
about the same criteria, so if one approves the others probably would
too. Pick the one you prefer and apply to that one. Multiple
applications might affect your credit record and shouldn't be necessary
if you've got a decent credit record.
A side note: if you are concerned that you might not be approved, you
need to know that the easiest approval often will be with a PLUS loan.
It's taken only by the parent, and approval is based on just your credit
history, not your income (ability to repay) which most other loans will
also consider. Also, the interest rate is usually lower than the
alternative loans you are considering. For this coming school year, The
PLUS rate is 4.17%. Repayment usually begins immediately following each
disbursement, but some lenders allow you to defer payments until
graduation (again at a higher total interest cost since you are not
paying down the principal each month).
| Quote: |
4. Has anyone had experience with either Educaid or Nellie Mae's. Is
there a bias for either one ? The school seems to endorse Nellie Mae
(not because of any better terms but because they are familiar with
the way each does business and get things done faster).
|
You should pick the one with the terms that you prefer, and check out
more than just those on the school's list. You may find some useful
differences.
| Quote: |
Finally - Thank you very much for any information you can provide. I
seriously appreciate it.
|
--
Steven B. Blank
College Financial Aid Consultants
29 Ives Hill Court
Cheshire, CT 06410
(203)250-7761 |
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Steve
Guest
|
| Posted: Mon Jun 21, 2004 10:29 pm
Post subject: Re: Comparing total cost of loans question |
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|
Steve Blank - Thank you for the information. Looking through the
threads in this group, you've not only provided me with valuable
information but have done so for many others. I can only thank you for
the help you've given me but I'm sure I speak for the group in
thanking you for answering their questions as well. Again thank you
for taking time from your schedule to help me and others - we need
more generous/selfless people like you in this world.
Best Regards -
Steve
On Mon, 21 Jun 2004 11:05:36 GMT, Steve Blank <steve@randallblank.com>
wrote:
| Quote: | I'm not a loan expert, and I can't give definitive answers to all your
questions, but...
Steve <sas@sasonsite.com> wrote:
I need to get a handle on the real costs of student loans to make a
decision on which one to choose. I would like to compare a Nellie Mae
Student loan against an Educaid loan (wachovia). The loans will be
taken out by the student (my son) and I will cosign. I'm applying
online and have both apps just about complete. A couple of questions:
1. My son won't be 18 until August 14. We need these loans approved
and to the school by August 2nd. I'll be cosigning. Will most
financial institutions accept his not being 18 yet if I cosign. Is
there anyway around this if this is not acceptable.
When you co-sign the loan, you're taking on the same obligation as if
you took it out in just your own name as far as the lender is concerned.
Your son is just an additional party for them to pursue if it's not
paid, and vice-versa, so his age shouldn't matter.
2. Will there be some final cost of loan info provided if approved -
is there some value that can be compared apples to apples used by all
student aid lenders ?
You should request and know all this before you apply for the loan. The
lender should be able to provide the info. The first things to look at
are the interest rate and any loan fees. And since most are variable
rates, what is their cap?
Then look at the repayment terms. When do they begin - some require
payments to begin within about 60 days, others allow deferring any
payment until graduation (but you'll pay more total interest on those in
the long run) and for how long a period. And are there any prepayment
penalties if you wish to pay off the loan faster than originally planned?
3. Is there any problem filling out multiple apps. The actual debt
isn't recorded until the loan is finalized but have concerns that it
will show on some sort of credit reporting that multiple large sums of
money have been applied for and thereby make me appear less
creditworthy. This may be a stupid question - sorry...
You really shouldn't fill out multiple applications. Most lenders use
about the same criteria, so if one approves the others probably would
too. Pick the one you prefer and apply to that one. Multiple
applications might affect your credit record and shouldn't be necessary
if you've got a decent credit record.
A side note: if you are concerned that you might not be approved, you
need to know that the easiest approval often will be with a PLUS loan.
It's taken only by the parent, and approval is based on just your credit
history, not your income (ability to repay) which most other loans will
also consider. Also, the interest rate is usually lower than the
alternative loans you are considering. For this coming school year, The
PLUS rate is 4.17%. Repayment usually begins immediately following each
disbursement, but some lenders allow you to defer payments until
graduation (again at a higher total interest cost since you are not
paying down the principal each month).
4. Has anyone had experience with either Educaid or Nellie Mae's. Is
there a bias for either one ? The school seems to endorse Nellie Mae
(not because of any better terms but because they are familiar with
the way each does business and get things done faster).
You should pick the one with the terms that you prefer, and check out
more than just those on the school's list. You may find some useful
differences.
Finally - Thank you very much for any information you can provide. I
seriously appreciate it. |
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