What to Know About Student Loans

Episode #5. With so many options available and so many factors to consider, the process of applying for student loans can seem confusing. On this episode of The MEFA Podcast, MEFA's Associate Directors of College Planning Jonathan Hughes and Jonathan Sparling break down everything you need to know about student loans, including factors to consider when comparing student loans, how some school may be delayed with their billing process this year, how to be a wise borrower, and how the process of applying for a loan works. If you enjoy the MEFA Podcast, please leave us a review.


Jonathan Hughes: Hi, everybody. Welcome to Navigating the Course to College, MEFA’s podcast. My name is Jonathan Hughes. I'm the Associate Director of College Planning and Education at MEFA. And with me as always is…

Jonathan Sparling: Jonathan Sparling, also Associate Director of College Planning and Education here at MEFA.

Jonathan Hughes: Oh, well, just two associate directors of college planning and education. Uh, well this is our, our loan episode. So today, because that's what time of year we're in, this is the point where people are going to start looking at loans and want to know all about which kind of loans they should apply for and what the process, our process is.

We're going to look at our mailbag and look at some questions from, from parents and students, probably about loans, spoiler alert for that event as always. There's a lot of news in terms of colleges and what they're doing as far as opening in the fall is concerned. So we'll have our news from Jonathan.

What's going on?

Jonathan Sparling: Thanks, Jonathan. Yeah. Uh, a lot continuing to happen on college campuses. Certainly given where we are in the midst of the pandemic, you know, in a, in a normal year, there'd be a lot happening in this timeframe, just as schools opening up, moving back in, you know, fall sports are starting, you know, kind of normal things.

And certainly some of that is still happening. Some of it is not happening. Uh, some of it is happening in a hybrid format. So, uh, you know, one of the big things that we're seeing and we continue to see are college plans for the fall. So, you know, in general more colleges, what we're, what we're seeing are opting for a virtual or hybrid.

Fall semester, uh, versus fully in person. Um, and this is, uh, this holds true, even for those colleges who had initially planned to be fully on campus. You know, we see this every day, there's a new article. Uh I've mentioned this on the, on the podcast before, the Chronicle of Higher Education is tracking what colleges, what their plans are as of today, they were up to about almost 1,400 schools.

And you can see that the percentage is shifting, right? So. Even three weeks ago, about 65% were planning to be fully in person. Now that's down to under 50%. So as more schools are announcing their plans, those plans tend to be either some hybrid approach or fully online. And we're also seeing that some schools have walked back their fall plans.

Right? So in States that are seeing cases spike, or perhaps. There's been more discussion on campus schools or that may have one said, yep, we're going to be in person for fall or actually, uh, walking that back. So, um, continue to learn more about that. And it's kind of a daily thing now for students and families, you know, they are receiving from what we've heard and what we've seen in some of our colleagues who have children who are going to college, they're getting emails and kind of, you know, things are changing on, on a, on a minute by minute basis.

So, um, yeah, it's really interesting, uh, what we're seeing and it's continuing to happen. Um, and then even for those schools that are going to be on campus, you know, the experience is going to look certainly very different this year. You know, so a lot of schools are requiring students to sign some type of contract to maintain social distancing, agree to testing.

You're going to have reduce class size, uh, as well as, um, uh, kind of more spread out residence halls, modified campus events. So it's gonna look a lot different on college campuses, uh, if even for those who decide to open. Yeah. Yeah.

Jonathan Hughes: One question I had about that is, and I think we may have actually talks about this on a prior show, but if we, if we didn't, even if we did, um, the, the colleges that do offer virtual classes or not, you know, accepting students physically on campus. Are they, are they reducing tuition for their students, uh, for the fall semester in those cases?

Jonathan Sparling: So many are not. Uh, we're finding that in what we're seeing is that, you know, schools are essentially adhering to the fact that it's going to be the same type of, um, the same content.

It’s going to be, they're taught by the same professors kind of, you know, they're, they're moving virtual. Um, but that doesn't change. And obviously changing the instruction, but it doesn't change kind of who's delivering it. And so a lot of campuses are holding true to, um, maintaining the same tuition. Now, there are some exceptions, as you can imagine, those schools with very large endowments that have the means to reduce some tuition, uh, or reduce some costs are doing it.

And then some others who may quite frankly, are concerned about enrollment. And so they're using it as a way to, uh, to keep students there. So yeah, kind of a mixed bag in general, most are not reducing the tuition costs now for families. And since this is about student loans, certainly if you are deciding to, if you're your school has said, we're going to go hybrid, you will incur less cost because you, if you were planning to be on campus, you would need board costs and you won't have those being virtual.

Jonathan Hughes: Right. Right. Of course. Yeah. The fees, the fees would definitely be lower in that, in the state. Um, okay. Anything else? Uh, we were talking maybe about sports.

Jonathan Sparling: Yeah. Yeah. So the other, you know, the other big piece besides just kind of everything that's happening on college campuses in terms of plans and, you know, hybrid versus virtual versus in person is, is, um, is the impact of all this on fall sports.

You're seeing more. Uh, from all divisions division one, two, and three announced that, uh, either fall sports are being canceled completely or shifted to spring, uh, for those who aren't canceling, they are keeping them within the division. So that kind of minimizing how much travel will be done. Um, it seems like on a daily basis, again, you know, all of this is continually moving.

You know, what's really interesting is that, you know, I assumed and Jonathan. I know you assumed and we all kind of assumed it that, you know, it's, today's August 5th, this would have been signed, sealed and delivered. Right. Kind of plans would have been out there and everything would have been figured out.

And certainly the schools I would imagine would have hoped that would have been the case too, you know? Cause it's, it's kind of a, you know, a constantly evolving thing, but it really isn't, it's, it's, it's, it's, we're learning new things every day and that, and the same applies to fall sports. And so, you know, we are seeing more.

Conferences opt out or cancel seasons. Um, just today, uh, I heard that Yukon announced that there will be no, uh, football for the year, um, for the upcoming fall season. And so I believe that there might be one of the first D one programs to announce a complete no football. Um, wow. If not the first, maybe, you know, right up there.

So yeah, I mean, you're seeing, you're seeing the impact on fall sports. Um, you know, one thing we will say in that. Schools have been pretty good about is that for students, student athletes, those who are on athletic scholarships, really just checking with the school to seeing kind of what's going on.

We've heard that most schools are honoring them. Um, but again, that's going to be a school by school basis.

Jonathan Hughes: That was my question. What happens to those students who accepted on the basis of a, of an athletic scholarship? So it's good to know that most of those colleges are able to honor that and are doing that.

Jonathan Sparling: Yeah, for sure.

Jonathan Hughes: Yeah. Well, I mean, Who knows the next time we talk, things could be better yet again, um, that kind of an environment very much. So it's important to keep, keep these updates coming in. We're going to close this down and go to our mail bag, open up our own mail bag here and there we go. First question.

These are questions that come to us either through email, which by the way, the email address, if you have questions, is college planning@mefa.org. The phone number is 1-800-449-MEFA. Um, you know, The bulk of what we do in this college planning department is talk to families and students and answer their questions and try to get them through this path through college.

So, uh, if you have any questions, please do not be shy to contact us in any way that's convenient for you to do so. Now the first question comes to us from Andrew and he writes to us, um, I currently have a loan with me as a

Jonathan Sparling: co-borrower

Jonathan Hughes: for my daughter's undergraduate. I would like to borrow for the upcoming semester. How do I go about adding to the current round?

So this is a common question that comes up for repeat borrowers, but yeah. Also for people going through the process the first time, how do you borrow for four years? Do you borrowed four years at once? Do you borrow one loan to get a line of credit and you just keep adding to it? And essentially the answer is that you apply on a yearly basis for the most part, and you can apply, uh, on a semester, the basis as well. There's no real obvious, um, benefit to doing it. So unless that's the way you like to do it, but most folks tend to apply on a yearly basis.

For me, if I can say that you do the application, you say, and this is my loan period. If it's for the full year, it might be something like. August through May of, you know, August, 2020 through May of 2021. And then you've requested them out for that year.

Your credits pulled, you get your stuff, you pick your loan. And that gets dispersed to the college as the college requests it.

Typically colleges want to be paid per semester. So like a one payment in the fall master the next one on the Spring of the, the spring semester, the next year. You're going to do that same process all over again. So you're not actually adding to the loan that you had in a prior year. It's a new loan altogether next year, as long as probably have different rates, different interest rates, maybe different terms.

Um, and when, if you, every year for four years, you're going to graduate with four separate loans. Now people get concerned about that because they think they'll have to make four separate payments. You do not, you make one payment, uh, they're all itemized on one bill. If you do want to combine them all into one loan, there are refinance options that you can use at that point.

But that's a whole other category, frankly. Um, for the purposes of this question, one loan is. You know, one year equals one loan basically. And I don't know if you have anything to add to that, Jonathan?

Jonathan Sparling: No, no, I would. You, you explained it very well. It's, you know, it's kind of that year by year basis and yeah, that question we get a lot is am I now looking at four separate loans?

Yes, but the consolidated billing statement, um, you know, the, I guess the one thing I would add, and I think we mentioned this in a former episode, but, um, Just to reiterate rates are very low this year, uh, as a result of everything that is happening. And so, um, you know, we always make sure to tell students and families, you know, first borrow those, those federal loans, the, the direct unsub site or the direct subsidized direct on subsidize for the student.

That's just their loan. And then if, and when you need to get to the private, um, You know, certainly maybe if it has some great rates, we've had some great ones this year, but you'll notice across the board some really good rates this year. Um, and so, you know, if ever a time to borrow, um, you know, at least you'll, you'll be able to get some pretty good rates.

Jonathan Hughes: Yeah. That's a very important point. I'm glad you brought it up. Um, and how appropriate, by the way, Some personal news, some personal news, how appropriate that this is our topic. When guess who paid off his federal student loan debt?

Jonathan Sparling: Well, it wasn't, it wasn't me. And, and you're the only one on the show. So I'm guessing you.

Jonathan Hughes: Sure. If you're, if you're not, if you're not watching this and you're listening to it, my thumb is pointing to my face. I'm very excited.

After 20 years, 20 years of repayment. Yep. There you go. But you know, I can't, this means I can no longer, um, You know, scare high schoolers. When I say, look at me, look at my face, I'm still paying my student loans and they get panicked, but I'm, so those days are over, but that's okay. I'll take it.

Jonathan Sparling: Congratulations. That's great. Does it feel good?

Jonathan Hughes: Yes, it feels good.

Jonathan Sparling: That's great.

Jonathan Hughes: I know. Now I can start saving for my son.

Jonathan Sparling: There you go.

Jonathan Hughes: Ah, so. That is all. Thank you. Thank you. Bye. Back back to our borrowers. Our next question comes from Kenneth. Who wants to know? Uh, well, he writes we're about to apply for our first student loan for my daughter's second year of college. So I guess they were able to pay out right for the first year, which is great.

I understand that we should borrow the amount we need for the entire school year, not just the fall semester, whereas we only have an estimate of the spring costs. What happens if we borrow too much? Also, please describe how we actually pay the cost with the student loan funds. Do we end up paying with a line of credit that we draw from for the two semester bills.

Okay. So a little bit of overlap from the last question, but, uh, it's important to respond to that. Um, it's not similar to a line of credit. We can only send funds directly to a college. So how they actually pay the college. We don't send money to the parents, but we don't send money to the students. We send money to the college and the college can really only accept.

Um, what is owed by the student? So they have to certify that, um, the student is enrolled before they can take any money from us. They have to certify that the student is enrolled, um, the days in which they want the money. And also that the loan funds are not in excess of what's required. So, uh, cost of attendance minus any other financial aid.

You know, that's, that's your, that's your window for, for, for loan money. Um, so, and typically people do apply for a year at a time, uh, and colleges can not hold onto money for multiple years and apply it. So that's, that's another reason. Um, so basically we send it to them. They credit the student's account.

So. And I also want to include a question that I've received on this and this summer, a couple of times, a few people have asked about this, um, people who were borrowing for a second or third year, or maybe they have another child's coming in and they say, is there a dollar limit that you cut me off? And they say you can't borrow any more money?

No, there's not a dollar limit that we cut you off at, every process, every loan process, as we said prior, It's the same. So as long as you have sufficient credit and sufficient income, and you're requesting the loan, if you're approved, you're approved. And really the college is the one that, that acts as the safe guard on that, that they're not getting too much funds to pay the college bill.

Um, but there is not a sort of aggregate limit. Over which we will not, uh, you know, preview for, for loan money now to circle back to the first part you have one semester bill, this is the question of, you know, should you borrow per year, per semester? Uh, and then also if you only have the bill for one semester, how much do you know, how, how can you know how much to borrow for the year?

So, yeah, maybe you have a fall semester bail. If you double that, um, you can expect that that's probably around what your yearly bill is, right? If it happens that you end up applying for more than you need, you can always call us up. And lower that amount. So you can call us up as long as it's not, you know, the day before it's supposed to go out, you know, within a certain amount, you can call us up and, and reduce that loan amount.

It's very easy to do so. Or the college may reduce that on their end as well. Even afterwards, if we already send the funds to the college and it's morning, you need, you should contact the financial office at the college. They can always refund, uh, overages back to the lender, um, which will not just. Pay a principal on the loan will actually reverse the interest that's accrued on it as well.

So we'll just sort of like reverse the overage that you requested and fix it so that, uh, it was always a smaller amount to begin with.

Jonathan Sparling: Exactly. Yeah. And then, you know, one thing I'll just add on that is, you know, going back and I wrote it down, especially for this year, right. Again, kind of every, so much as through the context of this year, but you know, when you spoke about the colleges and the certification process, um, you know, so as you mentioned, it's you apply you're approved and it essentially goes over to the college, right?

Sits to be certified. You know, it's obviously this is all digital. Um, so the school will then certify the loan. Now, as you can imagine with deadlines being pushed out, billing deadlines, that's another thing, you know, we could have earlier on, uh, schools are pushing out billing deadlines. We've heard some as many as, uh, August 24th for the fall semester, which is kind of crazy because if you think the fall semester could start the next week.

Right. And so, you know, because of that, There is a, uh, at many schools, a delay in processing loans, you know, and we're seeing that at MEFA as well. You know, we, our peak season of seeing loans is basically pushed out two weeks, uh, kind of from seeing and the trends overseeing because all is have pushed out when they're making decisions that impacts billing because that impacts costs, which costs impact, you know, what you get the actual bill for, and then that's kind of a trickle down effect and for how much folks are borrowing. So just be aware of that.

You know, we get that question a lot. Like how long before I apply and it's the school certifying it, uh, this year might be a little bit long and it might be a little later than normal simply because, you know, some schools are, are waiting cause they have to.

Um, and so just, just one thing to be aware of. Um, you know, but again, if you ever have any questions you can, after you apply for the loan. Call us, call the school and they'll tell you where your certification is.

Jonathan Hughes: Yeah, that's a good, that's a good point. And I know the next question that comes up after that families, if there is a bit of a delay in process, so saying the next question is about late fees.

Um, you know, am I going to be somebody with any late fees because of this? So, um, I would hope that colleges would, um, be understanding and this environment and the atmosphere and to contact your, uh, financial aid office with questions about that. You know, anecdotally, I would say in my experience, colleges are usually pretty, pretty lenient with late fees.

If it's a situation where, you know, a loan is in flux somewhere. Um, so, but it's important to, to, to reach out. Um, because they, you know, they, they were not going to waive it if they, if they don't know they working on getting a loan. And also if you do have, uh, more to this person at the college and you need and need a refund, do that quickly, too.

Uh, and the reason is, um, after a certain amount of time, It gets harder to reverse the interest on that loan. So if you know, right away that there's too much being sent to the college, and it's too late to stop it on our end, call the college and have them refund it to us. So we can refund, uh, reverse all the interest that accrued on that loan.

Because after I think it's 90 days or 120 days, It gets hard to do that. So, um, just in general, keep on top of things, don't be afraid to call the financial aid office. One of the key messages of all MEFA communications, don't be afraid to call the financial aid offices questions. Um, so thank you. And our last question comes from, Oh, it's also Kenneth.

Let's play two. Are there prepayment penalties if we're able to pay off the remaining balance before the original term ends? For example, if we take out the 15 year deferred option and four years after the graduation we're able to pay all those loans. Are there any additional fees?

This is a nice, positive and simple message.

No, uh, there are no repayment penalties, uh, for paying off the loan early for, from MEFA, for federal. You can certainly do that. It's a good thing to do if you can, because if you pay a loan off early, it means that over the long run, you're going to be paying less over the life of the loan.

Oh, uh, it's a good question to ask. If you're looking at different loans in general, MEFA doesn't have any prepayment penalty, federal loans don't have prepayment penalty. In fact, Jon, have you ever come across an educational loan that has a prepayment penalty? I have not. I don't, I don't have say it's not common.

Jonathan Sparling: Yeah, very uncommon. I actually, I can't think of one off the top of my head. And if you think, um, no, so I, I. Very rare. Yeah, of course. I always make sure, but very rare.

Jonathan Hughes: It's a nice positive message to close the mail bag on. And we'll now segue into our main topic, which is. Loans. And certainly this is the time of the year where people are calling up families, calling up, whether they want to talk to us for five minutes, for 10 minutes or for an hour, it's mainly about how they can finance the upcoming year.

And what's the best way to borrow. How do they start this process? What are the important things that they should be looking at? So, um, You know, I just wondered if you could give us Jon your impression so far this year, what families are asking you and what they need to know and what they should know.

Jonathan Sparling: Yeah, absolutely. So, you know, I, I think it's, you know, as, as you mentioned, Jonathan, this time of the year folks are researching loans, it's kind of loans is top of mind and, you know, pandemic aside, obviously some, some new. Uh, worries or concerns this year or questions is, should I say, but, um, a lot of overlapping themes and similar questions to what we would hear in a normal year.

And so, you know, some, some things that come to mind and some trends that, that I've noticed over the course of this year, and even in years past that families ask, um, you know, so one big theme is, is folks, you know, when it comes to student loans, it's it's where do they start? Right. And so they've gotten to the point where they've maximized all the free money and grants and scholarships.

They've figured out what they can play, pay from savings. They've get out what they can pay in a payment plan. And they've taken out the, the federal loans for the student. And they're at a point where it's like, okay, I know I need to borrow a private loan. Where do I start? Um, so really there's, there's a couple of different places that you can go to.

Figure that out or to research, you can go to individual private student loan, lender, based on your, your credit profile and the information that you put in what loans you may qualify for.

And so, you know, Credible only works with some lenders, so just be aware of that. It might not be the universe of lenders. Um, and then, uh, kind of a final, the place that you can go is to the actual college or university website.

So a lot of colleges will have what's called a preferred lender list. Um, that's just. Lenders that they work with, who, um, have meet certain criteria for their students. And who've they been doing business with them for a while. So they it's, it's preferred by the school. Certainly you don't have to utilize them.

And that's your choice. You can use whatever lender you would like. Um, and some other schools won't, won't have this preferred lender list. They'll have, what's called a historical list. And so, you know, If there are students in the past five years have borrowed from 60 different lenders. It's not that many, but it's called 40 they'll list off 40.

So, you know, you can go to the individual website of, of lenders, the aggregators, like a Credible, or you can go to the individual school. So that's, you know, that's kind of one theme or question I get or hear a lot is where do I start? So that's, you can, you can start there and you can, you can go to those, those different places.

Jonathan Hughes: Yeah.

Jonathan Sparling: Another thing I hear from families a lot in speaking with students and families is what do I look for? Right. Like, all right. So what do I look for when it comes to applying for a private loan? You know it's my first time, um, You know, maybe I borrowed some other debt in the past, or maybe I haven't like, what do I look for when it comes to figuring out what loan is best to borrow?

And so for that, you know, I would say that the student loan much like any other debt, there's some, some key, uh, Terms to know, and some key things to, to be aware of. Um, and so, you know, the first would be interest rate. So obviously you're in to look at what is the interest rate that's being offered. And that's, that's, uh, you know, in speaking with families and, and just kind of, if you read research it's, that's.

A high percentage. I don't know what it is, but it's a high percentage of what drives the decision, what offers the best interest rate. And many of you already know this, but interest rate is really just the cost of our money. So, um, you know, it's typically driven by credit score. And so, um, the higher your credit score, the lower, the interest rate and vice versa.

So, you know, interest rate is, is one. That's going to drive you looking for that, looking for the best interest rate, um, within interest rate, you know, Considering is it a fixed or variable interest rate? You know, the advantages of a fixed is that, you know, it's going to be the same interest rate for the life of the loan, through repayment, a variable as the name implies will vary.

And so variable rates are very low right now. Um, some under 2%, but just know that you're looking at a rate that will change over the course of. Not only the time that you've borrowed it, but also the entire repayment term. And so just, you know, within an interest rate, you know, being aware of those two, um, another term or another, you know, one, I talked to them about what to look for is, is repayment term.

And so this came up earlier in the mailbag, but, um, You know, repayment term that depending on the particular lender, they will offer various repayment terms associated with loans. And so the third payment term, just specifies the time you have to repay the loan, as we mentioned, there's no prepayment penalties, but you certainly want to be, feel comfortable knowing that.

Whatever term you choose, you can meet your repayment obligation in it. So, you know, in the MEFA side we have 10 and 15 year. Some lenders will offer seven years. Some will go out to 20 years. Um, the repayment term is another really important term to look for when you're going through the private student loan comparison.

Um, And then the last kind of under the, the, the what to look for category and, you know, interest rate repayment terms. Another big one for families is, is does the loan require a co-borrower and a co-borrower is someone who, um, in many cases it's a, it's a parent or a guardian who is also equally responsible for repayment of the loan.

Now for most students who are going to full, um, 18 to 22 year olds, uh, if phone in that age bracket, you will, they will need a co-borrower on the loan simply because they don't have established credit history. And so, you know, having that co-borrower allows them to not only apply for the loan, but also be approved for the loan.

And so, you know, those, those there, the terms to be aware of, and there's other things to consider, but interest rate repayment term, and does it require co-borrower, um, are very important ones. And for what I tell families all the time, if they're kind of looking at loans, um, for the first time, so that's another trend.

And then the last one, and we touched on this already a little bit, but is families really, There's a lot of confusion about how it works. Right. Like, how does, how does this all work? Right? Like I applied for this loan. I don't get it myself. Right. I do, but it's in my name, but how does it work? And I, I think you, you outlined that earlier, Jonathan, very well.

Um, you know, in many cases, in many lenders, it's the loan proceeds. You apply it's in your name, but the funds are going to the college. So you never actually see the check. You obviously see the debt cause you have to repay it, but you are, you don't see that money. It's, it's kind of a process that goes right over to the school.

So, you know, if I had a capture those themes, it's it's, you know, where does number, number one theme families talk a lot about or ask a lot about is where do I start? Uh, the second is kind of what to look for and the third is kind of how the, how it all. Works out, um, once they apply for the loan.

Jonathan Hughes: Yeah. That's great. Um, one thing I would say too is, um, the question of deferment, right? So a lot of people know when they have to want to know when they had to start making these payments. Is it in school? Is it until the student leaves school? They don't have to start. And that depends. Uh, it depends on the type of loan that they're qualified for.

And, uh, and you know, a lot of times, unfortunately I think people assume that they won't have to repay until after the student leaves college. So just to be aware of the terms of, uh, of the loan that you're applying for accepting, um, Now we do have some resources on mefa.org that we can help folks figure all this out.

What do you want to talk about? Some of those?

Jonathan Sparling: Yeah, absolutely. Um, so we have a, um, a recorded webinar, all about student loans. Um, I think it's what to know about student loans is the name of it. We talked a lot about some of the factors that I had mentioned a little bit earlier, go a little deeper, dive into some of those.

And then we also talk about, um, ways to be a wise borrower. We have this, you know, kind of, how do you be a wise buyer, how you be smart about it. And, um, Without getting too much into the details, but yeah, we talk about it's important to minimize borrowing, right? It's important to assess the affordability of the loan before you actually take it out.

Um, you know, we talk about staying on top of timing and deadlines and things of that nature. So, you know, we have a really great webinar that does a deep dive. So I encourage you to look at that. And then we also have two really good blog posts that. Take that webinar and kind of break it out a little bit more.

One is about six ways to be a wise borrower. And the other one is I believe five key terms to know about loan terms. So. We try to break it down. We talk about it in the web, and then we break it down to two blog posts and we're talking about it here. So, you know, however you like to learn about things, but those are great.

Um, because it's, it's, you know, kind of breaks down and, and in different ways. And then we also, if you are looking in particular for the MEFA student loan, we have a really good, uh, loan calculator that you can actually put in your, some information used before graduation. And it'll show you an estimated, a repayment amount based on how much you're borrowing and repayment plan that you choose. So you would try to make it as transparent as possible, both with our individual loan at MEFA, but also just good information in general, no matter where you end up borrowing.

Jonathan Hughes: Yeah. And I think that, that, um, monthly payment, yeah.

Calculator is kind of where I want families to end up. Um, especially when they're making decisions as to how much they're going to borrow to go to school, which college they're going to pick. You know, I'll say to go to the, loan payment calculator, put in your, your amount that you gonna borrow this year, see what your monthly payment is.

Multiply that by four. Yeah, because remember this is a year, one of probably four years, but maybe, maybe two, maybe more than four, depending on that. Let's agree. Um, and what's that monthly payment. And is that doable to you? Can you get there? Um, and if not, what is it that, that needs to happen in order for you to be able to afford that?

The other thing is that when I speak with parents, I want them to know. As I understand, there's no such thing as just a co-applicant, right? If you're a co-applicant on the loan, you're equally responsible as well with the student, because a lot of times, you know, people call up and they'll say, I know I'm on the loan. It's not really my loan. I'm just the co-applicant, it’s really her loan. Uh, but you know, that's, that's on your credit report as a co-applicant. So this is important to you personally, not just, you know, to the students who hopefully has borrowed their federal loans first before coming to MEFA or another third party lender.

So, you know, this is your monthly payment as well as students' monthly payments. So is this something that you can handle? And then the other thing is, um, if graduate school is a certainty or looks to be a certainty at this point. Um, make sure that if you have a defense that it, you know, you know, when that goes to into repayment, but sometimes people assume undergraduate deferred loans can be deferred to graduate school and it's not always the case. So just make sure that, that you're aware of that.

Jonathan Sparling: Yeah. Yeah, absolutely. And to the grad school. Yeah. Point, you know, I think it's, it's also important too, because generally speaking, there's less financial aid available, less free money for graduate school. It's gonna be more loan heavy. Um, and so yeah, just thinking in terms of four years.

Absolutely. But maybe even beyond that in grad school, so yeah. Yeah, definitely all good things to, um, to consider.

Jonathan Hughes: And consider in time too. Yeah. And for year one, people kind of just kind of trying to stretch every dollar out through year one and think, well, I'll worry about the second year when that happens.

Um, but you know, the time to really look at that is, is a four. So it's really where I think families should be looking at before they made that decision as to what, what is it? Can I handle this monthly payment? That's four years.

Um, But I think that's definitely important to steer folks to the blog and to all the curriculum that we have on being a wise borrower. Definitely the biggest part of that being not borrowing more than you have to borrow.

That with families that it's better to stretch when you can pay out of pocket. You know, while the student is in college is going to go further. So, is there anything else we should add to that you think?

Jonathan Sparling: No, you know, the, the, the only, the last thing I'll mention is that it, we recognize, um, you know, we talk about this all the time, so.

It's second nature to us. We recognize it might be the first time for you folks listening. So always, always please reach out, take advantage of the resources as we always say. And we'll always be the case. Everything at MEFA is free. Um, and so certainly reach out if you have questions because, um, that's what we're here for.

And, and, uh, hopefully we answered some of your questions throughout this, uh, today, but you know, we, um, available to have a conversation about your particular situation, for sure.

Jonathan Hughes: Yeah, that’s good. And then again, the information is college planning@mefa.org. Um, 1-800-449-MEFA is the phone number. You can connect with us on social media, on Facebook, Twitter, for tweets.

Anyway, as you say any way, that's convenient for you. To contact us and to have this conversation, we want to be able to do that with the obvious exception of in person these days.

But other than that, I think that's the show. Uh, thank you for listening. If you have any questions, as Jonathan said, please reach out to us, connect with us, visit the website, to see any tools that we, that we talked about or, or more that we haven't.

And of course, please subscribe. To the podcast, you can find it on Spotify, Apple, and iHeartRadio. Thanks for listening.

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