One-Income Household by Susan Reynolds & Lauren Bakken

Author:Susan Reynolds & Lauren Bakken
Language: eng
Format: epub
Publisher: Adams Business, an imprint of Adams Media, Inc.
Published: 2009-07-15T00:00:00+00:00

If you don’t qualify for an unsubsidized PLUS loan, your child may be able to obtain an unsubsidized FFEL or Stafford loan. Unlike the PLUS loan applications, these require a FAFSA. Again, interest is accrued from the date the loan is acquired and can be deferred, as with the PLUS loans, but will be added to the amount owed.

Commercial Loans

If none of the previous options is available, you can apply for commercial loans. Many banks, credit unions, and student loan companies are eager to loan money to you or your student. Although these are typically competitive with federally subsidized or unsubsidized loans, you may pay additional fees of up to 5 percent for a “guarantee” (this may be refundable if you repay the loan) and up to 7 percent in origination fees. Since there have been recent reports of unsavory lenders, it is important that you make sure the lending institution or loan company is reputable. Ask the college’s financial aid office for a list of credible lenders, and thoroughly review all loan documents, looking for hidden charges.

ONE-INCOME INQUIRY

How Much Debt Is Acceptable?

Lenders will assess your creditworthiness based on three numbers: your cost for housing, your outstanding loans, and your total debt. Basically, they want your housing costs (mortgages plus any equity loans, or rent) to be no more than 28 percent of your take-home pay. They also prefer that no more than 9 percent of your take-home pay is allocated for other recurring loans (car loans, credit card payments, other student loans, and so on). That means your total debt should not exceed 37 percent of your take-home pay.

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