Paying for College After Scholarships

Webinar Transcription

2026-7-14-Paying for College After Scholarships

Anna: [00:00:00] Hello, everyone. Good evening, or afternoon, or morning, whatever time it is from wherever in the world you’re joining us. We are so happy you’re here for our webinar with our partner, Juno, on, “Paying for College after Scholarships.” My name is Anna Vande Velde, and I’ll be your moderator today. I’m a senior advisor at CollegeAdvisor, where for the past five years now, I have worked with students one-on-one in advising sessions and have been a co-captain of our essay review team.

Anna: To orient everyone with the webinar timing, we’ll start off with a presentation, then answer your questions in a live Q&A. On the sidebar, you can download the slides, and you can start submitting questions in the Q&A tab anytime. Please note, Eddy might answer some of the questions as we get through the presentation, um, but you don’t need to wait until the [00:01:00] end to, to put your questions there It is my pleasure to introduce your speaker tonight, Eddy Ciobanu.

Anna: Um, Eddy, could you please share a bit about your background?

Eddy: Absolutely. Thanks for having me. Um, I love doing this session, Anna and I have, have, uh, co-hosted in the past as well, so it’s great to be back. Uh, welcome to all the families here. My name is Eddy again. I used to work in college admissions. Uh, I worked both in the admissions office at Yale and at Williams College.

Eddy: I was a former college counselor myself, so after that I worked at Phillips Academy as a, uh, associate director of college counseling in the office there. So I’ve seen this process from both sides, from the admissions officer perspective, from the counseling perspective, uh, and so happy to be here. I love, uh, when students are, and families are asking really good questions.

Eddy: And inevitably, and I was just talking about this beforehand, uh, you guys come with a lot of questions, and it’s great. So please keep that up. We’re gonna leave a lot of time, uh, for questions. We will do our best to get [00:02:00] to all of them, uh, or as many as is feasibly possible. Um, so please ask away. Uh, I will talk about a lot of the…

Eddy: Typically, there will be some, um, uh, some questions that are answered along the way. We’ll keep our eye on it. Anna, feel free to chime in at any point if there’s something that should be raised, if it’s a particularly relevant question. Um, but right now, uh, I’m actually currently pursuing an MBA at the Kellogg School of Management while I am at Juno.

Eddy: So I’m in an evening MBA program while I work. Uh, and I came to this because I’m actually a Juno member myself. Uh, I started by being a user. Uh, I needed loans to help pay for my grad school, uh, and that’s how I heard about the organization. I took my loans to help pay for it, and then I actually came on staff after the fact.

Eddy: So I practice what I preach. I’ve actually been able to save money myself, uh, through Juno as a result, and I love saving other people money, especially if they, uh, if you do need to borrow to help pay for loans. We’ll get a lot more into that later, but that’s kind of about how I’ve come into this.

Anna: Thanks so much, [00:03:00] Eddy.

Anna: Before you get into your presentation, I thought it might be helpful for us to just get a sense of who’s joining us. So I’m gonna open this poll. Please let us know which of those categories describes you best. And while we wait for your responses, Eddy, I was wondering if I could put you on the spot and ask if you had to go back in time to where a lot of our listeners are now, so a lot of Maybe high school juniors, seniors, um, thinking about financing their college.

Anna: What’s one thing you would do differently knowing what you know now?

Eddy: Ooh. Ooh, such a good question. So, uh, I think for me, uh, what’s important, at least what I would say is don’t be afraid to exhaust every option that’s out there, um, particularly as it relates to scholarships. Again, I know this may be, you know, common sense, and I hope it is, but one way to think about it is many times there are a lot [00:04:00] of smaller scholarships that are out there that are regional or local to your area where students may not always be…

Eddy: They may not get a lot of applications. So you’ll see, you know, maybe hundreds or thousands of applications to those big ticket, uh, scholarships, the ones that are $10,000, $20,000, $50,000, and that makes sense. Those are very popular. Uh, they’re very competitive as well. Um, but make sure you don’t overlook the smaller scholarships.

Eddy: And so if a scholarship is $500, right, and you take an hour to write that essay and it, and it pays off, you end up getting it, you can think of it as you’re getting paid $500 an hour, right? And, and I just remem- Like, when I, when I had that realization, I was like, ‘Wow, that’s a lot of money,’ right? For, for… I’m not saying it’s little work or it’s no work.

Eddy: It’s, it’s still you have to put your best foot forward. But there are a lot of scholarships that have very few number of applicants, so you have a higher chance of being accepted for those. [00:05:00] Put your best foot forward. Even if you spend two hours, three hours, a couple hours on it, um, it can have a, a really high payoff.

Eddy: You know, those $500 scholarships here, $1,000 there, uh, it, it can add up if you get a couple of those, uh, stacked on top of one another

Anna: Absolutely. Couldn’t agree more. I was fortunate to get some of those smaller scholarships, and they really did add up. Um, Eddy, just so you know, joining us, we have mostly parents.

Anna: So over 40% are parents of high school students, almost 30% are parents of college students, and then we’re also happy to have some high school seniors, juniors, and some younger high schoolers joining us as well. Thank you everyone for being here. I’m gonna close the poll, and then I’m gonna hand it over to you, Eddy, for the presentation.

Eddy: Awesome. Thank you. And it’s actually really great to see that ’cause there is some important information that is distinct for parents of rising freshmen in college, and then [00:06:00] also parents of existing college students. I’m gonna get to that when we talk about federal loan changes and the impact that it has on borrowing options for families.

Eddy: We’ll get to that in a moment, but of course, we’ll set the scene, talk about the cost of college. We have a, a, a wide array of, of audience members here. Some of you may know this already. Uh, we’re gonna get everyone up to speed. We’re gonna talk about the, uh, federal loans, uh, that are available. And again, as I mentioned, some of those important changes that just went into effect.

Eddy: I’m gonna share an update on, uh, or more information, excuse me, on private loans, how that works, a little bit about… more about Juno, how we fit into the process, and then again, Q&As. Um, you can post your questions in the Q&A, and we’ll make sure to look at those. So quick note here, I’ll just mention, uh, briefly about Juno.

Eddy: I’ll come more, more, uh, share more at the end here. But just so you know, Juno is a collective bargaining organization. Uh, we bring families together who need to borrow to help pay for college to get better rates [00:07:00] and terms. Um, this past year, we negotiated on behalf of 30… a little over 30,000 families, uh, across undergraduate and graduate programs, uh, and that’s how we build the coalition together.

Eddy: I’m part of this coalition, uh, ’cause I mentioned I’m a Juno member myself. I’m actually still in school. I still use Juno to pay for my grad loans right now. Uh, so it really is a collective effort when we all come together. Uh, there is strength in numbers, and we’re able to negotiate better rates and terms as a result Now, to get into the timeline here.

Eddy: Again, some of you may have gone through this process right now, you may have gone through it a couple of years ago, or this is completely new. So l- to make sure we’re all on the same page, the important part, uh, starts with the financial aid applications. The FAFSA is the Free Application for Federal Student Aid.

Eddy: Uh, this goes live on October first every year, and it’s the starting point, uh, of this process. You wanna make sure to, uh, if you can, look at it and apply, submit your documentations, at least [00:08:00] get it ready as early as possible, and I’ll share, uh, why, uh, in a moment. You’ll get the Student Aid Index number once you complete the FAFSA.

Eddy: Uh, this is a number that helps determine how much financial aid your family will receive. It– The number itself is not the aid award or the aid offer, but it’s an index number that then determines how much financial aid a family will qualify for. The lower the student aid number is, the Student Aid Index number is, the higher the financial need for the family.

Eddy: So then students will apply to college. Again, you may be very familiar. I know CollegeAdvisor will share a lot more information about this if you’re not familiar. You can apply certainly in the early round in November, early decision, early action. Uh, many students will apply regular decision in January.

Eddy: So you’ll apply to college, and then you’ll get your financial aid offer. Now again, uh, if you do, if you do apply early, then you’ll get your financial aid, uh, offer earlier, uh, than, than March or April. Uh, again, it can depend on your [00:09:00] application timelines. But you can appeal your financial aid offer at that point, and then from there, uh, decide which school to enroll by May first.

Eddy: Now, where we are now is here in the process of researching and applying for student loans before that tuition due date is due. So many universities are just about now starting to release tuition, uh, bills, and they’re sending them to families. If you haven’t yet received them, that’s okay. Uh, schools will send them usually all throughout July, uh, and then sometimes even up, up until August.

Eddy: Um, and then th- that’ll be the exact amount that is due, and then from there, uh, you can understand what your total needs are. You can estimate. Uh, you don’t need to wait for your tuition bill to go through this process. I just wanna say that. And in man, many cases, it’s actually… it can be advantageous or helpful to start the process early, even before you get the tuition bill from the sch- from the school.

Eddy: So what we’re gonna talk about today is this part: researching and [00:10:00] applying for loans. Um, we’ve hosted many webinars all throughout the year, uh, with CollegeAdvisor. You can access those. Uh, for those who are younger, we will host them again in the future. So stay tuned if you wanna, uh, tune in again, uh, in the upcoming, uh, later on in the, in the fall

Eddy: So first we wanna talk about, uh, just getting a, a couple, a couple goals in mind to understand the cost of college. Maximize your, uh, free money, first of all. The more you can borrow, the less you have… Uh, excuse me. The more you, you can get in free money, the less you have to borrow. That is always better.

Eddy: Maximizing grants and scholarships is key. Uh, that’s, I mentioned, uh, smaller scholarships earlier. Those will add up. You know, five hundred dollars here means five hundred dollars that you may not have to borrow and pay interest on. So that is important. And then if and only if you do need to borrow, how you can avoid borrowing at higher rates if those loans are needed.

Eddy: I’m gonna [00:11:00] go through this through the sake of example, uh, with UCLA here. So we’re looking at the in co- in-state cost of attendance at UCLA is about forty-five, a little over forty-five thousand dollars. Now, this is published on the school’s website. Uh, if you have received a financial offer from the school, it will also be included on that as well as the tuition bill.

Eddy: And so this is the cost of one year only. So to approximate the cost over four years, you can multiply this by four. Uh, of course it’s gonna be a little bit higher ’cause tuition tends to increase by about three, three to four percent every single year. But just to get a rough estimate, um, this is the cost of w- But we’re gonna focus on the cost of one year at UCLA.

Eddy: Now, there are both billed and unbilled expenses. Um, the billed expenses, which means the, the charges directly from the university, include things like tuition, any mandatory fees, food and housing, um, which is also called room and board, [00:12:00] and then also health insurance. These are some of the billed expenses, so that gets, uh, s- charged by the university.

Eddy: Now, there are unbilled expenses as well. Um, colleges will have an estimate for personal expenses, an estimate for books, right? Students are oftentimes required to purchase books on their own. You may be required to purchase your own, uh, airplane ticket if you need to fly to campus, a train ticket, a bus ticket, whatever it might be.

Eddy: Um, personal expenses are also meant to account for, you know, if you wanna dine out with your friends at the local restaurants, if you wanna buy a football t- uh, ticket at the local games, uh, any, you know, laundry, all those kind of miscellaneous expenses that may add up. That constitutes the personal expenses category.

Eddy: Now again, that can vary by each student depending on how much a student wants to spend, but it’s just an average estimate. Do know that you can waive the health insurance cost If you have he– uh, if your parents have coverage, [00:13:00] uh, for the student and it, uh, applies to the state that stu- that the student is going to college in, then you can waive this cost.

Eddy: Uh, make sure for the rising freshmen in college and their parents, those forms tend to be due around early August. Um, just make sure you check your university’s deadlines. You don’t wanna miss that ’cause again, here’s an amount where you can save about thirty-seven hundred dollars that will not get charged to you if you have that health insurance already.

Eddy: So make sure you submit that waiver so they don’t charge it, and they can excuse this ’cause the student will have coverage. So these constitute the cost of attendance. Now, for the sake of this example, I’m gonna assume a five thousand dollar scholarship that the student receives from UCLA, and this can be in the form of many different, uh, areas.

Eddy: It can be from the federal government, from state, uh, state governments, or potentially even institutional aid. Um- Pell Grants are, uh, grants through the federal government that are based on the results of the [00:14:00] FAFSA. Uh, so you tend to… It– As I mentioned, the lower your student aid index number is, the higher your financial need is.

Eddy: So Pell Grant is awarded to students who have, um, the mo-more significant financial need. As a result of that, families can qualify for up to seven thousand three hundred and ninety-five dollars in, uh, grant funding, and this is funding that doesn’t have to be paid back. There’s additional grant funding through the federal government called the FSEOG Grant, Federal Supplemental Education Opportunity Grant.

Eddy: You don’t have to remember that, um, just so you know the name of it. And this is funds that is given to the university directly for them to give to students. So students can get anywhere between a hundred dollars to up to four thousand dollars in additional grant funding. And again, this is typically reserved for students that have the highest need, as determined by the results of the FAFSA.

Eddy: And then from there, I wanted to differentiate when we talk about work-study. There’s two pieces of this. One is [00:15:00] considered w– federal work-study, which is a partially p– a campus job partially paid by the federal government and partially subsidized by the campus university. And so federal work-study is de-is designated specifically for students who qualify for federal, uh, for this program, um, because again, the federal government is paying for, uh, paying in part for the students’ wages.

Eddy: Now, many students, um, uh, can also work a campus job, but it’s just a general work-study job rather than a federal work-study job. So there are two classifications there. Again, many students will work on campus. Even if you don’t qualify for financial aid, you can get a, a campus job. You know, students are working across the cafeterias at universities, across the gym facilities, across the, um, you know, the libraries and many other places.

Eddy: A student might be a TA for a class or for a professor. Uh, those are campus jobs typically reserved through the university, and they’re not necessarily tagged as federal work-study. Um, but again, they may be [00:16:00] available, they may, uh, they may get filled up. So you wanna look at what those available options are and apply for those jobs when the postings become available, usually around, uh, a, a, a little bit before the start of the school year.

Eddy: So if you do wanna get a campus job, whether it’s a federal work-study job, that will be one classification, but generally other work-study jobs will be available to students. Uh, make sure you apply before those jobs get filled. Um- State governments also provide aid to in-state students. Um, just know that this funding is the most likely to run out, so you do wanna apply early for these, uh, state grant programs.

Eddy: And then finally, universities themselves will offer grant funding. Um, it can be in the form of need-based financial aid, but also in the form of merit scholarships. So need-based financial aid is determined by the results of the FAFSA, and it’s based on a student’s financial need. Merit scholarships are de- uh, determined based on a student’s, uh, some kind of quality attribute or skill that the student possesses that the [00:17:00] university wants to recruit.

Eddy: And so you may have a very high GPA or a very high test score, or, uh, maybe you’re a very strong, uh, athlete that they wanna bring to campus. Uh, you may be the most talented musician that they’ve seen, right? So whatever skill the student has, the university wants to recruit it, and so they may provide additional funding for you to attract you to that, uh, to their university over other universities.

Eddy: So make sure, uh, if that’s relevant, uh, oftentimes schools will automatically determine, uh, uh, grant funding, but there are some universities that have additional applications for additional grant, uh, additional merit scholarships. So keep an eye out for those, um, because there may be additional… an additional essay, for example, for some kind of, you know, ten thousand dollar scholarship that the school is offering.

Eddy: Um, this is an annual process, so you have to go through this every single year. Um, again, just as a reminder, for the sake of this example, we’re gonna [00:18:00] talk about a– we’re gonna assume a five thousand dollar grant and sch– grant, uh, or scholarship here. Um, you can make up other numbers, uh, as you wish to go through this, but I just wanna illustrate, uh, uh, a, a sample here.

Eddy: Now, from that amount, uh, we have the total cost of attendance when we subtract grants and scholarships. That constitutes the family’s total need. Uh, and the total need is also the equivalent of a family’s borrowing limit. So you can actually– you cannot borrow more than this amount, uh, as dictated by, uh, federal loan policy.

Eddy: And so that does– this doesn’t mean that you have to borrow this full amount, but forty thousand three hundred and fifty-three dollars, in the case of UCLA, is the total borrowing need. That’s the maximum amount. If a student does get additional grant funding, uh, whether it’s an external scholarship, maybe it’s a late-breaking scholarship through the university, that’s fine.

Eddy: That will then further reduce this amount, uh, this borrowing limit. [00:19:00] So instead of maybe five thousand dollars if a student gets a, a, has a ten thousand dollar grant and scholarship at the end of the summer, the amount left to pay would reduce by an additional five thousand dollars. So it would be thirty-five thousand dollars here.

Eddy: So that’s fine. That’ll reduce the capacity. That’s okay because then that’s less that you have to borrow and more scholarships in your pocket

Eddy: Now from here, uh, now is when we turn our attention to resources that the family has. So with that, families may have, uh, savings, whether it’s in a five twenty-nine or other personal savings that they have that can help contribute to the cost of college. In this case, we’re gonna assume a ten thousand dollar, uh, contribution from personal savings.

Eddy: Now, a couple points that I’ll make here. Uh, one you’ll see on the screen is generally you can think about delaying the [00:20:00] borrowing needs that your family may have if you do have available resources within a personal savings account. The further out you push out your borrowing, the less interest you’ll have to pay.

Eddy: So we see this happen with families who may be able to, uh, pay for the first full semester and then don’t have to borrow until the second semester. Or maybe you have enough to s- to pay for the first full year of college, and if that’s the case, you save on twelve months of interest accruing on that loan, uh, or on that potential loan that you would have taken but now don’t have to anymore.

Eddy: One consideration and one slight hiccup to this is because of the changes that are now in effect that started July first, families have reduced borrowing limits through the federal government. And so it may not be as clear cut anymore to just use your savings right away based on the needs that your family may have and the borrowing capacity through the federal government and what rates you might see in the private loan market.

Eddy: This will make a lot more sense as I go through it, but I just [00:21:00] wanted to give that small caveat here

Eddy: Um, I see a question here. I’m seeing a couple pop in along the way. Um, one, uh, one, um, person mentioned, what about the CSS Profile? How does that fit in with the FAFSA? Um, and do you have to complete that too? Uh, in some cases, yes. Uh, s- not every school requires the CSS Profile, but some schools do. Over two hundred schools require the CSS Profile.

Eddy: It is an additional application platform, uh, that the families will have to c– uh, that the families have to complete if the school requires it. Um, it is a bit more detailed than the FAFSA, uh, and that is used to determine institutional aid rather than federal aid. The FAFSA is used, uh, for federal aid, both federal grants and federal loans.

Eddy: Um, but many universities will use the FAFSA for institutional aid as well. Typically, the schools that have more significant financial aid budgets will require the CSS Profile as well, um, ’cause they’re very, um… It’s, it’s more nuanced in terms of, uh, the [00:22:00] questions, uh, and the family circumstances than the s- than the FAFSA is

Eddy: Um, to what extent do colleges pract… I’m just looking at some of the questions here as well. Um, to what extent do, do colleges practice scholarship displacement? So if you applied a local scholarship, will the college lower my college’s aid? It’s a great question, and it, it will vary by institution.

Eddy: Typically, uh, if a student does have any loans, uh, external scholarships will go towards that first. Uh, and then after that, if a school, excuse me, if a student does have a work component, it will, uh, if you have a high enough scholarship to cover any loans, for example, uh, then it’ll typically the order of operations is it’ll, it’ll apply to, um, loans first and then work study.

Eddy: If after that you have a, a large enough scholarship to still cover more, some colleges will try to work with the student. So if you need something like a laptop, um, to [00:23:00] help you pay for a laptop instead of, instead of displacing the scholarship amount, but then after that point, then it’ll displace dollar for dollar.

Eddy: Now again, this will vary by institution, so there’s no, there’s no one answer here. That’s why it is important to connect with each school to understand what their scholarship policy is. My hope is that first it will go towards loans again, but, um, that’s not always the case, unfortunately

Eddy: Um, okay. Uh, let’s, uh… I’m gonna keep, uh, keep moving just for the, for the sake of some time here, and then I see some other questions that maybe we might be able to get to. Um, now in this case, again, we are assuming ten thousand dollars, uh, used from savings. From there, that reduces the amount left to pay by ten thousand, so we have the amount left to borrow now at a, a little over thirty thousand.

Eddy: There’s many different options that a family can explore. There’s federal loans to the federal government through… for the [00:24:00] student to take out, uh, federal loans for the parent that they can borrow, and then also private loans, which are co-signed loans, which means both the student and a family member or a co-signer is on it.

Eddy: Now, quickly here, of the three options, if you do have to borrow, we recommend borrowing the Federal Direct Loan first. This is a loan that the student takes out, uh, because it does generally have low interest rates on it. Um, there are significant, uh, federal repayment benefits, but the downside is that there are low borrowing limits to this loan.

Eddy: On the parent side of the federal equation, the Parent PLUS Loan has a high origination fee, and it’s the same rate for everyone across the board. Regardless of what your credit score is, as long as you qualify, you get the same rate. Now, similarly, there’s now implementing– uh, the federal government now implemented a change beginning July 1st, where you can borrow a maximum of twenty thousand dollars per year.

Eddy: I’m gonna go into depth on each of these three, uh, and so, uh, don’t worry if [00:25:00] you have questions so far. I’m gonna talk about each of them. But, uh, on the private side, again, there’s usually no origination fee. Uh, there are a few protections that’s the downside of private loans, but you can borrow up to the cost of attendance, so it is helpful if you need to borrow more than what the federal government will allow you to borrow Now, before we talk about the specifics of each of those, I wanted to emphasize both the importance of thinking about financial aspects of the loan process, but also some of the non-financial components.

Eddy: So like we talked about the origination fee, which is just the cost of taking out the loan in the first place, that is gonna, um, that matters. The interest rate, it’s oftentimes the number that, uh, and the metric that families focus on the most and for good reason. Um, but the rate type as well. Are you looking at a fixed rate loan or if, or a variable rate loan?

Eddy: And then similarly, as we just highlighted earlier, are there any borrowing limits to these loans? Um, because if that’s the case, then you have to explore, uh, potentially [00:26:00] other options. Now, how do you even qualify for these loans? That’s an important question to ask. Whose name is the loan in, and then when do you have to start making payments on those loans?

Eddy: Do you have to start paying right away? Do you have– Uh, can you wait until the student graduates from college, uh, and start making payments at that point? Those are important questions to be asking. And then also what happens if there are any hardships that you, that the student or the family faces? Are there any protections for that?

Eddy: So let’s get into it. We’ll talk about the federal direct loans first. Again, this is the loan that the student can take out. It’s, uh… Every undergraduate student is eligible. Freshman year, the borrowing limit is five thousand five hundred dollars. Uh, and it’s through the federal government, so there’s no credit check required, and there’s no income required for this, uh, for this loan.

Eddy: The student is solely responsible, so this is a loan that’s gonna be in their name. It’s a fixed rate at six point five two percent, uh, for the [00:27:00] upcoming academic year, and it also does have a one point oh six percent origination fee associated with it. Um, so just be mindful of that. The lo– The interest rate is lower than the Parent Plus, as we’ll see in a, in um, a, a few slides here.

Eddy: So it can be an attractive option. It is why, part of the reason why we say use this first, but also other reasons why, uh, this loan qualifies for, um, federal forbearance, uh, as well as deferment options and potentially public service loan forgiveness. If the student is entering into some kind of public service work and the student makes consistent on-time payments over the course of ten years, they’re eligible to have their loans, the remaining balance of their loans forgiven.

Eddy: So that is a huge benefit, uh, and one of the reasons why if, if, if a student doesn’t yet know exactly what they wanna do, that flexibility can be important. Um, and so it’s, uh, so those are some of the primary reasons why we encourage this to be the first point of contact if the first option, if [00:28:00] you do need to borrow.

Eddy: Payment will begin six months after the student graduates, so six months is the grace period. And as I mentioned, there are, uh, there are very strong hardship protections associated with this loan. If you have this loan, and I encourage students, if you have your financial aid offer ready for the, the seniors or even some of the returning students or the parents of, of current college students here, pull out your financial aid offer and see if you have any part of that– any, if any part of this loan is subsidized or if it’s fully unsubsidized.

Eddy: A maximum amount of three thousand five hundred dollars of the five thousand five hundred can be subsidized. And if that’s the case, then the federal government is paying that interest on the, on the three thousand five hundred while the student is in school, plus the grace period. So interest always accrues on a loan the moment it’s, it’s dispersed.

Eddy: But if it, if a student has a subsidized loan, which again, not every student will qualify, it’s based on the results of the FAFSA. [00:29:00] If you have a subsidized loan, it’s not that you don’t have any interest on it. The interest is accumulating, but the federal government is paying that interest on your behalf.

Eddy: And then the remaining two thousand dollars interest is still accruing, and the student is responsible for that interest. You don’t have to make payments on it, uh, and in fact, many students actually don’t. But just know that if you’re not making payments on the interest, the interest is accumulating over time, and it will get added to the principal balance of your loan if you’re not making those payments.

Eddy: Um, and that will become your new loan balance after you graduate, plus that six months after

Eddy: And so from here, um, I wanted to highlight a, a couple, um, a couple, uh, other updates to this. The borrowing limit, as I mentioned, is five thousand five hundred, but I was referring to dependent students. It actually goes up to six thousand five hundred for sophomore year and then seven thousand five hundred for junior and senior [00:30:00] year.

Eddy: Now, when I– uh, when we look at the category of independent students, that’s a very specific definition as it, as it pertains to the FAFSA. This is not who, who is claimed on the tax returns or any de-designation related to IRS filing status. Uh, independent student status, uh, as determined by the FAFSA is a student who’s met any of the following criteria that you see on the right side of the screen.

Eddy: So they’re at least twenty-four years of age, uh, they’re married, uh, the student is a graduate or professional school student. So every graduate student, uh, if you’re pursuing graduate school after undergrad, every student is considered an independent student, uh, so parent, parental information is not going to be expected because parents are not expected to contribute to graduate school.

Eddy: Um, if the student is a veteran or member of the armed services, if they’re an orphan, an emancipated minor or homeless or at risk of being homeless, uh, these are all, uh, valid reasons for a student to be independent. It does r– it will require documentation, so you cannot just claim [00:31:00] these statuses without proof.

Eddy: Um, but if a student does fall into any of these categories, then they can borrow more for their undergraduate degree. Um, nine thousand five hundred freshman year, all the way up to twelve thousand five hundred for junior and senior year. Now, similarly, if you can borrow under those terms, if your parent is also denied the Parent PLUS Loan as a result of adverse credit history.

Eddy: I’m gonna share some examples, uh, in a, in a few minutes here on, on why your parent might get denied Parent PLUS. But as long as you don’t have an adverse credit event on your history, then most parents will qualify for the Parent PLUS Loan So if you do not need to borrow more than five thousand five hundred dollars, then really the best bet is just to stick with the Federal Direct Loan.

Eddy: Um, if you do need to borrow more, then that’s where we can have the conversation of comparing federal, uh, Parent PLUS options with private loan options and see which one makes the most sense for your family. Now, to get into the [00:32:00] private lo– uh, the Parent PLUS option, excuse me. This Parent, uh, PLUS option typically is higher interest rate.

Eddy: So for the upcoming year, it’s about two and a half percentage points higher than the Federal Direct Loan. It’s set at nine point o seven percent. Uh, and the unfortunate part as well is that it’s not just a higher interest rate loan, but it has a higher origination fee as well. So four point two three percent, which is again, just the cost of taking out the loan.

Eddy: If you borrow a hundred dollars, you have to actually borrow a hundred and four dollars and twenty-three cents. Or, uh, i-in the case that you see here, if you actually borrow a more reas– a, a more, a typical amount, the full twenty thousand dollars, that fee on that twenty thousand dollars is gonna be eight hundred and forty-six dollars, and that’s the fee that goes to the federal government just to take out the loan.

Eddy: So again, there’s borrowing limits now in place, uh, for students who are starting in the fall of twenty twenty-six, and then every student younger than them. Um, for the Parent PLUS Loan, the parent is [00:33:00] responsible only. The student is not on this loan. There’s nowhere for the student to be on this loan. So just be mindful of that.

Eddy: Um, legally, the parent is the one that’s gonna be on the hook for this loan. The standard repayment is sixty days after the loan is dispersed. But just know that you can request deferment on these payments. You have to take that step to request it. Uh, you’ll get deferment while the student is enrolled in college plus the six-month grace period, but you have to actively ask for it, so it’s not the default option.

Eddy: Um, make sure if that’s important to you to go in and request that, uh, so that you can, uh, fully defer while the student is in college, and so you don’t have to make payments on that. The Parent PLUS makes sense after this, uh, Federal Direct Loan. Um, and again, everyone who qualifies gets the same rate. Um, but we’re gonna see, uh, in a moment here, uh, when it makes sense and when it may not make sense, uh, for the family to use this option.

Eddy: This is available for all parents as long as their student is [00:34:00] enrolled, their undergraduate student is enrolled in at least half-time at the university. Um, you apply on studentaid.gov. So when you get the slides, you can click the hyperlink that’s included here. You’ll have to sign the Master Promissory Note as well.

Eddy: But I mentioned some of the examples why a parent might be denied Parent PLUS. So if you’ve had a recent bankruptcy and that’s still on your credit report, uh, if you have any more, uh, any debts that are large debts over ninety days delinquent, um, or any kind of wage garnishment or any liens, uh, on your profile, those might be reasons why a parent is denied If you are denied, uh, if a parent is denied, that’s not the end of the road.

Eddy: You can still get an, an endorser for the Parent PLUS Loan, which is effectively the same thing as a cosigner. So the parent would get a cosigner for the Parent PLUS Loan. That person would be used to secure the loan. In the case that a parent cannot pay, then the endorser would then be expected to pay Now here’s the important part.[00:35:00]

Eddy: I referenced these changes that are going into effect, uh, and have gone into effect starting July 1st, uh, so just two weeks ago. There’s an annual limit of $20,000 per student if the student is starting college in fall of 2026 and everyone younger than them. So all the rising freshmen in college right now and then all the high school juniors, high school sophomores, everyone younger, this is applicable to you.

Eddy: This is the new borrowing limit in place. It’s not only an annual limit, but also a lifetime aggregate limit. So parents can only borrow $65,000 total for any student over the course of their undergraduate career. Now, if there are multiple children in college, a parent can borrow $20,000 per student, so each student has their own limits.

Eddy: But the important thing to know here is if there’s only one student in college, it doesn’t matter which parent borrows. It can be a c- one parent only, it can be a combination of both. But [00:36:00] for that specific student, uh, only one or both parents can borrow a maximum of $20,000. So it doesn’t matter if one parent borrows the full $20,000, if one parent…

Eddy: You know, both parents borrow $10,000 each. Whatever permutation you wanna do, uh, the maximum amount per student is that $20,000. Now, a really important note here, because there are parents of current college students. If you have a current college student or if you yourself are a current college student, these limits may not apply to you.

Eddy: You have to have borrowed a federal loan in the past. So let’s say you are currently going into your sophomore year in college, then you had to have borrowed either a Parent Plus Loan last year or a Federal Direct Loan in the student’s name last year to be eligible. If you did not borrow any loans, uh, through the federal government last year, unfortunately, you are now subject to the new, uh, borrowing limits, the borrowing restrictions.

Eddy: But if you did borrow a federal loan last year, then [00:37:00] you can qualify for the legacy exception, which is basically colloquially known, colloquially known as being grandfathered in to the old terms of the Parent Plus, which means you can borrow up to the cost of attendance. So the law passed last year, it went into effect this year.

Eddy: So part of that, uh, part of the, um, provisions within that is that current college students would not be affected by these new changes ’cause you chose to… You, you enrolled in college before this law was passed, and so you would not be affected by the, the changes. Now, you also have to stay enrolled in your current university if you wanna maintain that legacy provision.

Eddy: If you do transfer universities, then you’d be subject to these new borrowing limits that you see on the screen here. So just know that you have to remain in your current program of study to- to maintain eligibility for the borrowing, the old terms, which is you can borrow up to the cost of attendance minus any grants or scholarships that the student receives.

Eddy: So historically, [00:38:00] Parent Plus was the default option. Parents could borrow, again, up to the cost of attendance minus any scholarships, so you could borrow up to that total borrowing limit. But now that’s not the case anymore as a result of these changes I’m happy to answer any questions, um, uh, along the way.

Eddy: Feel free to post those in the Q&A. I’m gonna return to the example that we were discussing with UCLA, and we’re gonna, uh… Just to remind you, uh, this student had a five thousand dollar scholarship. We’re assuming ten thousand dollars that the family can contribute. And then from there, I’m gonna assume the student maximizes the federal Direct Loan every single year, and that the parent utilizes the full Parent PLUS every single year.

Eddy: What does that look like? So here you can see, uh, the breakdown. Now, in the first year, the Direct Loan is fifty-five hundred dollars. You see the total unmet need is about forty-eight hundred dollars. That unmet need number goes down in years two and years three because the student can borrow one thousand [00:39:00] dollars more.

Eddy: So the Direct Loan increases, that yellow part increases by a thousand dollars. Now, the big dilemma that we’re facing here is what happens in senior year. So over the first three years, right, we assume the maximum borrowing limit through the Parent PLUS loan. The parent borrowed twenty thousand dollars in years one, two, and three, so that’s sixty thousand dollars in total.

Eddy: Now, with the annual cap of sixty-five thousand dollars, a parent is only eligible to borrow five thousand dollars in that senior year, and then you, you will have met the maximum cap. This leaves a significant unmet need of almost eighteen thousand dollars, so the family has to figure out some way to pay for this.

Eddy: Now, with these caps in place, many families are effectively forced into the private loan market. So this is why it’s important to know even if you didn’t initially plan on looking at private loans, uh, it’s [00:40:00] important to know what rates you qualify for because you may be faced into the… you may be forced into this scenario where federal loans are not enough to cover your total, um, borrowing needs.

Eddy: Now, again, as I just mentioned, you might have to go through, uh, other options to have both, um, Federal Direct Loans, Federal Parent PLUS Loans, and then also private loans on top of that. Now, I’m gonna share a little bit about the private loan market, just so you have an idea. It is important to be, uh, educated and well-informed on this so you know what rates you qualify for, whether you qualify, and then what you can expect to receive as a result.

Eddy: Private loans typically don’t have origination fees, so there’s no cost to take them out. But the interest rate varies entirely based on your credit score and your financial metrics. So things like credit score, income, debt to income ratio, those types of factors that lenders are using. Um- Usually there’s a minimum credit score of around six fifty.

Eddy: For some lenders [00:41:00] it can be… It can vary six fifty to six seventy or six eighty. So if you don’t have a strong credit score, you may not even qualify for private loans. Or if you have a credit score just above the minimum qualification ranges, then you might be seeing high interest rates. You can qualify for the loan, but you’re seeing high interest rates as, as a result, and those are gonna be expensive loans to take out.

Eddy: Um, now, that may not be as attractive of an offer, so this is why, again, it’s important to know what rates you qualify for and then how you can plan accordingly as a result. On private loans, the student is typically the primary borrower, and then a parent or anyone else, um, is a cosigner on that loan.

Eddy: That is a, it’s a joint responsibility. You can take both fixed rate and variable rate loans, uh, variable rate loans. The most common, at least that we see with Juno families, is fixed rate loans ’cause it makes it easier to plan. You have the same rate across the life of the [00:42:00] loan instead of being subject to the volatility of the market with variable rate loans.

Eddy: And then you can select your payment terms. The payment terms you select and your rep– and when you choose to begin payments will also affect the interest rate. So if you select a five-year loan, for example, then usually you’ll see more favorable interest rates than a twenty-year loan because you’re paying the lender back on an earlier timeframe.

Eddy: So lenders will have five-year, seven-year, eight-year, ten-year, twelve-year, fifteen, twenty-year loans. It really varies, and you can select the loan terms that make the most sense for your family. I’m gonna speak in just a couple slides on the repayment options that are at least, uh, most common, what those are, uh, but that will also impact the interest rates that you see.

Eddy: So again, Parent Plus is an option for families, but, uh, now starting this month, um, families might need to explore, uh, private loans, uh, just because you may hit your f- your Parent Plus caps and not have enough [00:43:00] to borrow through the federal government A few common questions here, uh, again, is that, um, you should consider private loans only after the federal direct loans.

Eddy: I wanna emphasize that time and time again. Um, if you do want the loan to be in both the child’s name, the student’s name, and the parent’s name as a cosigner, then private loans are the way to go. Parent loans are exclusively the parent’s responsibility. So for better or for worse, that may not be as an attractive offer to parents.

Eddy: Um, many families that I’m speaking with have, um, parents have their own loans that they’re still taking care of, either from gra- from undergraduate or graduate school. And so if that’s the case, a parent may not want to have, uh, all these additional Parent PLUS loans in their name ’cause they are solely responsible for that.

Eddy: So a cosigned loan might be an attractive option for that reason. Um, if you have really good credit, then you can qualify for lower rates than what you’re seeing in the Parent PLUS. That’s a common reason parents will go the [00:44:00] private loan route. But also some families might be forced into private loans if you’ve hit your federal cap in borrowing through the Parent PLUS program Now, I mentioned repayment options.

Eddy: So typically it depends on the lender, um, but many of the lenders that Juno works with, you’ll see these as four options. You’ll, um, every lender that we work with, we make sure that they have a def– a fully deferred option where you don’t have to pay anything while the student is enrolled in college. Uh, and then plus the grace period, which is usually six months.

Eddy: Some lenders have a nine-month grace period. So for basically four and a half years, you don’t have to make any payments. Um, it’s very common for families to do that. So we see about thirty-four percent of Juno families do this. Now, what’s the most common option is the fixed payment option. Um, students or families are making a very small, usually twenty-five dollar a month payment, um, during their deferment period.

Eddy: So it’s a reasonable expectation. Um, most students can do twenty-five dollars a month. [00:45:00] It’s not that, that much of a financial hardship. The reason why this is very popular is because, um, oftentimes families, uh, will choose this for the autopay discount that can also come with it, which makes it more attractive compared to the deferred option.

Eddy: Um, so if you connect your bank account and you allow the, the lender to withdraw twenty-five dollars automatically from your bank account every single month, then they’ll give you a slight discount on your interest rate, um, in order to do that. Um, so it’s, it is an attractive option for many families, uh, and so that can be helpful to further reduce your interest a little bit.

Eddy: Your, your, excuse me, your interest rate a little bit. Another option is interest-only payments. So if you can pay the interest while the s- um, and only the interest, uh, while the student is in college, then your final balance will be the same amount that you originally borrowed. It won’t be more, which is great.

Eddy: If you can make those payments, I recommend it. Um, the final option, which is not popular or not common, I should say, but of, [00:46:00] uh, but the option where you would pay the least amount in interest is doing immediate repayment. So once the loan is dispersed, you begin full principal and interest payments, uh, while the student is in college.

Eddy: Again, not very common, especially for undergraduate families, but it is available, uh, and if you choose this option, then you’ll pay the least amount in interest over the life of the loan

Eddy: A couple things here to know as well, um, this is a very common question we get all the time. Um, your borrowing is one year at a time. So financial aid is calculated on an annual basis. Cost of attendance changes annually, and so you’ll need to go through the, uh, if you do need to borrow, you’ll need to go through the loan process, uh, one year at a time.

Eddy: You cannot borrow for multiple years. Um, if you pay back the loan faster, then that’s great. Um, the loans that, excuse me, the lenders that we work with at Juno don’t have any prepayment penalties. Federal loans [00:47:00] also don’t have, uh, any prepayment penalties. I can’t speak to all lenders out there, so you’d have to double-check.

Eddy: Uh, I know for sure the lenders we work with don’t have any prepayment penalties. So you can do something like, for example, that twenty-five dollar a month payment that I was mentioning. And if that’s the minimum amount you can commit to, great. Just do that. Uh, meet your minimum payment obligations. But maybe one month you can pay a hundred dollars a month, or maybe the parent gets a bonus and you can contribute a thousand dollars a month that month.

Eddy: Great. If you can make those payments, uh, then you can start paying both the interest down and also any potential principal payment, uh, earlier on. And then, um, interest starts accruing, uh, once the money is sent to the school. Uh, it doesn’t accrue when you sign the loan. Uh, you actually have time to cancel if you need…

Eddy: if you want to. Um, so the only one the loan gets disbursed to you, to the university, does interest start accruing. Now, a couple, a couple final [00:48:00] things. Uh, I’ll go through, uh, sort of these final slides here, and then, um, we’ll have plenty of time for questions as well. And a-again, I wanna… Well, we can s- We can stick around after for anyone who, uh, for all the questions that are here, and if you, if anyone in the audience is willing to stay.

Eddy: But I’ll get through some of these final slides here, and then we’ll get to Q&A. Um, June and July are by far the most popular months, especially I would say even July, ’cause this is oftentimes when, um, when families are getting that tuition bill. Um, but just know that, uh, this timeline is if you haven’t started yet, it’s okay.

Eddy: This is, uh, June and July are the most common months to go through this process. To get approved for a loan is fairly quick. Um, sometimes it’s the same day, uh, but usually budget around one to three days for that approval process. And again, the loans are not disbursed, uh, until, um, until the s- uh, tuition due date.

Eddy: The university also has to certify that loan. Um, so that’s oftentimes what takes the longest. I would budget about two weeks for that. [00:49:00] Um, so if you are facing, uh, earlier tuition due dates, uh, from your university, make sure you leave about two, two and a half weeks for that process

Eddy: Now, a couple, a couple notes here as well. Um, even if you don’t know, uh, don’t have your tuition bill yet, you can still apply for loans using the f- um, the estimate on the financial offer that you received. So if you do that, the reason we recommend starting early in June and July a- and not waiting till the very end to go through this process is if you see competitive rates, uh, that you like and that work for your family, apply and lock in that rate.

Eddy: When you apply, you hold that rate for thirty days. It’s good for thirty days, and that’s, uh, that shields you from any other fluctuations. Rates do change on a monthly basis, and rates can even change weekly. Um, they may not be as dramatic of a change, but there may be a week where a lender chooses to increase [00:50:00] their rates or chooses to, to decrease their rates.

Eddy: We have seen it, uh, and I’ve spoken with families who wish they, uh, they applied when, when we, um, when we knew and we notified them that there was a rate drop with our lenders. But again, that’s part of the fluctuations that happen within the marketplace. So if you see a rate that you like, lock it in and you can have that for thirty days to sit on it, to think, and also to shop around You have 30, that 30-day window to shop around, and if you do that, if you look at multiple different lenders, then that’s okay.

Eddy: Um, if your credit is run multiple times for the same type of loan, so in this case it would be a student loan, then that will count as one inquiry on your credit report. You just have to keep it within this 30-day window, within this contained timeframe. So again, you’re expected to shop around. Um, my hope and our hope at Juno is that you explore options through Juno, but don’t take my word for it.

Eddy: You may or may not get the best rates. We hope you get the best rates through Juno, but there are some families that might, um, [00:51:00] based on their, uh, their financial criteria, you might see a better rate through another lender. And if so, that’s great. Shop around, um, because we actually do have a rate match program.

Eddy: I’ll get to that in just a moment here. Um, but, uh, there are a lot of benefits of shopping around and seeing what lenders will offer you the best rates for your situation. Um, some of the Juno benefits include a 1% cashback bonus for all Juno families who use us to take out their loans. Juno is not a lender, and I wanna be clear about that.

Eddy: We actually, we work, uh, sort of as an aggregator. Um, we’re similar to a broker, a little bit different, uh, just technically from that, uh, ’cause we don’t work with, um, a vast array of, of lenders that are out there. We are very specific with the lenders we work with, and those are the ones that have agreed to certain rates and terms for the Juno membership.

Eddy: And I’ll also add Juno membership is free, so there’s never any cost. We never ask for your money. There’s no one on our web- nowhere on our website to include your credit card information or nothing like that. So we say membership just [00:52:00] because we are a collective group together. Um, there’s never any cost to using Juno services.

Eddy: Everything that we do is free for families. And so, uh, the benefit of Jun- of using Juno is you get that 1% cashback bonus on the amount of your loan. If you go through our rate match program that we have, uh, we can actually, uh, bump up your cashback bonus to 2%. So if you are taking out $30,000, you would actually get a $600 cashback bonus And so a few things to know.

Eddy: Uh, again, we’re free to use. Um, there’s no hard inquiry on your credit report to check your rates. Um, so I highly recommend if you haven’t yet checked rates, just check your rates. It’s… Uh, there’s no downside to it. Um, through Juno, we will always have, uh, lenders that have no hidden fees and also the ability to not pay while you’re in school.

Eddy: If you have questions, feel free to reach out. I’m happy to share my email address. Um, I… A lot of my time, uh, at this time of year is spent one-on-one with families, uh, talking through your options, [00:53:00] um, figuring out what makes the most sense for your situation, even if it’s not Juno. Juno doesn’t make sense for all families, and we’re very upfront about that.

Eddy: We’re very transparent. If there’s options that are better for you, so for example, um, e- just today I was talking to a mom who didn’t have the best credit, and that’s a reality, right? Uh, we talked about how to help build credit over the course of the next, uh, few years. Um, but the best rate for this family was actually the Parent Plus.

Eddy: And then we talked about how to strategize leveraging that plus, um, some other, um, the, the need for a small amount of private loans, uh, for that freshman, for the freshman year of, of college for this student, uh, for their student. So again, sometimes, uh, the offers through Juno are not the ones that make the most sense.

Eddy: Sometimes they are, but we wanna make sure you’re getting the best deals, uh, that are available for your family and you know about those and how to navigate the process. So, uh, I mentioned this rate match program [00:54:00] as well. Uh, basically the way it works is that if you shop around, and we actively encourage you to shop around, please do, uh, Juno can rate match 11 different national lenders.

Eddy: And so if you get a better rate through another national lender, send that to us at [email protected]. Send us the terms of your loan. One of our lenders will be able to rate match, uh, to give you that same low rate, and then Juno will give you the two percent cashback bonus. I went through that quickly, but again, it’s a fairly straightforward process there.

Eddy: Um, now if you do have, uh, if you do wanna sign up and check your rates, uh, please use the link here. You can use the, the QR code or the hyperlink here as well. So with that, uh, I will leave this slide up and then let’s turn our attention to Q&A

Anna: Awesome. Thank you so much, Eddy. Um, like you said, that’s the end of the presentation part of your question. We’re gonna move to the Q&A now. I will read each one out loud and paste it into the public Q&A so you can als- [00:55:00] both see and hear the questions before Eddy responds. If your Q&A tab isn’t working for whatever reason, please just make sure that you joined from the custom link in your email, joined the webinar from that link, and not from the webinar landing page.

Anna: So you might need to close out, go to your email, come back in. But this is being recorded, and it will be emailed to everyone who registered, so no worries about missing anything Um, lots of good questions, Eddy.

Eddy: Mm-hmm.

Anna: Um, let’s see.

Eddy: I will see- Oh … as you’re looking, um, I saw one, uh, that I know you answered, and I’ll just add one final thing to it, ’cause the question was if, you know, if you know you won’t qualify for federal financial aid, do you still need to complete the FAFSA?

Eddy: Yes, absolutely, to double down on, on what you mentioned, Anna, that some schools actually still require the FAFSA to be filed for merit scholarships. That’s a reason. But also if you wanna get federal loans, you also need to inc- uh, you need to submit the FAFSA. So if you [00:56:00] wanna take out the f- um, the Federal Direct Loan or the, uh, or the Parent Plus, you also need to submit the FAFSA.

Anna: Thank you for catching that and adding that, Eddy. Um, if students are eligible for the Federal Work-Study program, how, how, how do they access that?

Eddy: Yep. Uh, you’ll be, uh, you’re… It should say Federal Work-Study. Um, and you have priority at, on those jobs. So that would be a conversation with your financial aid office to make sure that you’re aware of which the jobs those are.

Eddy: They’re specifically designated as Federal Work-Study, which is why it, it… The designation actually does matter ’cause priority is given to students from, um, who qualify for it. Um, and you’d be able to identify which jobs those are. Typically, there, uh, there’s a filter on most universities, um, whatever job search platform they use or where- wherever their listings is for, for campus jobs.

Eddy: There’s a filter for that. Um, but make sure you double-check that with the financial aid office. [00:57:00]

Anna: Thank you. Do you know if a student goes out of state, can they after a year or two become residents of that state so they qualify for in-state tuition?

Eddy: Excellent question. It varies by state. Um, there are some states that are notorious in not allowing this.

Eddy: Uh, California is one example. Uh, but there are other states that, uh, that are more willing and, and actually friendly to it, and might even, might even provide resources for you on how to claim residency. Um, again, the UC system is the most, one of, if not the most popular public, uh, public college systems in the, in the country.

Eddy: Um, so I understand kind of from their demand perspective why they wouldn’t allow this. There are other university systems that are less popular, uh, and they want, actually want to attract students from out of state, and they can do that. Um, one of the incentives might actually be the ability to [00:58:00] qualify for in-state residency after one year, potentially depend- you know, it, it will vary by, by school.

Eddy: Um, there are some schools that are much more friendly to it than others. Excuse me, there are, there are some states that are much more friendly and willing to, to consider that than others

Anna: Um, but my day job, I’m a lawyer, and we joke that our answer is always, “It depends.” And it seems like that’s often true with financial aid and financing your college.

Anna: It depends on, on a lot of nuances. Um, Eddy, what do you think… Like, with all the changes going on, do you think schools are gonna be more or less generous with merit-based scholarships?

Eddy: Great question. I saw this, uh, I saw this question pop in, uh, as I was, I was, I was looking initially, and I was like, “All right.

Eddy: We- we’ll save that one towards the end.” Um, so, you know, in terms of, um, uh, in terms of what I think, um, my [00:59:00] hope is that schools will be more generous. Again, I, um, uh, that’s sort of a hope and a prayer, um, more than anything else. Um, a couple of things I am worried about just with the federal changes, I am worried about families being able to pay for a college.

Eddy: There are gonna be many families that don’t have strong credit, uh, either that will not qualify for federal loans, as we mentioned, ’cause that is part of the criteria for… Excuse me, that will not qualify for private loans. I misspoke. Um, part of the criteria for private loans is certain credit score, right?

Eddy: And if you don’t have that credit score, you may not qualify entirely. So let’s say you go to a school that costs, and even in-state schools, right? We looked at, uh, we looked at, uh, the UCs. Um, UCLA is, is over $40,000. So if you can only borrow 20 through the federal government, how are you gonna make up the difference, that other $20,000?

Eddy: Some families, there’s no good answer, right? And there, right now there is no good [01:00:00] answer if you don’t qualify for additional private loans. So my concern is that many families may not be able to enroll in university this summer as you’re navigating, as you’re, as you’re… You know, you may have not heard about these changes.

Eddy: You may not know about these changes. Or even if you qualify, you might be seeing very expensive and high interest rates, right? So that loan becomes very expensive. I cannot in good conscience recommend a family take out a $40,000 loan at a 15% interest rate. Like, that is gonna be so expensive. And at that point, families are gonna ask the hard question, like, “Is this worth it?”

Eddy: Right? I’m not sure. I can’t answer that for you. But I also know that that kind of loan burden is gonna be very difficult for many, many families. And so students may start, um, choosing not to enroll, and then we’ll see. Again, this is kind of a ri- I promise I’m, [01:01:00] I’m, I’m getting to that, to the question. My concern is that colleges, um, may see drops in enrollment, particularly some of the, you know, the, the most selective colleges typically you’re not, they’re not gonna have to worry.

Eddy: But some of the other universities, um, as we think about them, they may see enrollment drops, and they may have to offer additional grant funding in order to attract students, right? Because if you can’t pay, then you just may choose not to enroll And if that’s the case, many universities are gonna see, uh, may potent- my fear is that many universities will see significant, um, summer melt, which is basically like students at this point in time just drop off and they choose, even if they committed, they, they will not enroll starting in the fall.

Eddy: Um, so again, I’m not sure if that means colleges will have to offer more aid or that will also put colleges in e- even further financial bind if they’re not able to bring students in. It’s sort of a, I don’t know, it’s a chicken and egg problem and I don’t know which one, which one is first. [01:02:00]

Anna: Yeah. Yeah. Um, I don’t think anyone could know.

Anna: Uh, we’ll all be keeping our eyes on it for sure. Eddy, what would happen to a student who had loans if they were then, if they then joined the military or got into a military academy?

Eddy: So, um, if you’re going to a military academy, uh, first of all, tuition is gonna be free, um, as long as you, uh, commit your service, complete your service requirement after.

Eddy: So there isn’t necessarily a, a concern there. Um, if you, uh, if you go to a school that has, um, something like ROTC, for example, um, then, uh, there are possibilities for deferment. Um, I’d have to double-check. Uh, it will be lenders, lender dependent. Um, and so doesn’t … Not every lender will necessarily grant a deferment.

Eddy: Um, it’s similar to how if a [01:03:00] student enters graduate school as well, um, some lenders would be willing, will be willing to defer while that student’s in graduate school, but I will double, I, I can double-check on it.

Anna: Thank you. Do students need to declare all outside scholarships to their university?

Eddy: Uh, you do.

Eddy: Uh, yeah, so, uh, you do have to declare it. Um, and so that- those, those funds typically get sent to the university anyways. Now again, there can be a different scenario if, if s- if a small scholarship is willing to send you the funds directly for you to apply, you know, apply to education expenses, then that’s between you and, and that scholarship.

Eddy: Um, some places may be willing to do that. Most cases the, the scholarship gets sent directly to the university, so there’s no choice but to, but to declare it, um, because the, the financial aid office has to process that

Anna: That makes sense. Um, could you address how students might appeal a [01:04:00] financial aid offer?

Anna: And, um, any tips on how to effectively negotiate better packages? Maybe you have a- an offer from somewhere else. How should families be thinking about this?

Eddy: Ooh, we’ve got a whole webinar on this. Uh- I was gonna say-

Anna: And,

Eddy: and

Anna: so- … check out our pa- our, our webinars page. I’ll link it in the chat, but I’ll let you answer, Eddy.

Eddy: Absolutely. So I’ll just mention something quickly, um, ’cause, uh, just know that you can submit an appeal. That’s oftentimes the biggest piece. Now, with that, there are valid reasons to appeal, uh, appropriate reasons to appeal, and reasons that would not be considered by financial aid offices. And so if there’s been any change in circumstances, financial circumstances, that’s oftentimes the biggest one.

Eddy: If there’s multiple children enrolled in college now. So FAFSA, for example, doesn’t consider that anymore, um, when the FAFSA was, uh, redesigned and simplified. Um, so if you have multiple children in college, that’s a, a reason to appeal, ’cause obviously paying for [01:05:00] two children is much harder than just paying for one child in college.

Eddy: Um, so you just need to let financial aid offices know that that’s the circumstance and the situation. If there’s any other circumstances that were not reported on, uh, on the FAFSA, like high medical expenses, uh, elder care, right, um, ongoing, um, medical treatment. You know, if there’s some kind of chronic condition going on, anything that was previously not shared, those are, those are absolutely important reasons to submit an appeal, uh, so that you can be considered for additional need-based scholarship.

Eddy: I will also highlight, um… I don’t know if it… Where can it? Uh, I don’t know if I can pa- oh, can I paste it in, can I paste it in the chat as well?

Anna: Yes.

Eddy: Um, so I’ll paste actually our, um, our appeal… Is it okay if I paste our appeal tool in the chat?

Anna: Absolutely.

Eddy: So-

Anna: I think it’s even the webinar I posted I think also includes that link.

Eddy: It does, yeah. So this is… We, we created this tool. It’s free. Uh, feel free to [01:06:00] use this. Even if you’re just playing around with the numbers, start now so you understand kind of what the appeals process is like. Uh, this… I just pasted the link in the chat here. Uh, it’s a free tool that we created. Everyone has access to it.

Eddy: Um, and, uh, it was actually born out of families reaching out to us to… W- we manually read appeal letters and gave feedback. Um, we found that it actually worked, um, because we’ve been hosting these appealing, uh, appealing financial aid webinars over the last several years. And so now we actually created a tool, uh, that, uh, that does it automatically.

Eddy: Uh, and so you can submit information here. Uh, you can select the type of appeal that you wanna, uh, include. It’s a need-based appeal, a merit-based appeal. And then, uh, if you select a merit-based appeal, for example, you include the schools that you, um, that you were admitted to, the scholarship at those schools, and the tool will actually select the best fit university to submit an appeal.

Eddy: ‘Cause you wanna submit one from a near-peer university, right? So let’s say you got, you know, you got admitted to Ohio [01:07:00] State, um, but you submit an appeal from, um… I’m gonna make up this, you know, like USC. Which USC is a great school, like Ohio State is a great school, but they handle financial aid very differently.

Eddy: USC is private, uh, Ohio State is public, right? So like, as long as you submit a near-peer school, uh, that’s gonna be the best, uh, comparison point. So many things like that. I’ll leave it at that ’cause the tool is, is fairly self-explanatory. But of course, if you have any questions feel free to reach out.

Anna: Thank you. Um, this participant asked, “Can and why would a scholarship reduce FAFSA amount?” I’m guessing they meant can it reduce, um, a, a grant from the university? But I wanted to read their question as submitted and throw it to you, Eddy.

Eddy: Sure. So, um, so a scholarship if… Maybe this means like can an outside scholarship is how maybe I was interpreting it when I saw the question.

Eddy: Yeah. So like- Mm-hmm … [01:08:00] it can, uh, depend… I think we, we had a question similar to this, so forgive me, forgive me if I’m misinterpreting this. Um, but it can reduce, uh, the funds that are s- uh, that are administered by the university. The… Now the, the… If you have need-based aid, right? So that was the merit-based scholarship.

Eddy: If you have need-based aid, that’s going to be dictated by the results of the FAFSA, right? So that Student Aid Index number, and then schools will meet that need through their financial aid policies. It can be both merit scholarships and need-based scholarships.

Anna: Thank you. Um, if, if parents are able to get interest rates on a private loan much lower than the Parent PLUS option, are there reasons to still consider doing Parent PLUS?

Eddy: Uh, after the changes, uh, not really. Um, and so at that point, again, families [01:09:00] will just maximize on the interest rate. Uh, and if you can get a private loan lower than 9.07%, then you’re better off, uh, in basically in every case, you’re better off going the private loan route. Um, now again, this isn’t to discount the f- the f- the federal loan option at all.

Eddy: You can always borrow the federal loan Parent PLUS in the future, in future years. Um, but just know that, uh, many families who get lower ra- lower rates in the private market will just choose the private route.

Anna: That makes sense. Are state grants available, uh, only to in-state students and only at public universities?

Eddy: Uh, typically, yes. Uh, so s- they’re for in-state applicants. So univ- states wanna retain their talent in state, which is why they offer these, uh, these scholarships. Uh, and it’s usually for publicly funded institutions. Um, I’m trying to think. That’s most cases. [01:10:00] May- um, maybe s- for 100% certainty, I, I would look…

Eddy: I’ll look into it again. Um, but typically that’s the case where it’s for public, public institutions.

Anna: Do you ever think, Eddy, that taking out a home equity loan would be a better option than the Parent PLUS?

Eddy: Good question. We get this question a lot. Um, it depends. So sorry, not to come back to that, but so- It, so it, it can depend on the rates that you’re seeing.

Eddy: Now, obviously with like a h- a, a home equity line of credit for example, um, there’s inherent risk to that, right? If you’re putting … Essentially you’re putting your home on the line if you don’t pay the loan back. I’m not assuming anyone’s not gonna pay that back, but just there is inherent risk to that.

Eddy: Um, so if you’re comfortable with that and you can get lower rates, then that absolutely is an option for you to consider. Um, HELOCs or personal loans for example, [01:11:00] typically don’t have deferment periods, so you have to begin payments right away. Uh, if deferment is important to you and your family, um, this is where there are different types of loan products, right?

Eddy: So a HELOC is one, a personal loan can be another. A mortgage is anoth- uh, you know, yeah, mortgage is another. Um, uh, student loans are another type of loan product. And the way that student loans have been designed have been specifically for the intent of educational purposes, right? So that’s where you’ll see some of these options like deferment, uh, which for some families can be really important.

Eddy: Otherwise, most loans you will begin repayment, uh, on that loan when it’s disbursed. You would have to also organize, and this isn’t that much of a hassle, but just so that you know the difference. Um, on a c- on a student loan the lender communicates directly with the university so they handle the, the distribution, the, the disbursement of the funds.

Eddy: Uh, if you did a personal loan or a HELOC or [01:12:00] any other type of loan, uh, the funds would get sent to you and then you’d have to send it to the university. Again, not a big deal, but just know some of the differences.

Anna: Thank you. Where can families find an application for the subsidized student loan?

Eddy: So, uh, that is just part of the FAFSA.

Eddy: Um, so the, you- there’s not a separate application for it if you’re comparing subsidized versus unsubsidized loans. Um, based on the results, based on your student aid index number will determine whether or not you qualify for subsidized loans.

Anna: Um, at least that keeps the one thing simpler, uh, not another thing to fill out.

Anna: When you were talking about credit scores earlier, Eddy, is that the parent’s credit score or are they ever looking at the student’s credit score?

Eddy: It is … So the student’s information on a co-signed loan, a student will still include their [01:13:00] information. Um, most students don’t have income, or if they do, they have very little income.

Eddy: Uh, and they don’t oftentimes have a history of credit. Um, there may be some cases where students have good credit, but even then they would, they would need a co-signer. Um, I was just actually just talking to a family, a mom today, uh, and she said her son has a 700 credit score. I was like, “That’s amazing.”

Eddy: Um, I have a young dau- I have a, I have a young daughter. I was like, “I need to get on that,” uh, you know, to maybe set her up in this way that clearly, clearly they were on top of it. Um, so, uh, again, a- aside from that, right, but, uh, in that case even if a student does have a high credit score, typically they don’t have income.

Eddy: Uh, and they may have a credit score, but you know, they may not, they, they don’t have loans in their name, uh, up until that point. Um, so almost entirely the, the loan is based on the parent information, based on the parent credit score, parent income, those factors.[01:14:00]

Anna: Thank you. Um- Can families use a 401to pay for their student’s college and how would that work?

Eddy: Uh, technically you can, uh, if you have funds available. I don’t recommend it. Um, this actually– You guys are asking great questions ’cause I actually had another parent call today. I swear I’m not making this up, I had another parent ask this very same question earlier today.

Eddy: Um, I don’t recommend it. Um, right, I wouldn’t want… Um, the question here was like, um, at least in, in the earlier conversation I had, is like, should you, should you withdraw a portion of your retirement, uh, 401, 403in order to contribute? Now, I wouldn’t want parents… I’m very mindful of this. I wouldn’t want parents to, to put themselves in a position where they may not have enough for retirement, right?

Eddy: So this, this may be the answer can vary depending on, on the situation. Um, you know, if [01:15:00] you have a million dollars in your retirement and you wanna withdraw $5,000 to pay a difference, like, you know, that’s a completely different scenario than if you have like only $20,000 in retirement in your 401and you wanna withdraw $5,000, right?

Eddy: Um, I generally wouldn’t recommend it, but again, obviously one scenario is very different than the other. Um, if at all possible, I would avoid that. Um, you also wanna avoid any penalties, uh, on ear new ear- on any early withdrawals as well. So that is a, that is a piece of it. Um, avoid those penalties. And then also, um, if that’s the case, if you feel the need to have to withdraw from a, from a retirement account to pay for college, then I think there are broader conversations that need to be had within the family of, is this something that we can afford, right?

Eddy: Because if the, if the parents have to sacrifice any kind of, uh, security net that they may have, then that may not be putting the whole [01:16:00] family in the best position to succeed long term. That’s what I’m cautious of and why I generally would not recommend tapping into any retirement income for that.

Anna: Yeah, that makes sense.

Anna: Um, this question maybe is outside the scope of our webinar. It’s more policy related, but I’ll ask it and, um, see what you think, Eddy. Do you know the government’s logic behind capping the, the Parent PLUS loans at sixty-five thousand?

Eddy: Yeah. So if you saw me chuckling about a minute ago, it’s ’cause I saw this question as well.

Eddy: Uh, and it– and I have ex- I have exactly the same question that you do, Ula. Um, you know, I, I wish it was just capped at eighty, which would’ve made things a lot easier, where you could borrow twenty thousand each, each year over the course of four years. I don’t know the logic behind the sixty-five, um, but this is the number that, that was determined.

Eddy: Um, and that’s unfortunately what we have to, uh, what we have to, to [01:17:00] respond to now.

Anna: Thank you. Um, we have one question left, so if you have any others, please get them in the, in the Q&A soon so we can see them. Um, Eddy, which universities work with Juno?

Eddy: Oh, great question. So, um, we work with, uh… So depending, uh, on the undergrad side, we’re still building partnerships as well.

Eddy: Um, on the grad side, we’ve actually had some, some great levels of success. So we actually work with Harvard Law School, for example. Um, that’s been one. On the graduate side there, so the reason for that is there, there are actually more dramatic changes on the grad side than the undergrad side. Uh, I’ll mention them just ’cause it’s related to this question and why we’ve been able to partner with, um, more universities directly.

Eddy: Um, many different dental programs, MD programs, law d-, uh, law programs, uh, MBA programs as well. I mentioned I’m in an MBA program myself. Um, on the graduate side, [01:18:00] the Graduate PLUS Loan has been eliminated entirely. And so the Grad PLUS is the equivalent of the Parent PLUS for graduate students. Uh, and so that no longer exists anymore.

Eddy: So, like, just imagine if the Parent PLUS was eliminated entirely. So on the undergrad side, it got capped. On the graduate side, it just doesn’t exist anymore. Um, I should say it doesn’t exist for new borrowers. Um, for anyone who’s currently enrolled in college, if you, if anyone here is, uh, you know, if you have children in graduate school and they borrowed in the past, you can still borrow under the graduate loan program up until the student completes their degree program.

Eddy: But basically, it’s no longer an option for any new graduate students. So anyone starting this coming fall, it’s just, it’s disappearing. Now, because of that, obviously many graduate schools and professional programs are, um, uh, s- uh, there’s just fewer payment options, um, available to students. And even more than undergrad fa-, uh, graduate students and professional school students are forced i- into the [01:19:00] private loan market at much higher rates.

Eddy: So we’ve seen, um, quicker adoption on the graduate side as a result

Anna: That makes sense. I’m not seeing more questions at this time. Thank you so much, Eddy, for all of your expertise. Thank you everyone for joining us. Reminder, this will be emailed to you all as a recording, um, so you can look back. And we have other webinars, would you know, available on our website, CollegeAdvisor Webinars.

Anna: Um, check ’em out. There’s some really good content in them. Thank you so much everyone, and have a great night.

Eddy: Take care everyone. Thanks for all your great questions.