Pros and cons of student vs parent loans for FAFSA - will Direct Subsidized hurt my kid's future?
My daughter just got her financial aid package for her first year at State University, and there's a gap of about $8,700 that we need to cover after grants and scholarships. The financial aid office suggested she take out subsidized and unsubsidized federal loans in her name, but I'm wondering if there are downsides to this approach that I'm not seeing. I could take out a Parent PLUS loan instead, but I'm already carrying some debt from helping my older son through college. I heard student loans might hurt her credit score or debt-to-income ratio when she graduates. But the subsidized loans don't accrue interest while she's in school, which seems like a good deal. Anyone have experience with both options? Will having these loans in her name create problems down the road that I'm not foreseeing? She's planning to major in nursing if that makes any difference for loan forgiveness options.
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Miguel Harvey
Having your daughter take out the subsidized loans first is actually the smartest move. Here's why: 1. Subsidized loans don't accrue interest while she's in school and during the 6-month grace period after graduation 2. The interest rates are typically lower than Parent PLUS loans 3. Federal student loans have more flexible repayment options including income-driven plans 4. With nursing as her major, she may qualify for Public Service Loan Forgiveness or Nurse Corps Loan Repayment after graduation Maximum subsidized/unsubsidized loan amounts for first-year undergrads are $5,500 (with only $3,500 eligible to be subsidized). So she won't be able to cover the entire $8,700 gap with just those loans anyway. Responsibly managed student loans actually help BUILD credit history, not hurt it. The key is keeping the total borrowed in line with expected starting salary.
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Finnegan Gunn
•Thank you so much for the detailed breakdown! That's helpful about the maximum amounts - I didn't realize there was a cap on what she could borrow as a freshman. So we'll still need to come up with the remaining ~$3,200 gap somehow. Do you know if having these loans will impact her ability to get an apartment after college? That's one specific worry I have, that landlords might see the debt and deny her application.
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Ashley Simian
my son took out sub loans for all 4 years and now he CANT EVEN BUY A HOUSE because of his debt-to-income!!! dont do it! take the parent plus yourself, its YOUR responsibility anyway
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Oliver Cheng
•How much did your son borrow though? The standard annual sub/unsub loan limit for dependent students is $5,500-$7,500 depending on year in school, so max $27,000 for four years - which shouldn't prevent buying a house unless his income is very low or he has other significant debt. For the OP: First-year nursing students should definitely take the subsidized loans first (interest-free while in school!), then unsub if needed. Parent PLUS should be last resort as they have higher interest rates (currently 8.05%) and fewer repayment options.
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Taylor To
I don't think anyone's mentioned this yet, but make sure your daughter takes out ONLY what she needs for tuition/housing, not the full amount offered. My son's friend took the max and spent the extra on spring break trips and now regrets it badly. That's the real danger - easy money that has to be paid back with interest. Also, if your daughter is planning on nursing, many hospitals have tuition reimbursement programs for the last 1-2 years if she commits to working there after graduation. Worth looking into!
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Finnegan Gunn
•That's excellent advice. I'll definitely talk to her about only borrowing what's absolutely necessary. And I had no idea about hospital tuition reimbursement programs! I'll have her look into that as she gets further along in her program.
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Ella Cofer
whts the dif between subsidized n unsubsidized again? i always mix those up lol
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Kevin Bell
•Subsidized = government pays interest while in school Unsubsidized = interest starts accruing immediately Always max out subsidized first, then unsubsidized if needed, THEN parent plus as last resort. That's the order that makes the most financial sense for most families.
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Savannah Glover
Look, I've been dealing with the FAFSA mess for three kids now, and I've learned the hard way that getting through to someone who actually knows what they're talking about at Federal Student Aid can make a huge difference. I was stuck trying to decide between loan options last year when I discovered Claimyr.com - it got me through to an actual human at FSA in about 10 minutes instead of waiting on hold forever. They have a video demo at https://youtu.be/TbC8dZQWYNQ showing how it works. The agent walked me through all the pros and cons of each loan type for our specific situation. Turned out there were some special circumstances options I didn't even know existed that saved us thousands. Definitely worth talking to an actual expert before making your decision.
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Finnegan Gunn
•Thanks for the recommendation - I've been on hold with FSA twice already and got disconnected both times. So frustrating! I'll check out that service because I do have some specific questions about how these loans might affect her future FAFSA eligibility.
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Oliver Cheng
One important factor no one's mentioned: taking out federal loans in her name establishes her NSLDS record (National Student Loan Data System), which can be important if she ever needs to apply for additional aid, loan consolidation, or forgiveness programs. Also, the current lifetime aggregate loan limit for dependent undergrad students is $31,000 (with max $23,000 subsidized). For nursing specifically, there's also the NURSE Corps Loan Repayment Program that can repay up to 85% of qualified nursing education debt if she works at an eligible facility after graduation. Neither subsidized nor unsubsidized loans require credit checks for undergrads, while Parent PLUS loans do check credit.
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Ashley Simian
•credit checks are GOOD actually, they stop you from getting into TOO MUCH DEBT which is what the government WANTS you to do!!!
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Felix Grigori
When my daughter was starting college last year I was worried about the same thing! We ended up doing a mix - she took the subsidized loans (about $3500) and I took a smaller Parent PLUS loan to cover the rest. That way she's building credit but not taking on too much debt all at once. For nursing especially, starting with a manageable amount of federal loan debt makes sense since she'll likely qualify for some repayment assistance programs.
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Finnegan Gunn
•That's a good compromise approach. How has it worked out so far? Has your daughter mentioned any issues with having the loans in her name?
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Ella Cofer
doesnt FAFSA give u free money tho? why u gotta pay it back???
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Miguel Harvey
•FAFSA is just the application form (Free Application for Federal Student Aid), not the money itself. After you complete the FAFSA, schools use that info to create a financial aid package which can include: - Grants (like Pell Grants) - free money you don't repay - Work-study - money earned through part-time campus jobs - Loans - borrowed money you do have to repay The OP is talking specifically about the loan portion of their daughter's aid package.
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Kevin Bell
Something else to consider: if your daughter takes out the loans herself, it gives her skin in the game and financial responsibility. My son had his subsidized/unsubsidized loans in his name, and knowing he was responsible for them kept him focused on graduating on time. I also made a deal with him that if he maintained above a 3.5 GPA and graduated in 4 years, I'd help with payments. Worked out great as an incentive, and he finished cum laude in 3.5 years to save money. Student loans in her name won't ruin her future if the total amount is reasonable for her career path. Nursing starting salaries are typically $60-75k depending on location, so standard federal loan amounts should be manageable.
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Finnegan Gunn
•I like that approach of having her take responsibility while offering an incentive for good performance. That might work well for our situation. My daughter is pretty responsible already, but having that financial stake might make her even more focused.
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