When children need specialized educational help most parents have two major concerns. First, which program is right for their child and secondly how should they pay for it?
While I can’t tell you which program to pick, I can offer you some guidelines on how to finance your choice. Here are some points to consider.
CONSIDER THE OPTIONS
Many times families in crisis are so concerned about getting their child help that they don’t think clearly when it comes to considering their financial alternatives. This is completely understandable but can end up costing you financially.
Difficult as it sounds, try to stay calm. Don’t let your rush to find funding cause you to make an unwise decision. Parents should do a little homework and explore all their financial alternatives.
WHAT SHOULD A BROKER PROVIDE?
At Cornerstone, our mission is to help parents obtain affordable, personally tailored loans for their child’s needs. We gather the information, submit the documentation, and follow up daily with the lender until the loan is completely funded. We remain in touch with parents and the school so that both know exactly where we’re at in the loan process.
You should expect the same from your broker. He/she should return your calls promptly and make certain any questions you have are answered completely. I tell parents there are no dumb questions and to call me as often as they need to. After all, we’re talking about their most treasured possession – their child.
It’s generally wiser to finance your child’s schooling through an education loan than to clean out your retirement accounts or stocks. Those options can result in some hefty tax penalties.
Likewise, borrowing against your house is usually not your best long term option. Education loans do not require collateral and interest rates are often comparable to a home equity loan. Also, there are no pre-payment penalties for paying off your loan before its due date.
Education loans usually offer tax benefits as well. Check with your tax advisor about specific tax advantages that may apply to your situation.
WHO CAN QUALIFY?
Sometimes families make the mistake of thinking education loans are only for the very wealthy. In fact, I’ve worked with families from all different financial backgrounds.
If your credit isn’t high enough to quality for a particular loan many times a co-borrower helps. If there are troubling items on your credit report those can sometimes be explained or even removed with the proper documentation. Generally speaking, a credit score of 645-650 with no major derogatory marks should be enough to secure funding
I CAN’T AFFORD A LOAN
Many parents look at the amount of tuition programs require and think, “I couldn’t possibly afford it.” However, an education loan can often put the program you want well within your reach.
My job is to detail the loan and calculate the monthly payment so parents know exactly what they’re getting in to. There is no guess work. When tuition is amortized over many years it generally becomes very affordable. Also, in long term cases loan payments can often be deferred for months, making repayment more convenient.
I APPLIED BUT THE LENDER SAID NO
If you’ve already tried to find funding on your own and been turned down, don’t give up. I work closely with the top three educational lenders: Prep Gate, Key and Sallie Mae. Often times I can review your application and help you clear up trouble spots.
My experience has taught me which lenders will probably be best for which families. A personal phone call from me to the loan officer can help us to understand what, if anything, can be done to rectify the denial.
Occasionally parents have simply failed to include a key piece of information that, once supplied, can move the loan into approved status.
I look for every lending opportunity available so the child can be placed.
WHAT KIND OF DOCUMENTATION IS REQUIRED?
For most families, all the loan officer will need is proof of income and residency. Occasionally, lenders require proof of citizenship. In rare cases, the lender will need a statement of your assets and liabilities.
HOW LONG DOES IT TAKE?
Cornerstone can usually secure a conditional approval in 24 business hours. Many programs will proceed with admission based on that decision. On average, a formal approval will take 5-6 business days from start to finish.
While shopping for funding, parents should be sure to ask their loan officer to detail all of the costs associated with their loan. Typically, the broker will charge an application fee. Less reputable companies will try to tack on bogus fees for services that should be free.
As a mother and a financial services professional, I believe every child has gifts and abilities that are uniquely theirs. My job isn’t really about arranging loans, It’s about allowing parents to concentrate on placing their child in the best possible learning environment, knowing their financial concerns are being attended to.