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We used to have very good credit standing until we suffered a blow in our financial standing. We have a rental property that has been sitting in the market since October 2007, right after we evicted the tenant for non-payment of rent since June 2007. We have been paying the mortgage of our rental property (on top of our primary residence) since June 2007 and finally defaulted in Jan 2008 when our savings got depleted. since there was nothing left in our savings to continue paying the mortgage of this property, our credit was affected. Our 2 daughters have been in a private school since kindergarten. My older daughter is now a senior and youngest a sophomore in high school come fall. I wanted to know if there is loan out there that will grant me a $30K loan to pay a $30K tuition and replayment within 3-4 years. If I could just get a loan for the full tuition and repayment within 3-4 years, we will be able to get back on our feet financially. My husband and I have a decent yearly household income of $185K. We were turned down for financial aid several times since we fall under the "upper bracket" criteria. We were also turned down for small loans. If only we be given a chance to get back on our feet, we are able to budget everything again because instead of paying $3000 a month for high school tuition, with a loan repayment of even $1000 a month will keep us afloat financially. Unfortunately, public school was never an option for me to offer to my daughters. Thank you. PBD
pbddesigns, I'm genuinely sorry to hear of your property management difficulties. As a landlord myself, I can empathize.
Vanessa has given you useful information on loan options. But frankly, the hit to your credit that comes from an outright loan default within the past six months will limit your borrowing options very significantly.
Because of the multiple issues involved in your situation, I think you might benefit from talking with a good financial planner. Here are some questions such a person will want to discuss with you:
-What is the status of the rental house?
If the rental property has not been foreclosed upon, then perhaps you can negotiate with the bank for an alternate solution, such as a "deed in lieu of foreclosure". If you cooperate with the bank, they may even be willing to reduce the outstanding balance owed, and/or modify the negative reports made against your credit.
-How can you re-stabilize your household finances?
That your savings account was so depleted that you had to default on the rental property mortgage will rightly be seen as very worrisome by any financial professional who assists you. It suggests you have no "margin for error" going forward. What happens if you or your spouse encounters sudden medical expenses or loses a job? And given that you depleted your savings, where is the money going to be coming from to pay off the loan you seek for the private tutition--especially if that loan needs to be taken out at high rates?
This process may involve taking a hard look at where you can cut back on spending so as to make that $185K income go further during these difficult economic times.
-Are there alternatives to a bank loan for paying the tuition?
The reality is that with poor credit, and no viable options for the secondary students to borrow on their own behalf, you will be hard pressed to get an unsecured loan that covers the tuition on reasonable terms. Since paying the private school tuition is obviously important to you, it might be appropriate to see if grandparents, local charities, etc. might be willing to chip in with gift or loan funds to help make up the difference.
Best wishes to you and your family as you navigate these difficult issues!
Hi PBD,
I'm a FiLife intern, and I did a little research on your question.
I would generally recommend that everyone exhaust any federal loan possibilities before turning to private loans, because they generally offer much lower rates. Unfortunately, federal student aid is only available for higher education (college or career school). So, if you're going to take out a loan to finance your daughters' high school education, your only option is going to be a private loan.
There are some loans, such as Act Education Loans from the Student Loan Network that cater specifically to parents looking to fund their children's private school tuition. Because it is a private loan, there are no federal forms to complete and no application deadlines. There is also a 12-month grace period after graduation before loan repayment begins. If your oldest graduates next year, you would have to begin repayment of her loan one year later.
Funds from an Act Education Loan would be disbursed directly to you, the borrower, rather than to the school. However, your credit history may hurt your chances of approval or mean a higher interest rate and/or loan fee. Interest rates on Act Education Loans can vary widely depending on your credit - from Prime minus 0.5% to Prime plus 7.9%.
Your best bet might be to take out a personal loan from your bank. Once approved, you can meet with a credit specialist to discuss the interest rate. Unfortunately, your credit history is likely to mean a higher interest rate.
Bank of America, for example, offers flexible term personal loan products and revolving personal loan products (check them out here. . If you take out a personal loan, make sure that your lender does not charge a penalty for paying more than your minimum payment. That way, you can pay down the balance of your loan more quickly when you get back on your feet, rather than continuing to pay interest on it.
I hope that helps!
