Returning to school as an adult is more complicated than going to college immediately after high school. There is much more to consider as an adult — including some surprising costs involved — because you can’t put your obligations on hold while you get an education. One of the biggest considerations is how you’ll pay your tuition.
Federal student loans were out of the question when my husband returned to school because we earned too much (even though he would be quitting his job) and we had too much money saved to qualify. We planned to use our savings to pay for his tuition, but we still wanted an additional financial cushion. After all, we’re adults. We have a mortgage and a dog. Emergencies happen.
We ultimately decided that my husband should apply for a student line of credit. And that’s when the learning experience really started.
Before we set foot in a bank branch, we started researching. We chose a student line of credit for its low-interest rate over a conventional unsecured line of credit. We weren’t planning to use this line of credit, but if we needed to, I wanted to get a rock-bottom interest rate.
Once we settled on a student line of credit, my husband researched the products available from local banks. He learned about the products available for mature students, and which banks offered the best terms. We learned that though basic information is accessible online, important factors like interest rates and credit terms could only be obtained through a formal meeting at the bank.
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I was shocked to learn that even in today’s digital age, we needed a formal meeting to apply for a student line of credit. My husband and I had recently gone through the entire mortgage process digitally, which led me to believe that if you could apply for a mortgage over the internet, a line of credit would be easy.
I was wrong.
The bank required us to meet with one of their loan officers to obtain the line of credit. After reciting our income, housing costs, debts, savings and our need for a modest $15,000 student line of credit in my husband’s name, our loan officer started crunching the numbers and pulling credit scores. After a few minutes of tapping away on his keyboard, our loan officer informed us, in a grave tone, that my husband would not qualify for a $15,000 line of credit on his own. He told us that since my husband technically would not have an income while he was in school, they would not approve him for the line of credit. Instead, I would have to co-sign his loan.
After I recovered from my surprise, I agreed.
Once we gave the OK to move ahead with the student line of credit, our loan officer started upselling us.
First, he insisted that $15,000 wasn’t enough, even though my calculations had determined that this amount was perfect for us. We have money in the bank to cover my husband’s tuition and our budget shortfall. We have emergency savings on top of that. The line of credit was only insurance against extreme emergencies.
Our lender didn’t see it that way. He insisted we apply for a $25,000 line of credit now because if we needed to increase it later, the delay could cause us financial hardship.
Luckily, I was prepared for this upsell and held my ground, assuring him that $15,000 was all we needed.
The second upsell was about insurance coverage. Our lender wanted to sell us insurance to cover the balance of the loan in case either my husband or I became critically injured or died. We declined this coverage because we already have life and critical illness insurance. Additional coverage was redundant.
The final upsell was checkings and savings accounts with this bank. My husband and I use a no-fee checking account, and we have no interest in opening additional accounts with our lender. After I asserted that we would simply link our existing no-fee checking account to make payments, we were home free.
Throughout the process, our loan officer was extremely kind, but I still found the process unnerving. This feeling stems from the fact that our loan officer knew more about the process than I did, resulting in an inherent power imbalance. I tried to mitigate this by researching and printing out copies of my budget and net worth beforehand, so I was as informed as possible.
The result was that my husband opened a student line of credit from our local bank for the exact amount we intended, at a decent interest rate, without unnecessary add-ons like life insurance or checking accounts. But, I learned that if I had been unsure of myself, I could’ve easily been sucked into the extra upsells.
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