<p>All of this is nuts. Unless you are talking about graduating with a doctorate … MD type, then no way. Especially since some of these will be unguaranteed loans. The unguaranteed loans start compounding right away. This means, by the time you graduate, they will be even higher.</p>
<p>You need to find a 4th option. You will destroy your life with all those loans. Trying to put this nicely, but it is as if you don’t really know what it is like to be starting out in your career, straddled with that kind of debt. And plans to move back with your parents and pay them off fast generally do not work out. Something happens. Maybe you will fall in love and want to marry. Maybe your best job offers will be in a different location. You never know.</p>
<p>Even the doctors are finding that repaying their loans is not easy. Many find it to put a lot of limitations on what they would be doing. In high COLA, like mine, it’s is a nasty surprise to some doctors that they are not living as well as they had hoped given the time, money and loans they have put into these ends.</p>
<p>But at least MDs are pretty much guaranteed to be able to find jobs paying enough to repay the loans and still be independent. With a BA, that is not the case. There is a reason why banks and other lending companies won’t tend to an 18 year old without a parent on the hook as well. Even for proported degrees like engineering or programs that are likely to have great pay opportunities. The odds are not good.</p>
<p>This is definitely a loaded question. It depends on the situation–every case is different. Here’s one family’s story.</p>
<p>We saved for college from way back, through max retirement contributions, but because that money is tied up, we took Parent PLUS loans to fund college. Two D’s times four years each, while we paid their expenses out-of-pocket. It adds up. I didn’t like paying the 6+% interest rate back in 2005, really don’t like 7.9% now. But it was a trade-off–what I’ve saved inside the retirement account has been invested without worrying about capital gains & has compounded. In a good economy, in theory that plan works. </p>
<p>The day of reckoning, however, appears to be coming. Before these notes blow up with that usurious rate, do I take the tax hit with a withdrawal–early or not–to pay off some or all of the 7.9% loans? Some would say yes. Bite the bullet on the ‘juice’ for the time being & wait until the government relaxes rules on retirement funding kids’ college loans? Not likely in this administration, maybe not ever. They gonna ‘git’ ya eventually.</p>
<p>If I were doing it over, knowing what I know now about a fickle economy, with investment income a wash for at least the last 6-7 years & a 30-40% drop in housing values, in hindsight I would probably advise against my path, and would have limited my D’s choices even more than we did.</p>